Balanced Scorecard - The Four Perspectives

The Four Perspectives

The 1st Generation design method proposed by Kaplan and Norton was based on the use of three non-financial topic areas as prompts to aid the identification of non-financial measures in addition to one looking at Financial. Four "perspectives" were proposed:

• Financial: encourages the identification of a few relevant high-level financial measures. In particular, designers were encouraged to choose measures that helped inform the answer to the question "How do we look to shareholders?"
• Customer: encourages the identification of measures that answer the question "How do customers see us?"
• Internal Business Processes: encourages the identification of measures that answer the question "What must we excel at?"
• Learning and Growth: encourages the identification of measures that answer the question "How can we continue to improve and create value?".

These 'prompt questions' illustrate that Kaplan and Norton were thinking about the needs of small to medium sized commercial organizations in the USA (the target demographic for the Harvard Business Review) when choosing these topic areas. They are not very helpful to other kinds of organizations, and much of what has been written on Balanced Scorecard since has, in one way or another, focused on the identification of alternative headings more suited to a broader range of organizations.