Balanced Scorecard Implementation

The Balance Scorecard was developed by Robert S. Norton and David P. Kaplan while at Harvard in the early 1990's. They developed this measurement and planning concept for several reasons.

Ernst & Young did a study of 275 portfolio managers and they found "that the ability to execute strategy was more important than the quality of the strategy itself". Fortune Magazine, 21 June 1999, Why CEO's fail, by R. Charan and G. Colvin, concluded that their strategies were not bad it was a failure in execution of that strategy that caused their failure. A study done by the Brookings institute found that the relationship between tangible book values versus market values for industrial organizations had fallen from 62% in 1982 to 38% a decade later. There are studies today that put this relationship are 10% to 15% of tangible book value. What does this mean?

It proves that their has been quantum shift from the ability to create corporate value by managing tangible assets to managing intangible assets like knowledge-based assets such as customer relationships, innovative product and services, highly efficient and effective operating processes, information technology - databases, employee education and training, skill levels and motivational qualities.