Who's Counting?

Getting Started

Scorecarding starts with selecting company goals, then translating those goals into specific, concrete measures. For instance, a company with a goal of making on-time deliveries might set a measurable, specific objective of having 95 percent of its deliveries arrive within 24 hours of the agreed-upon time.

As for deciding what to measure, there are two schools of thought. One says to score only financial achievements such as sales increases; the other says to include nonfinancial matters such as customer satisfaction.

Norton and Kaplan suggest a balanced approach that scores four areas. Financial scores cover such things as revenue growth and profitability. Customer scores include rankings for market share, customer acquisition and other similar matters. Learning and growth scores aim to help manage employee turnover, productivity and the like. Finally, an internal business process score is concerned with product development, innovation and so on.

But before you apply these categories to your company, keep in mind that no company's scorecard will be exactly like another's. That's because the areas that are scored should be determined by a company's specific markets, strengths and strategies.

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This article was originally published in the July 1998 print edition of Entrepreneur with the headline: Who's Counting?.

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