If properly deployed, the Balanced Scorecard (BSC) can be a powerful tool to influence the behavior of people and the culture of an organization. Yet for many organizations, it is merely a half-hearted effort to include some non-financial measurements in their quarterly review process. Busy executive who may have initially generated some activity regarding the Balanced Scorecard can lose interest and shift to the next priority—such as customer relationship management (CRM) or trying to create a customer-focused culture. Too often, the BSC is then regarded just one of a series of “been there, done that” management fads—which is unfortunate, since the BSC could have been instrumental in helping accomplish many of those other priorities. This article focuses on how the BSC can play a valuable contributing role in creating a customer-centric culture and promote improved customer relationships.

Evaluating the Objectives in the Customer Perspective

Furthermore, measures like “Profit per customer” do not contribute much to defining the strategy of an organization, so they provide little help in focusing resources on effectively executing that strategy, which is a key function of the Balanced Scorecard. The measures that end up on the scorecard (if you’re following the best practices of the Balanced Scorecard Collaborative or the Balanced Scorecard Institute) should reflect progress toward critical strategic objectives, which are selected based on how they collectively define a strategy and how that strategy can be implemented. Much of the benefit from the BSC methodology comes from the process of developing the BSC, not just the resulting scorecard. The BSC provides a common set of terminology and a conceptual framework that enables a much more efficient and effective discussion of an organization’s strategy. The critical thinking surrounding the strategy, objectives, measures and initiatives force an organization to address difficult—but very important—issues such as who are they targeting as their customer and what is the unique value proposition they are offering? Strategy gurus, such as Michael Porter, stress that strategy is largely about accomplishing more with less, and that requires focus. Determining what you are NOT is often more important then emphasizing what you ARE going to emphasize as an organization. Trying to be all things to all people is rarely a formula for success in today’s competitive landscape.