Balanced Scorecard questions and applications

Financial Perspective

The material in this module tells us that many companies place disproportionate emphasis on the financial perspective at the expense of the other three perspectives. Give an example of an organization with which you are familiar from either previous coursework, the news, or personal experience where this has been the case. What were the results of this focus on the financial perspective on customers and other stakeholders? Be as specific as you can and give concrete examples.

An over-emphasis on financial metrics is indeed a bad idea because it can lead to ignorance or ambivalence towards other parts of the business equation that should absolutely be taken seriously and actually end up affecting the financial bottom line even if the connection is not obvious. Customers that feel the dollars and cents are focused on too much would go to firms that focus more on customer service and contributions to the community. Stakeholders, which do not just include employees and executives, might feel the same way and go elsewhere with their advocacy and patronage. For example, a college that keeps jacking up tuition rates with no real connection to inflation or other college rates could see patients jump ship and go to the more cost effective college. A person that goes to a car dealer and is summarily ignored or directed to cars they don't really want due to incorrect perceptions about class and so forth would rub that person the wrong way and they would go to a different dealer. A loss prevention officer at a retail store only following black people would hack off a lot of potential black customers. Even though the focus is on theft, assuming this only for black people would be less than wise.

2 Discussions

Who Are "Customers"?

Can you think of any organizations that do not have relevant "customers" to take into consideration? If there are such, how are they different from other organizations where all parts of the BSC operate equally?

The definition of customer in the traditional sense may not be applicable to a lot of companies but if one were to expand it properly to all people that could be called customers, then the dynamic changes greatly. For example, food service companies that sell food to restaurants obviously would not be interacting directly with the customers but they wares would be eventually served to the customers and the food service companies themselves do work directly with the restaurants that buy their goods. The restaurants are customers in that they could always buy their goods from other food service companies and they need to be kept satisfied through good service and competitive prices. Even with this distinction, the balanced scorecard would operate a little differently because the metrics used would be different as the interactions and type of business being undertaken are different. However, it would not be accurate to say that the balance scorecard would be entirely different because efficient operations and satisfaction of the "customers" as they exist is still the goal. The different parts of the balanced scorecard should still work in concert even if they are not equally weighted in terms of performance. Acting in a fashion different than that would not be a good idea (TechTarget, 2014).

3 Discussions

Business Process Perspective

Organizations are complex systems with multiple stakeholders. Sometimes the interests of various stakeholders can conflict. For your initial post to this discussion, give an example of a business process where the interests of two (or more) stakeholders are in opposition.

As for what facet could lead to stakeholders being in opposition, one would be how to spent retained earnings and profits. Some people in a company would want those funds diverted to research and development while others would want higher wages and benefits if the higher revenues could be maintained. The shareholders and stockholders may demand higher dividends as a reward for their investment. At the end of the day, the one way to avoid this is to have a definitive business plan and direction so that the general method in which money is spent, invested and diverted is based on the business plan of the company. For example, if one were speaking of Dell, their obvious bread and butter is the corporate server market as they haven't been able to pounce on the mobile consumer market as much and laptops are starting to fall out of favor in favor or tablets and smartphones. Wanting to pounce on the mobile market may sound like a good idea but if it's done with poor planning or at the expense of the corporate market, then it would do more harm than good to try and capitalize on the other markets. Even so, Dell should make investments in mobile if they can but all stakeholders should be involved (Dell, 2014).

4 Discussions

Learning and Growth Perspective

The home page of this module identifies several measures of the learning and growth perspective, such as:

• Real-time availability of accurate customer and internal process information to front-line employees

• Ability to launch new products

• Ability to create more value for customers

• Ability to penetrate new markets

• Alignment of employee incentives with overall organizational success factors

• Rates of improvement in critical customer-based and internal processes

Consideration of these measures reveals that it can be difficult to quantify these factors. For your first posting in this Discussion, identify one specific example of a learning and growth measure that you feel could be critical to an organization but difficult to measure.

One metric that would be hard to quantify and measure would be the one about "ability to create more value for customers." One reason why this would be difficult to attain is that "value" is defined differently and there can be more than one dimension of value with one person. For example, some people just look at the price point while others look only at performance. However, some goods are bought based on a combination of a reasonable price in concert with a product that is at least fairly good in quality and performance. For example, someone that is at a Chevrolet dealership would tend to buy a different car based on their income and what they want out of a car. In looking at cars specifically and not trucks, a person looking only at price would probably get a Cobalt or something else fairly small and cheap. A person that is looking for something high-end and socially popular would probably go for a Tahoe if not a Cadillac. However, someone in the mid-range would probably go with an Impala. However, value can be hard to define in the sense of what a person needs from the car. This can vary a lot as well including safety, performance, speed, towing capacity and cargo/person room.