The Balanced Scorecard (バランススコアカード) is a management framework that splits a company's strategy into four perspectives (learning and growth, internal business process, customer, and financial), sets goals and metrics for each, and evaluates performance from several angles.
Learning and growth
Internal business process
Customer
Financial
Financial: customer support turns into sales and profit.
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A perspective (視点) here means an angle from which performance is viewed. Financial figures such as sales and profit show past results but say nothing about the state of the people and systems that will produce future results, so three non-financial perspectives are added to keep things in balance. The perspectives are assumed to form a chain of cause and effect: learning and growth improve operations, better operations raise customer ratings, and those ratings lead to financial results.
AnalogyLike a car dashboard that shows not just the speedometer but also the fuel and temperature gauges, so you see how the car is running now and any early signs of trouble ahead.
How to remember"Balanced" is in the name: picture a scale with four pans, kept level so the financial pan never outweighs the rest.
Exam points
ExamThe four perspectives are the financial (財務) perspective plus three more: customer (顧客), internal business process (業務プロセス), and learning and growth (学習と成長). The aim is to plan strategy and evaluate performance with non-financial measures as well, instead of leaning on short-term financial results.
ExamGoals and metrics are sorted into perspectives by what they represent. The quality and efficiency of internal work go under internal business process, value delivered to customers, customer ratings, and market position go under customer, and staff skills and know-how go under learning and growth.
BSC is the abbreviation formed from the initials of Balanced Scorecard (バランススコアカード) and refers to the same framework.
Starting from the company's vision and strategy, a strategic goal is set for each perspective, the deciding factor for success (CSF) is identified for each goal, and each goal is then given a metric, a target value, and concrete actions. In this way an abstract strategy is broken down into actions that front-line teams can work on every day.
How to rememberA "scorecard" is a report card: think of one graded in four columns, not just the financial one.
Exam points
ExamBSC is a management method that covers more than drawing up strategy: it also evaluates the results of execution with each perspective's metrics and feeds that evaluation into the next round of strategy.
A CSF (Critical Success Factor, 重要成功要因) is the deciding factor that determines whether a strategic goal succeeds or fails.
Many factors affect whether a goal is reached, but to concentrate limited resources, you narrow them down to the few that matter most. A CSF is not a number but a factor stating what must go right for success, and only once it is fixed are a metric and target value set to measure how well it is achieved.
AnalogyLike a marathon runner chasing a target time who realizes the real key is putting in enough training mileage not to slow down in the second half.
How to rememberThe F stands for Factor. Check the last letter: CSF alone ends in a factor, not an Indicator.
Exam points
ExamCSFs are identified after the strategy is drawn up and its strategic goals (戦略目標) are set, as the keys to achieving each of those goals.
ExamHow well a CSF is achieved is evaluated with metrics or analysis that directly reflect the state of that factor. If the CSF is meeting delivery dates, for example, you track the share of orders delivered on time.
A KGI (Key Goal Indicator, 重要目標達成指標) is a metric that expresses, as a number, the final result a strategy or activity must achieve.
Stating by when, what, and how much in numbers lets anyone judge whether the goal has been met. Once the end point is a number, the deciding factors and metrics set afterward can be worked out backward from it.
AnalogyLike setting a marathon target of finishing within four hours.
How to rememberG is for Goal: the metric that tells you whether you broke the finish tape.
Exam points
ExamA KGI is a number that directly represents the state in which the goal has been achieved. If the goal is to grow membership, for example, the net gain in members over the period is the KGI.
A KPI (Key Performance Indicator, 重要業績評価指標) is a metric that measures how far the activities toward a goal have progressed.
KGI: net gain in members
CSF: drawing many people to trial sessions
KPI: trial-session attendance
Revise the actions
Track the KPI during the period and adjust how the sessions are promoted and run.
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A KPI captures, as numbers, the activities and conditions that come before the result, and one is set for each CSF. Tracking it week by week or month by month lets you spot delays and act without waiting for the end of the period.
AnalogyLike logging your weekly mileage to check how your training is going toward a target finishing time.
How to rememberP is for Performance: the metric that watches how you are doing day to day, before you reach the goal.
Exam points
ExamA metric that measures how the means of reaching a goal are being carried out is called a leading indicator (先行指標), and one that measures how much has been achieved is called a lagging, or outcome, indicator (結果指標).
ExamKPIs are not limited to company-wide business goals; they are also set for goals defined for a specific area, such as an information systems strategy (情報システム戦略), to measure progress toward them.
Mix-upEven the same kind of number can fall on either side, depending on how it relates to the goal. If it represents the state in which the goal is achieved, it is a KGI, and if it represents the state of the means or activities leading there, it is a KPI.
Value Engineering (バリューエンジニアリング, VE) is a method that treats the value of a product or service as the ratio of its function to its cost, and raises it through a set procedure.
Function
Cost
Value (function ÷ cost)
Unchanged
Lower
Rises
Raise
Unchanged
Rises
Raise
Lower
Rises sharply
Raise sharply
Raise slightly
Rises
Value, being a ratio, rises if you cut cost without losing needed functions, or raise function by more than cost goes up. Function here means what the user actually needs the product to do, and cost likewise means the total expense as seen from the user's side.
AnalogyLike choosing an umbrella not just by the price tag but by how many years it will last and what repairs will cost, comparing whether it does enough to justify what you pay.
How to rememberPicture a fraction with function on top and cost on the bottom: the smaller the bottom and the bigger the top, the higher the value.
Exam points
ExamIn VE, value (価値) is determined by two elements, function (機能) and cost (コスト), and is expressed as value = function ÷ cost.
ExamThe cost compared in VE is the total expense from when the user acquires a product, through its use, until its disposal: the life cycle cost (ライフサイクルコスト).
The Balanced Scorecard (バランススコアカード, BSC) sets goals and metrics from four perspectives, adding customer, internal business process, and learning and growth to the financial one, so that performance evaluation and strategy execution do not lean on finances alone.
A CSF is the deciding factor for success identified for each strategic goal, and it is a factor, not a number.
Goal management is built in this order: the KGI turns the end point into a number, the CSF narrows down what decides it, and the KPI tracks the state of that factor during the period.
Value Engineering (バリューエンジニアリング) expresses value as function ÷ cost, and the cost includes everything up to disposal after use.