The Balanced Scorecard

THE BALANCED SCORECARD

Chapter Five:

Internal-Business-Process Perspective

THE BALANCED SCORECARD

CHAPTER FIVE:INTERNAL-BUSINESS-PROCESS PERSPCTIVE

Table of contents

PART ONE – A SUMMARY OF CHAPTER FIVE 3
  1.   Introduction 3
  1.1 Definition: Internal Business Process 3
  1.2 Traditional Focus vs. BSC measures 3
  2. The Internal Business Process Value Chain 4
  2.1 The Innovation Process – the long wave of value creation: 4
  2.2 The Operations Process – the short wave of value creation 6
  2.3 The Postsale Service 7
  3.   Critical appreciation of the Balanced Scorecard 7

PART ONE – A SUMMARY OF CHAPTER FIVE

1.   Introduction

1.1 Definition: Internal Business Process

According to Kaplan and Norton internal business processes need to be defined when implementing a balanced scorecard. They define these as processes which are most critical for achieving customer and shareholder objectives. In order to define objectives and measures for these internal processes two requirements need to be made:
a. Objectives and measures for the financial and customer perspective need to be defined since each perspective contributes to the other and they all affect the business’ strategy.
b. Objectives and measures for the IBP-perspective need to be developed.

The linkage between vision, strategy and perspectives can be illustrated as follows:
[pic]
At first a vision needs to be formulated. Afterwards every business needs a strategy to emerge to this vision. The four perspectives contribute to the vision. Nevertheless the IBP-perspective contributes to the financial and customer perspectives since in the IBP perspective it is defined how customer and shareholder objectives/measures can be achieved.

1.2 Traditional Focus vs. BSC measures

Traditionally the focus was most often on attempting to improve existing processes. Kaplan and Norton suggest a completely new approach of the internal business processes consisting of:
A. The...