Google and the Balanced Scorecard: A Case Study
This paper examines Google as a case study in balanced scorecard management, drawing on Kaplan and Norton's four-step implementation framework. The paper analyzes how Google's strategy aligns financial, customer, internal business process, and knowledge and innovation metrics into a self-reinforcing competitive system. Topics covered include Google's key performance indicators across each scorecard category, how the company links its differentiation strategy to those metrics, its unconventional resource allocation practices (including the famous 10% personal-project policy), and its data-driven organizational culture. The analysis concludes that Google's approach closely mirrors balanced scorecard principles and produces a sustainable competitive advantage.
- Introduction to the Balanced Scorecard: Overview of balanced scorecard concept and Google's relevance
- Four Steps of Balanced Scorecard Implementation: Kaplan and Norton's four-step implementation framework explained
- Google's Metrics Across All Four Categories: Google's KPIs in financial, process, innovation, and customer areas
- Connecting Metrics to Strategy: How Google links differentiation strategy to scorecard metrics
- Strategic Budgeting and Resource Allocation: Google's unconventional resource allocation and 10% policy
- Metrics as Organizational Culture: Data-driven culture and organization-wide metric tracking at Google
- Conclusion: Google as a model balanced scorecard organization
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- Consistently grounds each abstract balanced scorecard concept in a concrete Google example, making theoretical content immediately legible to readers unfamiliar with the framework.
- Follows the four-step Kaplan and Norton process as an organizing scaffold, giving the analysis a clear and logical sequence that mirrors real-world implementation.
- Identifies a positive feedback loop in Google's strategy — talent attracts innovation, innovation drives market share, market share funds talent — which is the paper's strongest analytical move.
Key academic technique demonstrated
The paper demonstrates applied framework analysis: it takes an established theoretical model (the balanced scorecard) and systematically maps each component onto a real organization. Rather than describing Google in isolation or summarizing the scorecard abstractly, the writer uses each scorecard step as a lens to reveal why Google's practices succeed. This technique is common in business and strategy courses and shows the ability to translate theory into practical evaluation.
Structure breakdown
The paper opens with a conceptual introduction to the balanced scorecard and Google's relevance as a case study. It then moves through the four implementation steps — metrics identification, connecting metrics to strategy, strategic budgeting, and organization-wide metric tracking — devoting a section to each. Each section presents the theory, then applies it to Google. A brief conclusion synthesizes the argument and affirms Google as a model balanced scorecard organization. The structure is transparent and well-matched to the analytical task.
Introduction to the Balanced Scorecard
The balanced scorecard is a strategic management concept designed to achieve alignment among the diverse interests of an organization's stakeholders. The concept arises from the understanding that shareholders are just one of many stakeholder groups within any given organization. For an organization to sustain long-term success, it must be able to meet the needs of all critical stakeholders. The most effective strategy, therefore, creates a symbiosis between the interests of different stakeholder groups.
The balanced scorecard is an output-based perspective, with outputs organized into four categories: financial, internal business process, knowledge and innovation, and customer. This perspective stands in contrast to the traditional approach, which treats shareholder interests — that is, financial interests — as the only priority. Within the balanced scorecard framework, it is understood that financial interests are most effectively met when all other stakeholder interests are met as well.
Google is an example of an organization that excels at meeting the varied interests of its critical stakeholders. Google thus serves as a shining example of balanced scorecard-style management and makes an excellent case study for understanding the concepts that underlie this approach.
Four Steps of Balanced Scorecard Implementation
Kaplan and Norton (2000), the creators of the balanced scorecard, developed what they consider to be an optimal four-step process for implementing it within an organization. The four steps are: (1) monitor a variety of metrics, (2) connect those metrics to strategy, (3) develop a "strategic budget," and (4) involve the entire organization in tracking the metrics. Each of the four categories within the balanced scorecard should have dedicated metrics, and those metrics need to be aligned with the organization's overall strategy.
The strategic budget concept specifies that the organization should "authorize the initiatives necessary to attain scorecard targets" (Kaplan & Norton, 2000). Consistently measuring the metrics ensures that they play a valuable role in strategic control rather than existing merely as abstract targets.
Google's Metrics Across All Four Categories
The financial element of the balanced scorecard is probably the easiest component for most organizations, because all corporations already examine financial metrics. Google likely tracks a number of internal and external financial measures. External metrics tend to be highly standardized and widely understood — revenue, market share, gross income, net income, EBITDA, earnings per share (EPS), share price, and a variety of financial ratios. Among these, the company must arguably choose to focus its energy on the most important. Google certainly wants to maximize revenues, net income, and share price, as these are the fundamental measures shareholders use to evaluate a company.
On these measures, Google's historical performance has been exemplary: a market capitalization of $381 billion, EPS of $21.02, $59.8 billion in revenue with $12.9 billion in net income (MSN Moneycentral, 2015), five of the world's top 20 websites including the number-one ranked site (Alexa, 2015), and dominant market share in its industry (eMarketer, 2014).
In terms of internal business processes, Google will track a number of metrics that may not be publicly disclosed. The company will certainly evaluate the efficiency of its advertising — click-through rates in particular. It will also track metrics related to accounts receivable turnover. Certain financial measures, especially managerial efficiency indicators and return measures such as return on assets or return on capital employed, would also provide indications of internal business process performance.
Knowledge and innovation metrics — which measure organizational capacity — are critical for a company like Google. One way in which Google builds for the future is by diversifying its business. To that end, it would likely track non-advertising revenue as a percentage of total revenue. The number of copyrights and patents the company holds, especially patents, also reflects its innovative capacity. At many companies, the proportion of employees holding advanced degrees serves as a similar indicator, though Google has de-emphasized educational credentials in its hiring practices (Andersen, 2014).
Customer metrics are equally critical, as customers are central to Google's business model. Market share and market share growth both reflect customer acquisition and retention. Beyond those, Google can measure repeat usage, average revenue per customer, and customer satisfaction through polling — all of which indicate the degree to which Google is meeting the needs of its users.
The theory behind the balanced scorecard is that a company will direct its resources toward meeting all of these objectives simultaneously, rather than one or two in isolation. This integrated focus creates a strategic shift that can result in sustainable competitive advantage. Google is a prime example of a company that, whether through explicit use of the balanced scorecard or not, has excelled across all of these metric categories.
Conclusion
Google is an exemplary performer with respect to the balanced scorecard. If they do not use the scorecard explicitly, they most certainly utilize its principles. Google is a data-driven organization where metrics are embedded in the corporate culture. The systems the company has developed constitute a positive feedback loop: attracting the best talent, providing that talent with resources, and delivering the highest level of customer satisfaction, which in turn drives improved financial performance — money that is then reinvested back into the business.
The unique way in which Google allocates resources is something that most organizations find challenging within the balanced scorecard framework. Unconventional resource allocation can be a difficult sell to shareholders, who tend to have a shorter time horizon than the organization as a whole. Google's early successes gave it the luxury of pursuing its own strategic path, guided by balanced scorecard principles. The company executes so well across all four scorecard categories that it is difficult to imagine meaningful improvement. There are no obvious weaknesses in its approach, and its consistent success across all areas of the balanced scorecard stands as testament to how effectively it applies the principles on which Kaplan and Norton built their theory. It would be hard to find a company that executes the balanced scorecard better.
The results are plain to see. Google dominates search, and its vast store of data allows it to dominate online advertising — it delivers superior return on advertising spend and therefore wins the largest share of that market. Its financial resources are enormous, and the entire organization has embraced the idea that data is fundamental, and that decisions must be guided by what can be measured and how that aligns with strategy. If Kaplan and Norton had not developed the balanced scorecard before Google existed, it would be reasonable to think they designed it with Google in mind.
References
Alexa.com (2015). Top 500 sites. Alexa.com. Retrieved March 22, 2015 from http://www.alexa.com/topsites
Andersen, E. (2014). How Google picks new employees. Forbes. Retrieved March 22, 2015 from http://www.forbes.com/sites/erikaandersen/2014/04/07/how-google-picks-new-employees-hint-its-not-about-your-degree/
BSI (2014). Balanced scorecard basics. Balanced Scorecard Institute. Retrieved March 22, 2015 from http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard
eMarketer (2014). Google, Facebook continue on as the market's leaders. eMarketer.com. Retrieved March 22, 2015 from
Kaplan, R. & Norton, D. (2000). The balanced scorecard's lessons for managers. Harvard Management Update. In possession of the author.
Marr, B. (2012). Analytics at Google: Great example of data-driven decision making. Smart Data Collective. Retrieved March 22, 2015 from
MSN Moneycentral (2015). Google, Inc. Retrieved March 22, 2015 from http://www.msn.com/en-us/money/stockdetails?symbol=GOOG&ocid=qbeb
Reeves, M. & Deimler, M. (2011). Adaptability: The new competitive advantage. Harvard Business Review. Retrieved March 22, 2015 from https://hbr.org/2011/07/adaptability-the-new-competitive-advantage
Create your account
Always verify citation format against your institution’s current style guide requirements.