The Management Tool that Could - The Balanced Scorecard at 25
Covering just nine pages, the initial article was short on detail and had little supporting evidence for its main assertion - that an organisation would produce better results if its managers had access to a report comprising a small number of financial and non-financial measures. This simple idea, which was accompanied by a suggestion of what appeared to be an easy to master and plausible approach to choosing which measures to use, struck a chord with managers in the USA. International recognition and adoption soon followed - as Harvard Business Review would later note, that original paper quickly became one of the most reprinted articles to ever to appear within the journal.
Until 1995, Balanced Scorecard followed the normal profile of the many transient management ideas that launch through HBR: the authors provided a couple of follow up papers that expanded slightly on the original concept, set up a consulting firm to commercialise the idea, and wrote a book on the topic. However for Balanced Scorecard, the profile changed dramatically after the first book was published in 1996. Rather than gracefully fading away and being replaced by the next big thing, the idea began to develop a life of its own outside of HBR and beyond the work of the original authors.
More than just a flash in the pan
Charting the rise of Balanced Scorecard
To mark its anniversary we thought it would be fun to chart Balanced Scorecard popularity over the years using publication data, on the basis that the number of books and articles published is broadly representative of public interest in a concept.
We started by looking at the volume of articles published in English concerning Balanced Scorecard between 1991 and today - where an article was any form of short printed communication. Our analysis shows that 1995 was the beginning of rapid growth in the volume of published articles; between 1991 and 1995 coverage of Balanced Scorecard was limited and had been growing quite slowly, reaching about 2 articles a month in 1995 (split evenly between ‘trade’ publications and management journals). But between 1996 and 1998 the number of articles rose rapidly to over 300 per year, and this growth continued - by 2014 more articles relating to Balanced Scorecard were appearing per month, than had been published in total between 1991 and 1996!
Wider and deeper
The analysis of papers on Balanced Scorecard above highlights the growth in academic papers on the topic. Between 1991 and 2000, in most years the number of ‘trade journal’ articles exceeded the number of academic papers on the topic. Since 2001, the opposite is true - there were more academic articles each year than trade articles. Trade journal articles are mostly promotional: they typically aim to explain a concept to a wider audience, rather than introduce new thinking on a topic. Academic articles almost by definition do the opposite - they aim to expand our understanding of a topic, but rarely get a wide readership. So this analysis suggests that through until 2000 the bulk of Balanced Scorecard material was focused on communicating the idea - widening awareness of the concept. Since 2000, the focus has been shifting to deepening our understanding of how best to use and apply it. This shift in focus is understandable - by 2000 it is estimated that the majority of US organisations had implemented at least a pilot Balanced Scorecard: awareness at least in that market was high, what people wanted was clearer insights into how best to use it. We also can see this effect illustrated if we look at the books published on Balanced Scorecard over a similar time frame.
The graph shows that things started small - by 2000 there were only five books available (two of which were by Kaplan & Norton, the same authors as the original HBR paper): but in 2001 things begin to change - five new books were published that year, and the total number of books in print has grown steadily since - in 2016 there were about 95 books available. Some of these books are, in the classic tradition of management authors, simple retellings of the content of books written by others. But the “retelling effect” can only account for a small proportion of the total - the bulk of books are focused on specific applications of the tool, either in terms of function or industry. This massive expansion in the number of books available again illustrates the trend that has gone on to ‘deepen’ understanding of Balanced Scorecard over time.
What happens next?
As we have documented elsewhere, during the first decade of its life Balanced Scorecard went through considerable change, changes that were focused almost entirely on finding more effective design methods - quicker, more reliable, more engaging. Since then the focus has moved on - more attention is being paid to understanding how to apply Balanced Scorecard in specific areas (for example, in the Public Sector Scorecards), or to address particular needs based on intended use.
The most recent publications in the list suggest that this pattern will continue for a while longer, as authors look to reuse the proven and reliable mechanisms that Balanced Scorecard has come to embody more widely - whether that be through its application to general topics like strategy execution, or very in specific areas such as Chinese manufacturing plants. Until a few years ago keeping up to speed on Balanced Scorecard required just being familiar with a handful of concepts. But these recent changes in how Balanced Scorecard is understood and applied make this task much harder now - it is not just a handful of concepts, but a whole heap that you need to keep tabs on. That is potentially a lot more work - but fortunately firms like 2GC can take the pain out of this for you: we take the time to be at the forefront of Balanced Scorecard development so that you do not have to!
To support the book analysis above, we created a Balanced Scorecard booklist which we are making freely available, as a searchable database within the resources section on this website.
One consequence of this huge effort to gain greater understanding of Balanced Scorecard has been for it to change - better insights have lead to significant changes in what a Balanced Scorecard looks like, and how it is designed - changes that 2GC has directly contributed to and documented over the years, see our blog and other Balanced Scorecard resources. It has also lead to recognition that how a Balanced Scorecard is designed should reflect how it is likely to be used, recognition that one size / style of Balanced Scorecard most certainly does not fit all.
Balanced Scorecard at 25 - the same, yet better
For a management tool to live within the top 10 tools for two decades is a significant achievement. Balanced Scorecard’s achievement reflects three simple but powerful truths:
- The concept it embodies is a simple one that managers can engage with directly
- When applied, Balanced Scorecard works well enough to encourage organisations to continue to use it
- Over time the concept defined by Balanced Scorecard has been allowed to change.
This practical, flexible approach seems likely to continue: early indications are that even more new books on Balanced Scorecard will be published in 2017 than in any previous year. A fitting future for a tool that has had such an impact to date.