Page 38 - Performance Leadership

Chapter 2 Traditional Performance Management • 27

view, but that the metrics also show how the organization is
viewed by the customers
• Business process perspective: How effective and efficient are our
processes? Processes need to be efficient so that the costs can be
managed. Equally important, processes need to be effective so
that the customers’ needs are served. Proper management of
day-to-day operations ensure the short-term health of an
organization.
• Learning/growth perspective: How able are we to learn and
adapt? Investing in human capital (skills), information capital
(insight) and organizational capital (ability to change) is
necessary in order to be successful in the long-term.

It is widely estimated that more than 50 percent of large enterprises
use a balanced scorecard in some shape or form. Several publications
even mentioned the balanced scorecard as one of the most influential
management concepts of the twentieth century. This may be a slight
overstatement, but it is clear that the balanced scorecard is here to stay.
One of the reasons why the balanced scorecard is such a recognizable
tool is that it describes something fundamental, regardless of the indus-
try or geographic location in which you are situated. In order to be suc-
cessful and have a healthy bottom line, you need to have your shop in
order and keep your customers happy. And to make sure it stays that
way, you need to adapt to changes in your environment. These cause-
and-effects are described with a strategy map. Figure 2.4 shows the strat-
egy map of a U.S.-based retail company.
This retailer has one overall strategic objective: it wants to be the
world’s leading retailer at the $1 price point. In the area of learning and
growth, the retailer believes that the key to sustainable success is to
develop good information systems (LG1), to invest in employees by
providing training so that they will stay with the company for a long
period of time (LG2), and to cultivate the culture (LG3). With good
information systems and people that are experienced in the business,
the retailer believes that in the area of business process it will be able
to know its customers and be able to predict what they want (BP5).
Another effect of well-performing people and systems is that the retailer
saves significant time and costs when opening new stores (BP4),