Balance scorecard method

Knowledge Management

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The concept of knowledge measurement

An increasingly popular approach to measuring an organisation’s performance, and one that is being widely adopted in knowledge management, is the balanced scorecard. The advantage of this approach in knowledge management terms is that it directly links learning to process performance, which in turn is linked with overall organisational performance. Developed by Kaplan and Norton, the balanced scorecard focuses on linking an organisation’s strategy and objectives to measures from four key perspectives: financial, customers, internal processes, and learning and growth. In contrast to traditional accounting measures, the balanced scorecard shifts the focus from purely financial measures to include three key measures of intangible success factors. These roughly equate to the three components of intellectual capital – namely human capital (learning), structural capital (processes), and customer capital. The four perspectives can be framed as follows:
 Financial: How do we look to our ‘shareholders’ (or governing bodies)?
 Customer: How do our patients see us? Are we meeting their needs and expectations?
 Internal processes: What do we need to do well in order to succeed? What are the critical processes that have the greatest impact on our patients and our financial objectives?
 Learning and growth: How can we develop our ability to learn and grow in order to meet our objectives in the above three areas?
This knowledge management, which is about learning and growth, is measured as an integral and yet distinct part of overall organisational performance. The balanced scorecard approach can be applied to individual initiatives as well as to a whole organisation.