Balanced Scorecard Linked to Shareholder Value: Making the Numbers Count

摘要

The "balanced scorecard" (BSC), popularized by Kaplan andrnNorton, has become widely recognized both as a performancernmeasuring vehicle and as a strategy communications tool.rnTypically, 20 to 25 measures (performance drivers and/orrnindicators) are chosen for the BSC—to align people, processesrnand investments with the company's strategy. New "dashboard"rntype software enables an attractive BSC presentation.rnBecause of data accessibility, BSC measurements are almostrnuniversally historical or current data.rnMore importantly than lag measures, what decision-makersrnneed are forecasts. And credible forecasts are generated from arnMonte Carlo simulation of the company, industry, and economicrnenvironment. The BSC process merges "management byrnobjectives" with the "system dynamics" modeling approach.rnSystem dynamics offers the best process for enterprisernmodeling, yet this link is generally missing from BSC implementations.rnThe stochastic company model is also the meansrnfor optimizing the asset and project portfolios and for tuningrninvestment decision policy.rnMost corporate executives acknowledge that the sole orrnoverarching objective is maximizing long-term shareholderrnvalue. This paper describes an approach for incorporatingrnshareholder value and related key forecasts into the BSC.rnShare value is approximated by forecasting the company's freerncash flow with the company model.rnResolving the discount to get from expected monetaryrnvalue to market capitalization presents some interesting issues.rnShare value is tracked and forecast, so people in the companyrncan answer, "Are we creating or destroying shareholderrnvalue?"