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2. In a learning and growing organization, where the culture encourages people to make suggestions and question the status quo, a steady flow of new ideas arises from the rank-and-file employees. These ideas are vital to the future of the organization, because they come from the experts - the people who are involved with the business processes on a daily basis.
This insight about employees traces back to Deming, who saw the vital need for managers and shop-floor supervisors to listen to workers' complaints and empower them to make suggestions and improvements. Conversely, an organization that stifles or ignores new ideas from its employees is probably doomed. The balanced scorecard, using efforts such as employees' surveys and analysis of training data, is able to measure the degree of learning and growth, allowing leaders to assess the potential for long-term success.

3. Improved business processes lead to improved products and services. For example, if an improved process saves time, this results directly in a shorter delivery time to the customer - something that any customer will appreciate. In the government context, cost reduction is also always of importance to the customer, because the customer is the sponsor of the whole organization's budget - direct and overhead. The balanced scorecard measures customer satisfaction, and improving processes produces it.

4. Finally, improved customer satisfaction leads to loyal customers and increased market share, which directly affect the bottom line - whether that line equals profit, ROI (return on investment) or ROCE (return on capital employed) in the private sector, or NOR (net operating result) or IOH (overhead) in the public sector.

Note that the four steps in the causal chain are also the four perspectives of the balanced scorecard in its original formulation. This shows the basic reason why the perspectives (and their underlying metrics) are defined as they are. Any modifications to the metrics should take into account the hypothesis that is being proposed as the cause of long-term strategic success.

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* Contributed by: -
Dr. R. P. Verma,
Ex. H.O.D. & Dean, Commerce and Business Management Dept.,
Arabinda Bhandari,
Strategic Management Researcher,
Ranchi University, Ranchi.