The second major advantage Of the balanced scorecard approach to control is that it minimizes the chances of suboptimization,which occurs when performance improves in one area at the expense of decreased performance in others. Jon Melines,Chief medical director at Duke Children’s Hospital ,says, “we explained the [balanced scorecard] theory to clinicians and administrators like this – if you sacrifice too much in one quadrant to satisfy another,your organization as a whole is thrown out of balance. We could,for example, cut costs to improve the financial quadrant by balance. Or we could increase productivity in the internal business quadrant by assigning more patients to a nurse , doing so would raise the likelihood of errors-an unacceptable trade-off. Likewise,Toyota’s president, Akio Toyoda, admits that the company’s all-out-push to become the world’s largest car maker might have come at the expense of product quality,bloated inventories,and huge financial losses. As a result,he has vowed to rebalance Toyota’s priorities.
The second major advantage Of the balanced scorecard approach to control is that it minimizes the chances of suboptimization,which occurs when performance improves in one area at the expense of decreased performance in others. Jon Melines,Chief medical director at Duke Children’s Hospital ,says, “we explained the [balanced scorecard] theory to clinicians and administrators like this – if you sacrifice too much in one quadrant to satisfy another,your organization as a whole is thrown out of balance. We could,for example, cut costs to improve the financial quadrant by balance. Or we could increase productivity in the internal business quadrant by assigning more patients to a nurse , doing so would raise the likelihood of errors-an unacceptable trade-off. Likewise,Toyota’s president, Akio Toyoda, admits that the company’s all-out-push to become the world’s largest car maker might have come at the expense of product quality,bloated inventories,and huge financial losses. As a result,he has vowed to rebalance Toyota’s priorities.
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