Doi: 10. 1016/S1751-3243(07)03003-9 Conceptual Foundations of the Balanced Scorecard

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DOI: S Conceptual Foundations of the Balanced Scorecard
Robert S. Kaplan
Harvard Business School, Harvard University, USA
Abstract: David Norton and I introduced the balanced scorecard in a 1992 Harvard Business Review
article
( Kaplan & Norton, 1992 )
. The article was based on a multi-company research project that studied performance measurement in companies whose intangible assets played a central role in value creation (Nolan & Norton, 1991)
. Our interest in measurement for driving performance improvements arose from a belief articulated more than a century earlier by a prominent British scientist, Lord Kelvin (1883) :
I often say that when you can measure what you are speaking about, and express it in numbers, you know something about it but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.
If you cannot measure it, you cannot improve it.
Norton and I believed that measurement was as fundamental to managers as it was for scientists. If companies were to improve the management of their intangible assets, they had to integrate the measurement of intangible assets into their management systems.
After publication of the 1992 Harvard Business Review article, several companies quickly adopted the balanced scorecard, giving us deeper and broader insights into its power and potential. During the next 15 years, as it was adopted by thousands of private, public and non-profi t enterprises around the world, we extended and broadened the concept into a management tool for describing, communicating and implementing strategy. In this chapter, I describe the roots and motivation for the original balanced scorecard article, as well as the subsequent innovations that connected it to a larger management literature. The chapter uses the following structure for organizing the origin and subsequent development of the balanced scorecard
1. Balanced Scorecard for Performance Measurement
2. Strategic Objectives and Strategy Maps
3. The Strategy Management System
4. Future Opportunities.