How do we relate the balanced scorecard to strategic planning and performance evaluation?
• Including measures reflecting strategic objectives allows balanced scorecard measures to be used to evaluate how managers are creating long-term value. Strategic decisions relate to the long-term plan for value creation. To insure we are following the long-term plan we need multiple measures. Financial measures alone are lag indicators of value. Financial measures show the final results of business activities. Nonfinancial measures tend to be lead indicators of value. If customer satisfaction is declining, then profits will eventually decline. Thus, the nonfinancial measures on the balanced scorecard provide more timely information on changing value. How are the additional nonfinancial perspectives in the balanced scorecard related to making value chain management more visible? • Customers determine the value given to goods and services. Thus, one perspective focuses on customers. The internal value chain influences value by managing processes that provide goods or services to custom
