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Sven C. Voelpel
International University Bremen, Bremen, Germany, and Harvard University, Harvard Business School, Boston, Massachusetts, USA
Marius Leibold
University of Stelknbosch, Matieland, South Africa
Robert A. Eckhoff
EMPRISE Consulting Group, Dusseldorf, Germany, and
Thomas H. Davenport
Babson College, Wettesley, Massachusetts, USA
Abstract
Purpose - To trace the rationale, features, development and application of the Balanced Scorecard (BSC) over the past ten years, to provide a critical review of its key problematic effects, and to suggest a future direction.
Design/methodology/approach - The shift from the industrial to the innovation economy provides a background to identifying five major problem areas of the BSC which are then discussed with reference to selected case examples. An alternative systemic scorecard is then proposed.
Findings - The tyranny of the BSC as a measurement "straightjacket" is beginning to jeopardize the survival of firms, hinders much-needed business ecosystem innovation, thereby negatively affecting customer value rejuvenation, shareholders' benefits, other stakeholders as well as societal benefits in general. A more systemic alternative is proposed.
Research limitations/implications - Future research might focus on further development ofthe systemic scorecard in different industries and organisational settings with detailed systemic measurement techniques.
Practical implications - Rather than relying on the static BSC, it would be more effective to adopt a systemic perspective in measuring/managing intangible assets.
Originality/value - An alternative to the BSC is proposed that involves radical change in its underlying assumptions by moving to a more systemic, dynamic framework - a systemic management system, including a systemic scorecard.
Keywords Balanced scorecard, Innovation, Intellectual capital
Paper type Research paper
The authors wish to thank the anonymous reviewers, Stephan Abée and David O'Donnell as well as participants in the intellectual capital stream at the 4th International Critical Management Studies Conference in July 2005, Cambridge University, UK, for their valuable contributions and discussions.
Introduction
When introduced by Kaplan and Norton (1992; 1996) the Balanced Scorecard (BSC) represented an innovative approach to measuring a firm's performance. Instead of just measuring the financial results of a firm, the important and logical causal factors for financial outcomes were identified and included in an expanded and "balanced scorecard'. Others had previously proposed the measurement of firm performance in non-financial terms (see Eccles, 1991), but this was the first time that performance measurement...