The customer perspective of the balanced scorecard begins to trace the achievement of financial goals one step back -- that is, to the customers and/or recipients of the services provided by the organization whose resources support it. Here is a useful brief summary of the approach:
Niven, P. (N.D.) Customer perspective. EPM Review. Retrieved May 17, 2010, from http://www.epmreview.com/Resources/Articles/Customer-Perspective.html
Analysis of customers sounds like a no-brainer -- so obvious that it should be taken for granted. However, in practice, it's actually particularly complicated -- and therefore often done superficially or neglected altogether in favor of memories, convenient abstractions, unshakable prejudices, or other non-data-based strategic assumptions. Doing it right involves acknowledging the diversity of customers, their widely varying needs and resources, and the entire economic climate within which they function. Kaplan, one of the gurus of the balanced scorecard, has an interesting discussion setting forth both why this perspective is necessary and how complicated it can become:
Kaplan, RS (2005) A Balanced Scorecard Approach To Measure Customer Profitability. Working Knowledge. Harvard Business School. Retrieved May 17, 2010, from http://hbswk.hbs.edu/item/4938.html
The example in this case is an assessment of this aspect of the balanced scorecard in three small to medium sized companies. Here's how this process has been described:
Although 50 percent of Fortune 1000 companies currently use a balanced scorecard (BSC), few small businesses are using a BSC. A review of the literature finds no BSC papers in leading small business/entrepreneurship journals. This article begins with a discussion of the BSC and why a small business should use it. Three small to medium-sized enterprise (SME) case studies are presented, with a copy of their BSC, to illustrate how Hyde Park Electronics, Futura Industries, and Southern Gardens Citrus use a BSC to set strategy and align operations to achieve breakthrough results. Implications are, that like large businesses, SMEs can also benefit from using a BSC. Entrepreneurs of SMEs can use the case studies to develop their own BSC to improve performance. Implications for practice and research are discussed.
The article from which this summary is taken can be found here:
Gumbus, A. and Lussier, RN. (2006) Entrepreneurs use a balanced scorecard to translate strategy into performance measures. Journal of Small Business Management. 44(3):407-426. Retrieved May 17, 2010, from http://proquest.umi.com/pqdweb?sid=1&vinst=PROD&fmt=6&startpage=-1&clientid=29440&vname=PQD&RQT=309&did=1074432261&scaling=FULL&vtype=PQD&rqt=309&TS=1226877391&clientId=29440
Analyze how these companies implemented the balanced scorecard and its apparent effects.
1. Introduction: On what specific customer perspectives did each company focus, and what measures did each company use to ascertain how well it was meeting the goals implied by those specific perspectives?
2. Analysis: In your opinion, are these measures truly "customer-centric" as described in the background reading by Barber? Why or why not? Defend your position. Use your readings to help you decide whether the improved performance was due to viewing the company from the perspective of their potential, prospective, and/or present customers.
3. Conclusion: From the companies' point of view, do you think their effort to evaluate the business from the customer's perspective was the KEY contributor to improved performance? If so, defend your position. Or was another perspective more important? If so, which one was the KEY contributor? Defend your position.
4. Evaluation: Identify at least one measure you would have included that they omitted. In other words, how could you have improved on their approach?
1,042 words© BrainMass Inc. brainmass.com June 4, 2020, 12:46 am ad1c9bdddf
The Balanced scorecard is the management tool which most of the Fortune 500 companies are using. While large companies are increasingly moving towards BSC approach to implement operational strategies, BSC is still to gain momentum with small companies. All three SME's, Hyde Park Electronics, Futura Industries, and Southern Gardens Citrus (SGC) have fewer than 250 employees and have used BSC and also benefitted from it.
Hyde Park Electronics: The Company employs 42 people with a management staff of 8 people who designed the BSC. The company transformed from being a seller of custom machine controls to a narrow customer base with 3 sales field executives. A new technology wave change the way business was done; penetration sales model was adopted and focus changed to product development. It was at this time that BSC was introduced. There was a lot of data but little information could be derived from it. The BSC initially focused on financial metrics since the company was strong in this area. However, the team felt that these measures were all short-term focused and lacked the long-term direction without customer orientation. Hence efforts were directed towards customer satisfaction which would result from product acceptance and thus would generate repeat customers. The outcome of the initiative was measured tracking sales, delivery time, and measurement of employee performance.
Futura Industries: The culture at Futura was every individual was expected to contribute to the success of the company as well as success to the customer. The company maintained a high standard of employees who stood for trust, integrity, contribution, and interdependence. The BSC focused on two important parameters through which ...
The balances scorecards perspectives are examined.