The Balanced Scorecard ( BSC ) evaluates your organization from four different perspectives in order to measure its overall health.
Each of these perspectives focuses on a different aspect of your company and provides a balanced view of your organization.
The BSC recommends developing Objectives, measures ( KPIs ), and Initiatives according to each of these perspectives.
These four perspectives are described in the following sections.
Financial Perspective
In the public sector, this perspective is often referred to as Stewardship or by another more appropriate name.
The financial perspective is a key focus of the Balanced Scorecard.
It reflects the organization’s financial performance and the use of its financial resources.
Financial resources keep companies operating, and the financial perspective focuses specifically on this area.
Customer Perspective
The Customer / Stakeholder perspective evaluates organizational performance from the viewpoint of the customers or other key stakeholders that the organization is designed to serve.
The customer perspective focuses on the people who actually purchase your products and services.
Customer satisfaction and retention are leading indicators of future success.
How you treat your customers today directly affects how much revenue you will generate tomorrow.
Business Process Perspective
The internal business process perspective evaluates organizational performance through the lens of quality and efficiency in relation to your products, services, and other critical business processes.
This perspective:
examines how smoothly your business operates,
considers efficiency, including reducing waste, accelerating processes, and achieving more with fewer resources,
indicates how quickly your organization can adapt to changing business conditions,
also encourages you to assess whether you are delivering what your customers truly want.
Learning and Growth Perspective
The learning and growth perspective evaluates organizational performance through the lens of human capital, infrastructure, technology, culture, and other capabilities that are essential for breakthrough performance.
This perspective examines your overall organizational culture.
It evaluates whether employees are aware of the latest industry trends and technologies and whether knowledge can be shared easily throughout the organization.
Stacking the Perspectives
During the early years of the Balanced Scorecard, each of the four perspectives was presented independently of the others.
Over time, however, organizations began to recognize that these perspectives influence one another in significant ways. The order in which they are structured therefore became important.
Modern Balanced Scorecards demonstrate how each perspective builds upon the one before it.
Generally speaking, improved performance against objectives within the learning and growth perspective enables the organization to improve its business processes, which in turn helps it achieve the desired outcomes within the customer and financial perspectives.
For example; if you train your employees and establish a culture of knowledge sharing ( Learning and Growth ), your company can operate more efficiently ( Business Process ). A better-performing organization serves its customers more effectively ( Customer ), and satisfied customers purchase more of the products and services you offer ( Financial ).
Standard Strategy Perspectives
The following perspective types are standard within the system. In other words, they are available by default in the strategy perspective field of any Objective. However, you can still delete any of them on a strategy-specific basis. See: Deleting Standard Strategy Perspectives.