Critics of The Balance Scorecard
I summarized these opposing views from Art Kleiner's January 2002 article "What
Are the Measures That Matter?" in 'strategy+business' magazine.
Professor Kaplan (Harvard) is the most visible figure behind Activity-Based
Costing (ABC) and the Balanced Scorecard, which come from accounting
He sees both as full-scale cultural changes tools, to break down the
implicit barriers between finance - accounting and operations. ABC
to gather cost data from a system perspective. It parses costs among
projects, processes, and products. Its goal is to the cut more accurately
the non-value added activities than traditional cost accounting can.
It helps financial folks see what operators see. The Balanced Scorecard
the team accountable. The Balanced Scorecard is high quantitative on the
supply side. It's an update of management by objectives. (Peter Drucker
In April 2004, Norton and Kaplan and Steven R. Anderson wrote the Havard Business Review "Time-Driven Activity-Based Costing":
In the classroom, activity-based costing (ABC) looks like a great way to manage a company's limited resources. But executives who have tried to implement ABC in their organizations on any significant scale have often abandoned the attempt in the face of rising costs and employee irritation. They should try again, because a new approach sidesteps the difficulties associated with large-scale ABC implementation.
In the revised model, managers estimate the resource demands imposed by each transaction, product, or customer, rather than rely on time-consuming and costly employee surveys.
Professor Johnson (Portland State University in Oregon) argues that using
microeconomics (ABC) to drive management decision-making has been a
since the 1950s. Too many MBAs make decisions entirely from quantitative
information, rather than from explicit, detailed knowledge of how a
works and customer wants. He blames the troubles that mainstream companies
get into -- for example, the current predicaments of the U.S.'s big three
on the misuse of measurement. Companies should focus on the 'means,'
e.g., designing a production system that makes errors visible and correctable
the moment they occur, rather than enforcing targets and goals. Error
counts will naturally get lower. The 'ends' would take care of themselves.
Robert S. Kaplan's book with consultant David P. Norton, "The
Balanced Scorecard: Translating Strategy into Action" Harvard
Business School Press, 1996.
H. Thomas Johnson's book with with Swedish consultant Anders Bröms,
Beyond Measure: Extraordinary Results through Attention to Work and People"
Simon & Schuster Inc., Free Press, 2000