The concept of the Balanced Needs Scorecard was invented by Kaplan and Norton to help companies recognize the importance of measuring performance in a balanced way by measuring inputs as well as outputs. For example, profit is an output, whereas money spent on improving productivity is an input that increases profit. Similarly, money spent on improving customer satisfaction, research and development, leadership development, and community involvement are inputs that ultimately result in improved financial performance.
If you are currently monitoring performance of your company only in financial output terms then it as if you are driving a car without any instruments on the dashboard except a rear view mirror. Financial results only tell you about the past. They do not tell you about the state of the future. Only when you set goals and measure inputs for all categories of the scorecard do you get an idea of how you might improve your financial performance in the future.
Successful companies set goals and objectives for each category of their scorecard and closely monitor their progress.
The model of the Balanced Needs Scorecard was created by Richard Barrett and is described in "Liberating the Corporate Soul: Building a Visionary Organization."
The model of the Balanced Needs Scorecard differs from Kaplan and Norton's model in two important ways:
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