One of the concepts in the Balanced Scorecard methodology that appeals to many executives or other business decision-makers is the idea of having “leading measures.” After all, nobody wants to be compared to a driver who can only navigate by looking through the rearview mirror. When Dr. Robert Kaplan and David Norton introduced the Balanced Scorecard (BSC) over a decade ago, part of the “balance” that they introduced was balancing the traditional financial measure, which they characterized as lagging measures, with measures that gave a better indication of likely future performance—leading measures.

The Context: Understanding Balanced Scorecard Terminology

The Balanced Scorecard methodology stresses that objectives and measures from multiple perspectives should all be considered. The classic perspectives for for-profit businesses are Financial, Customer, Internal Operations/Processes, and Learning and Growth (which focuses on human capital, technology and organizational culture—the intangible assets that create value). By looking carefully at all four perspectives, organizations can focus on both the causal drivers of performance and the outcomes.

In the Balanced Scorecard, the strategic objectives (often just referred to as objectives) are the stars of the show. Objectives often consist of a verb-adjective-noun phrase. For example, an objective may be something like “Grow International Sales” or “Build Deep Client Partnerships.” These objectives should be linked in cause and effect chains that cross the multiple scorecard perspectives—graphically depicted in what has become known as a strategy map. The following diagram shows objectives linked in cause and effect chains that are part of a strategy map for a software company based in the U.S. that wants to execute a strategy of growing international sales.