Make Balanced Scorecard a Regulatory Requirement

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Make Balanced Scorecard a Regulatory Requirement
AMOS, Member
I have the view, that the Balanced Scorecard should be enforced as a regulatory requirement for organizations.
It should be part of corporate governance requirement to regulate the strategies employed by management and the board.
It should be part of SarbOx for USA or corporate governance regulatory requirement, 'comply or explain'.
It is because now the emphasis, is on the customer satisfaction and continuous improvement of process, it has a long term profit maximization and competitiveness.

Supporting this Idea
Elife Dilmac, Member
Amos, I am really supporting this idea for the BSC. Before being able to make it a regulatory requirement, government people must be convinced of the benefits of the balanced scorecard.

Balanced Scorecard Unlike Accounting is no Measure
JC Spender, Member
Unfortunately the Balanced Scorecard (BS) is little more than a concept, impossible to articulate as a measure.
GAAP makes accounting seem objective. There are no similar institutional structures for the BS.
In fact, the core of the BS concept, especially obvious when you read Kaplan's history of the BS, is to balance the modernist tendency to try and quantify everything. In a sense the BS is a post-modernist reaction to the quantification/modeling tendency that dominates the analysis of management - as opposed to its practice.
The BS frames the necessary processes of synthesis that the management must enact before profit can be earned under conditions of Knightian uncertainty (check Wikipedia on this). Thus the BS is an attempt to reframe the theory of the firm as an activity only viable under uncertainty. It denies the modernist assertion that the firm is a rigorous maximizing mechanical device - as most business school professors insist. But they have never had to run a firm, of course, or manage anything.

BSC as a Regulatory Requirement
Alexander Guerra, Member
I believe the the BSC has a strong measurement control statement, however the weakness within the BSC is it only gives you the facts, but it doesn't tell you what to do.
I might recommend you to pool at the Hoshin Kanri and box score tools that focus on control management tools and limit the number of KPI's measured instead of having a lot of indicators which not necessary and value for the company or the customer.

Make Balanced Scorecard a Regulatory Requirement
Johnny Michael Tan, Member
Great idea. However, organizations should bot implement the Balanced Scorecard for the sake of compliance, but because it makes their organization and operations excellence a reality.
Indirectly, companies that pursue ISO9002, TS16949, Sarbane-Oxley and other standards are in fact being scrutinized for evidence of performance records and how they measure success.

Essential Principles
Juan Carlos Solis Castro, Member
Most of us have heard some version of the standard performance cliche: "You can't manage what you don't measure nor you can't improve it".
The thing is, many organization have embraced continuous improvements initiatives but without identifying measurements.
Hence the idea to adopt BSC is certain feasible, proven to accurately measure those key cost drivers that are important to achieving the organization's targets.

Balanced Scorecard is not a Measurement System
JC Spender, Member
But first you have to create the value-adding firm... How do you measure that? There is no theory of entrepreneurship, if by 'theory' you mean something like a science.

Difficulties in Making the BSC a Regulatory Requirement
Earle Taylor, Member
The suggestion to make the BSC a regulatory requirement sounds appealing, especially to those that are familiar with the benefits. However, there are some practical difficulties:
1. The BSC is proprietary and will need to be released fully in the public domain.
2. Regulations are mandatory and apply to individuals, businesses, state or local governments and for-profit and non-profit organizations. To get the BSC to regulation status requires significant improvement in methodology and demonstration of the objectivity and repeatability of derived metrics which must be obtainable by anyone that follows the systematic procedures. This implies prescription, which then destroys the model's intrigue for innovation.
3. Notwithstanding the value of the BSC, its use in the public sector is neither wide-scale or fully accepted.
4. Other similar performance-related methodologies such as CAF, MAF, and many others would need to be tested and given equal opportunities.
So while the thought is definitely in the right direction, the reality points us to a more sobering ambition.


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