DISCUSSION BOARD 1 2
Discussion Board 1: The Balanced Scorecard and Strategy Map
Key Concept Explanation
The Balanced Scorecard (BSC) and Strategy Map methodology was developed by Drs.
Robert Kaplan and David Norton in 1992 (Priliska et al., 2023). These concepts are essential
tools for strategic management in business. I took particular interest in this topic purely out of
academic curiosity. It is a topic I have not extensively researched in my academic career. The
balanced scorecard translates an organization's vision and strategy into a comprehensive set of
performance measures organized into four perspectives: Financial, Customer, Internal Business
Processes, and Learning and Growth. Priliska et al. (2023) explains that “by monitoring and
measuring organizational performance from multiple perspectives, companies can ensure that
they achieve long-term success and generate value for customers and shareholders (p.1484).”
This framework ensures a balanced approach to performance management, linking short-term
actions with long-term goals.
A strategy map complements the balanced scorecard by visually representing the cause-
and-effect relationships among strategic objectives within these four perspectives. It illustrates
how value is created by the organization, showing how improvements in learning and growth
lead to better internal processes, which in turn enhance customer satisfaction and drive financial
success. According to Priliska et al. (2023) essentially “the purpose of applying the strategy map
is for the company to know the achievements of each company unit in the process of achieving
company goals (p.1484).”
Comparison
The extensive discussion on the Balanced Scorecard and Strategy Maps significantly
differs from the course textbook primarily due to the inclusion of empirical studies and real-
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world implementations. Unlike the textbook summary, these studies delve into aspects such as
cognitive biases, strategic causal relationships, and the practical implications of strategy map
adoption in managerial decision-making. They provide an understanding beyond theoretical
frameworks covered in the course textbook. This empirical approach enhances the research's
applicability and relevance in practical contexts. They offer deeper insights into how these
frameworks are applied in actual organizational settings like the Iron and Steel Company that
Eftekhari & Rorabi (2022) followed and studied. The article, “A quantitative methodology to
enhance a strategy map” by Moraga et al. (2020) used the Balanced Scorecard and Strategy Map
concept but introduced a different methodology called DEMATEL to receive even better results
from our text concept. The methodology was used to improve the identification of causal
relationships of an existing strategy map of a company. The paper advocates combining both
qualitative and quantitative maps to ensure strategic coherence. This approach is positioned as a
novel contribution, addressing gaps in existing literature that often assumes quantitative maps
alone are sufficient without validating their conceptual alignment with managerial
understanding.
Article Summary
The article, “The balanced scorecard: Do managers need a strategy map when evaluating
performance?” written by Kerry A. Humphreys differed from other articles because the author
conducted an experimental study by manipulating the presence of a strategy map but not actually
implementing the concept for a company. This study investigates whether managers, when given
both narrative strategy information and a strategy map, develop a deeper understanding of
strategic causal relationships than those provided only narrative information. A strategy map
visually represents the causal relationships between strategic objectives, aiding managers in
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understanding and aligning their actions with the organization's goals. The findings suggest that
the presence of a strategy map enhances managers' comprehension of these relationships, leading
to more balanced performance evaluations and overcoming the common measures bias
(Humphreys, 2023, p.4358). The addition of a strategy map alongside narrative strategy
information is found to enhance managers' understanding of strategic causal relationships,
facilitating a more accurate mental model of organizational strategy. This understanding persists
beyond immediate decision-making tasks, potentially improving performance in dynamic and
complex scenarios. The study underscores the balanced scorecard’s role in promoting a shared
organizational strategy among employees and suggests that while not essential for every
judgment, strategic causal knowledge benefits other balanced scorecard-based decisions.
Biblical Integration
The balanced scorecard and strategy map, when viewed through the lens of God's law,
emphasize holistic stewardship, accountability, and purposeful action in alignment with biblical
principles. Three biblical verses illustrate this relevance. First, Proverbs 16:3 (ESV, 2001)
teaches “commit your work to the Lord, and your plans will be established.” The balanced
scorecard encourages committing every aspect of business (financial, customer, internal
processes, and learning) to a strategic plan. By aligning these elements with God’s principles,
businesses can trust that their efforts will be established and blessed. Second, Colossians 3:23-24
(ESV, 2001) states that “whatever you do, work heartily, as for the Lord and not for men,
knowing that from the Lord you will receive the inheritance as your reward. You are serving the
Lord Christ.” This verse speaks to the internal perspective of the balanced scorecard,
emphasizing excellence in work and service. By integrating this mindset, businesses can ensure
that their processes and operations reflect dedication to God's glory, fostering integrity and
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excellence. Finally, Matthew 25:21 (ESV, 2001) preaches “His master said to him, ‘Well done,
good and faithful servant. You have been faithful over a little; I will set you over much. Enter
into the joy of your master.’” The learning and growth perspective of the balanced scorecard is
about stewardship and growth. This verse highlights the importance of being faithful stewards of
the resources and talents entrusted to us, which aligns with continuous improvement and
development in business.
Application
The Balanced Scorecard and Strategy Map concepts were applied to an iron and steel
company in Iran, which is part of a larger holding company in the Middle East, to improve
strategic management and achieve organizational goals. The process began by outlining the
necessity and benefits of the balanced scorecard and strategy mapping methods, followed by a
review of relevant research. The case study focused on defining the company’s strategic
objectives through a structured, four-phase approach. Eftekhari & Torabi (2022) listed the phases
as the following: 1) presenting the strategic statement of the holding; 2) presenting the strategic
statement of the company; 3) determining strategic aspects, and 4) developing the strategy map
(p.58).
The resulting strategy map, used as the company’s strategic document from 2014 to 2020
and approved by the CEO in October 2020, led to significant improvements in sales and net
profits. Sales increased by 30%–96% and net profits rose by 21%–99%. This demonstrated the
effectiveness of the balanced scorecard and strategy map in optimizing the realization of
strategic goals and driving substantial business growth.
Annotated Bibliography
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Cokins, G. (2020). The Strategy Map and its Balanced Scorecard.KEDPACS,K61(3), 1–16.
https://doi.org/10.1080/07366981.2020.1750799
This article explores the challenges faced by executives in strategy execution, highlighting the
gap between formulation and implementation. It discusses how the Balanced Scorecard,
pioneered by Drs. Robert S. Kaplan and David Norton, addresses this issue by translating
strategy into actionable metrics (KPIs) that align managerial actions with organizational goals
beyond short-term financial results. It critiques the lack of consensus and understanding
surrounding BSC implementation, questioning whether it will encounter similar adoption hurdles
as activity-based costing (ABC). The abstract emphasizes the need for strategic clarity and
effective measurement in organizational performance management (EPM/CPM), suggesting that
mere dashboard monitoring may not suffice without actionable insights and outcomes.
Eftekhari, A., & Torabi, A. (2022). Drawing a developed strategy map in balanced scorecard
model in an iron and steel company. IEEE Engineering Management Review, 50(3), 58-
69. https://doi.org/10.1109/EMR.2022.3192247
This study explores the application of the Balanced Scorecard (BSC) and Strategy Map to
develop a strategic management framework for an iron and steel company in Iran, part of a larger
holding company in the Middle East. The research highlights the necessity and benefits of BSC
and strategy mapping methods and provides a comprehensive analysis of their application within
the company. This research is relevant to scholars and practitioners in strategic management,
particularly those interested in the application of BSC and strategy mapping in the manufacturing
sector. It provides practical insights into how these tools can be adapted to specific industry
contexts and the impact of external factors on strategic planning and implementation.
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Humphreys, K. A. (2023). The balanced scorecard: Do managers need a strategy map when
evaluating performance? Accounting and Finance (Parkville), 63(4), 4357-4373.
https://doi.org/10.1111/acfi.13097
This annotated bibliography reviews research examining the impact of strategy maps on
performance evaluation using the balanced scorecard framework. The study explores how the
provision of a strategy map influences managers' understanding of strategic causal relationships
compared to narrative strategy information alone. It identifies that managers who receive a
strategy map demonstrate enhanced strategic knowledge, mitigating the common measures bias
observed in performance evaluations. The research underscores the importance of strategic
clarity and visual representation in aligning performance measures with organizational strategy,
contributing to more informed decision-making and improved performance evaluation practices
(Humphreys & Trotman, 2011; Chen et al., 2016; Rotaru et al., 2020).
Moraga, J. A., Quezada, L. E., Palominos, P. I., Oddershede, A. M., & Silva, H. A. (2020). A
quantitative methodology to enhance a strategy map. International Journal of Production
Economics, 219, 43–53. https://doi.org/10.1016/j.ijpe.2019.05.020
This article reviews a methodology proposed to enhance the identification of causal relationships
within a company's strategy map using a multi-decision criteria approach. The study highlights
the strategy map as a crucial component of the balanced scorecard framework, emphasizing its
role in organizing strategic objectives across different perspectives and establishing cause-effect
relationships. The research addresses the gap in existing literature by integrating a quantitative
method, specifically the Decision-making Trial and Evaluation Laboratory (DEMATEL), with
qualitative strategy mapping approaches typically based on managerial judgment. It illustrates
the application of this methodology in a manufacturing context, demonstrating its effectiveness
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in refining and improving strategy maps to better align with organizational goals (Moraga et al.,
2020).
Priliska, A. D., Kurniadewi, M., & Winarno, F. S. (2023). Building Competitive Advantage
Through Strategy Map and Balanced Scorecard in Improving Company Performance.
Devotion: Journal of Community Service, 4(7).
https://doi.org/10.59188/devotion.v4i7.520
This article describes a qualitative research study focusing on PT. TA, a heavy equipment rental
company in Central Java. The research identifies strategic challenges such as product
dependence, low efficiency, and high costs, proposing strategies like market expansion and
product diversification. It emphasizes the need for improved production processes and
technology to enhance competitiveness. The study recommends adopting a Balanced Scorecard
(BSC) to align strategy with operations effectively. It explores how the BSC can monitor and
integrate business aspects, ensuring strategic goals are met. The research underscores the
importance of strategic clarity and performance measurement in sustaining long-term business
success.
Additional References
ESV.org. (2001). ESV Bible. https://www.esv.org/
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