Completing a strategic plan requires company leaders to identify strategic objectives based on the four perspectives of the “balanced scorecard.” A management tool created by David Norton and Robert Kaplan, the balanced scorecard helps organizations clarify and communicate the top strategic objectives of their business.
Here are the four perspectives of the balanced scorecard often used by for-profit organizations:
1. Finances. Key objectives of many for-profit organizations are building and maintaining financial performance and health. Profit and revenue are the obvious objectives from this perspective, but other objectives, such as increasing profit margins and implementing cost-saving measures, can also be important.
2. Internal processes. Quality optimization, boosts in efficiency, and better internal approval processes are all objectives of internal processes. These objectives help companies deliver their products or services more effectively to customers.
3. Customers. Naturally, customers are hugely important to for-profit entities. As a result, many companies focus on objectives that improve customer satisfaction. Without these customer goals, companies may struggle despite meeting strong financial objectives.
4. People. Also known as the learning and growth perspective, these goals involve nurturing the company culture and skills of the employees. Organizational, human, and information capital are parts of the people perspective.