Management System by Kaplan and Norton that Focuses on Financial and Operational Measures

909 WordsFeb 19, 20184 Pages
What you measure is what you get” – In the journal ‘The Balanced Scorecard – Measures that drive performance’ by renowned professors, Kaplan and Norton (1992), a new management system was introduced to a peripheral perspective economic industry. Past the industry era, traditional financial performance measures such as return-on-investment and earnings-per-share were deemed no longer competent in the ever-changing market. The view of focussing on either financial or non-financial perspectives alone were regarded as one-dimensional and ignorant of other crucial factors in both the company and the market. In 1992, Kaplan and Norton introduced a revamped management system that focusses on not only the financial measures of a company, but also the operational measures. This system comes after a realisation that no single measure can provide a vivid performance target on the critical areas of a business. The system provides managers the platform to view the business from four vital perspectives; Customer, internal, innovation and learning, and financial perspectives. These perspective are interdependent, they collaborate to form an efficient system that can track flaws in the companies to improve and hence provides a clearer target for companies. The companies view the perspective from customers objectively, by doing so they can understand what customers want or do not want. This insight then allows the company to tweak on their internal processes to provide such services.
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