By ROBERT S. KAPLAN

THE current global and economic climate gives rise to many
uncertainties, business is under increasing pressure to stay
competitive and enhance operational efficiencies. The Balanced
Scorecard approach conceived by Dr Robert Kaplan and Dr Norton
in 1992 applied years of research to the links between costs and
performance measurement.

More precisely, it sought to look outside traditional financial
measures in evaluating performance and effectiveness of
corporate strategy.

The Balanced Scorecard seeks to empower all levels of the
workforce by educating them about company strategy and the small
steps they can take to achieve its goals.  This approach has
been introduced to companies worldwide as a means of quantifying
factors omitted by conventional measures. The Balanced Scorecard
is a continuous process owned not just by top management, but
also by everyone in the organisation.

Unlike traditional approaches that looked primarily at tangible
assets, the underlying notion of the Balanced Scorecard is that
companies should measure not only tangible assets but also
intangible assets such as culture, staff and strategy that drive
the outcomes.
  
Robert Kaplan has spent most of his professional life
researching and writing about corporate strategy and the
value-creating activities of organisations.

The Balanced Scorecard has become the first such technique to
place a premium on strategy and allow operational measures to
reflect that direction.

The strategy map gives businesses the ability to look at their
operations from four perspectives: financial, customer, internal
business processes and growth.

So revolutionary was the Balanced Scorecard that it went beyond
what the authors originally conceived it to be.

Adopting companies not only used the Balanced Scorecard as
measures of performance but also took it to the next level -
using it to create an entirely new performance management
framework that puts strategy at the centre of key management
processes and systems.

Good strategy remains the central theme of the Balanced
Scorecard theory.

Traditional financial measures would simply take the position of
lowest prices, highest gains - this is only rational within
simple economic models where price is all that matters.

In reality the world is more complex than just price: its
service, the functionality of the product, ease of purchase are
among others important factors.

In fact, the marketing profession exists to get factors other
than price to influence the purchasing position.

Companies need to include aspects that are not directly
relational to financial measures to really benefit from the
Balanced Scorecard methodology.

If you can identify and be specific as to what it is you feel
the customer wants, then people feel more empowered. They can
find new ways of delivering it. It's really a shift in the
management philosophy.

With the new approach, and this is where the Balanced Scorecard
can be very helpful, people with visionary leadership
communicate the objectives - without telling people what to do.
That frees them to find new ways of delivering value to the
consumer.

Kaplan says "What started out as a measurement system here
turned out to be a very powerful way to change the culture. And
the management - the way the management uses the measurement
system. The communication, learning, the openness . . . it does
create a new environment".

So, in a new business climate, how does the Scorecard theory
enhance corporate performances and profit?

In Kaplan and Norton's new book, Strategy Maps contains several
important new contributions:

1.  A template that describes the basic components of how value
gets created in the Internal and Learning and Growth
perspectives
  
2.  Themes, based on value creating processes that articulate
the dynamics of a strategy

3.  A new framework for describing, measuring, and aligning the
three intangible assets in the Learning and Growth perspective -
human capital, information capital, and organisation capital -
to strategic processes and objectives in the Internal
perspective

Templates, strategic themes, and intangible assets are the
building blocks for understanding and executing strategy. They
provide increased granularity for executives to describe and
manage strategy at an operational level of detail.

The Balanced Scorecard theory is not new, so how has it adapted
to the new technological age? Kaplan believes it has more
relevance than ever - in an increasingly difficult marketplace,
it is essential for organisations to recognise when change is
required and how to act quickly.

The Balanced Scorecard helps communicate what it is that makes
your company unique and better than your competitors, what gives
your business some differentiators in the eyes of the consumer.

That's what you want to reinforce and what you want all
employees to be working towards.

Ten years ago, we thought Japan was the model - make it better,
faster, cheaper.

It turns out that's not a sustainable model. Other people learn
how to make it better, faster, cheaper and so you're competing
on a very narrow set of dimensions.

The technology sector has been slow to adopt the Balanced
Scorecard principle -Kaplan believes these companies fail
because they had a business model but not a strategy.

If anything, what's happened with Internet companies is back to
basics - the stuff we've been talking about for 25 years is
still very relevant.

If these differentiating, sustainable strategies are still very
important, then the measurement and management systems based on
these strategies are more important than ever.

Technology thrives on innovation and the scorecard gives much
more visibility to those critical processes than normal
operating measures.

Strategy Maps is recommended reading for every CEO and manager
who wants to keep companies in shape for the new business
environment.

Not only does it provide the framework for clear thinking, but
also a guide to developing successful and sustainable corporate
environments.

The Balanced Scorecard is a revolutionary management approach
with a powerful impact on future competitiveness and
profitability.

It enables organisations to effectively mobilise the execution
of their strategy through the discipline of the Balanced
Scorecard.

The Balanced Scorecard provides the foundation for an
increasingly proven management system that channels the
energies, abilities and resources of the entire company towards
achieving and surpassing the organisation's long-term strategic
goals.

Additionally, it can be applied to any form of business, from
huge multi-nationals to small business set-ups and to new and
rapidly changing businesses.

It is equally adept in the private sector as well as the
non-profit organisations and government agencies.

It is a methodology that can be implemented in any country
because the basic framework of the scorecard is customised to
local applications.

There are clear advantages to using the balanced scorecard
method.

Some examples of this are; Brian Baker, the executive
vice-president of the marketing and refining division at Mobil
North America, who says in the book: "In 1997 we hit the number
one ranking for the third consecutive year ? the scorecard gets
the lion's share of the credit".

The book also cites the example of Richard Magnus, the Chief
Judge from the Singapore district and magistrates' courts.

Upon returning from a Harvard Business School executive
programme, Magnus applied the Balanced Scorecard in the District
and Magistrates' Court System, a structure involving 84 judges,
500 administrators and 400,000 cases per year.

The scorecard was piloted in the Small Claims Tribunal, probably
the first application in the judiciary in the world.

So where does the Balanced Scorecard go from here? Kaplan
states, "There is still further penetration needed, a lot of the
applications are in business units rather than a whole
corporation, so we hope to extend that a bit more. I'm
interested in new sectors: health care, government, education,
venture capital. I think there are big opportunities."

Robert Kaplan is the Marvin Bower Professor of Leadership
Development at the Harvard Business School and has served on the
Harvard Faculty for 18 years. He is scheduled to visit Singapore
in May 2004.

His presentation is based on his latest book "Strategy Maps."
MIM is offering a special price to Malaysians to attend this
event. For information or to register for this event, phone MIM
at 03-21654611, visit www.mim.edu or e-mail enquiries@mim.edu.