of financial numbers that generally bear little
relation to the targets in the strategic plan.
Which document do corporate managers discuss
in their monthly and quarterly meetings
during the following year? Usually only the
budget, because the periodic reviews focus on a
comparison of actual and budgeted results for
every line item. When is the strategic plan next
discussed? Probably during the next annual offsite
meeting, when the senior managers draw
up a new set of three-, five-, and ten-year plans.
The very exercise of creating a balanced
scorecard forces companies to integrate their
strategic planning and budgeting processes and
therefore helps to ensure that their budgets support
their strategies. Scorecard users select measures
of progress from all four scorecard perspectives
and set targets for each of them. Then
they determine which actions will drive them
toward their targets, identify the measures they
will apply to those drivers from the four perspectives,
and establish the short-term milestones
that will mark their progress along the
strategic paths they have selected. Building a
scorecard thus enables a company to link its financial
budgets with its strategic goals.