NRI Papers
No.71   December 1, 2003
  Using the Balanced Scorecard in Reforming Corporate Management Systems  
Toru MORISAWA and Hiroshi KUROSAKI
       In recent years, using the balanced scorecard (BSC) methodology, a system which enables organizations to measure and manage corporate performance, has been rapidly attracting a great deal of attention in Japan as in other countries. However, not all Japanese companies have achieved success in introducing this technique. According to a questionnaire survey conducted by the Nomura Research Institute, Ltd. (NRI) in June 2003, about one-third of the 35 companies that responded to questions about the introduction of the BSC approach reported that they felt "Dissatisfied, as it left much to be desired." Therefore, unless appropriate measures are taken to correct these deficiencies, the concept may simply collapse under the weight of a growing number of failed cases in Japan and be regarded in the future as little more than a passing fad. As identified in the survey, the major requirements for the successful introduction of the BSC methodology can be summarized in the following areas: (1) clarifying the objectives for its introduction; (2) securing a firm commitment by top management for its introduction; (3) increasing the level of the understanding in organizations in which the BSC is introduced; (4) fostering BSC experts both in organizations where it is introduced and the BSC implementation office; and (5) especially in the early stages of its introduction, requiring that such leadership sections not give up the operating reins. In order to achieve success in introducing the BSC methodology and to enable it to fully display its effects in creating corporate value, it is necessary to do away with the current preoccupation with the idea of "budgetary supremacy" in such analyses. Indeed, the BBM concept (i.e., beyond budgeting model) being advocated as the new approach to corporate management in Europe transcends the conventional framework of budgetary management systems, and we believe this approach will further accelerate the trend towards value-based management in Japan.
Contents
I The Balanced Scorecard Boom
  1 Framework of Performance Measurement and Management
  2 Status of Introducing the BSC at Japanese Companies
II Is Success Being Achieved Through the Introduction of the BSC?
III Five Decisive Measures in Success or Failure
  1 Clarifying the Purpose of the Introduction
  2 Commitment by Top Executives to the Introduction of the BSC
  3 Increasing Awareness and Understanding of Organizations Where the BSC is to be Introduced
  4 Fostering BSC Experts at Both the BSC Implementation Office and the Organizations in Which the BSC Will Be Introduced
  5 Requiring the BSC Implementation Office Not to Give Up the Operating Reins (Especially in the Early Stages of Its Introduction)
IV Budgetary Supremacy that Prevents Value Creation by BSC
  1 Too Much Weight on Financial Viewpoints
  2 Relationship Between Budget, Performance Projections and Performance Evaluation Standards
  3 Three Steps to Overcoming the Current Status
  4 New Trends from Europe
V Metrics, BSC and Beyond Budgeting Model

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