USING THE BALANCED SCORECARD AS A STRATEGIC MANAGEMENT-SYSTEM

As companies transform themselves to compete in the world of informati on, their ability to exploit intangible assets is becoming more decisi ve than their ability to manage physical assets. Several years ago, Ro bert S. Kaplan and David P. Norton introduced the balanced scorecard, which supplemented traditional financial measures with criteria that m easured performance from the perspectives of customers, internal busin ess processes, and learning and growth. The scorecard enabled companie s to track financial results while monitoring progress in building the capabilities they would need for growth. Recently, some companies hav e gone further and discovered the scorecard's value as the cornerstone of a new strategic management system. Traditional management systems rely on financial measures, which bear little relation to progress in achieving long-term strategic objectives. The scorecard introduces fou r new processes that help companies connect long-term objectives with shout-term actions. The first - translating the vision helps managers build a consensus around the company's strategy and express it in term s that can guide action at the local level. The second - communicating and linking-lets managers communicate their strategy up and down the organization and link it to unit and individual goals. The third busin ess planning - enables companies to integrate their business and finan cial plans. The fourth-feedback and learning - gives companies the cap acity for strategic learning, which consists of gathering feedback, te sting the hypotheses on which strategy was based, and making the neces sary adjustments.