Introduced by Robert Kaplan and David Norton in 1992, the balanced scorecard (BSC) has left an indelible mark on performance measurement. The BSC is a performance measurement framework that goes beyond financial metrics, taking into account the other aspects of a company’s value creation process.
Traditionally, managers would measure performance through the limited lens of financial returns, even in the wake of introducing new strategies that might not be measurable through mere financial metrics. The BSC, on the other hand, measures performance across four perspectives, each one answering a critical question: Customer (How do customers see us?), Internal (What must we excel at?), Learning and Growth (Can we continue to improve and create value?), and Financial (How do we look to shareholders?).
The BSC’s holistic and forward-thinking approach is making a notable impact on the tech industry due to its dynamic nature. The development and deployment of new technologies occur at such a rapid pace that traditional performance measurement frameworks can’t catch up. Since the BSC looks at performance from several perspectives, companies that use it are more aware of their current strengths and opportunities for improvement, making it easier for them to adapt to fluctuating circumstances and emerging trends.
Apple’s BSC Indicators
A prime example of a tech company that uses the BSC to its advantage is Apple. A prominent player in the tech industry, Apple wanted to shift focus strictly from financial performance (measured by gross margin, return on equity, and market share) to a more overarching, holistic approach. To accomplish this, the company established a small steering committee that had in-depth, firsthand experience with the deliberations and strategic thinking of the Apple Executive Management Team. This committee then developed a BSC that measured performance according to five indicators that aligned with the four perspectives of the BSC. This approach is outlined in an article written by Norton and Kaplan themselves, from which the following discussion is drawn.
For the customer perspective, Apple used customer satisfaction and market share. For internal processes, the company chose core competencies. For learning and growth, Apple emphasized employee attitudes—specifically, commitment and alignment. Lastly, under the financial perspective, the company focused on shareholder value.
Customer Satisfaction
Customer satisfaction sits among the top of Apple’s priorities, but that wasn’t always the case. Previously, the company had its eye almost exclusively on its technology and products. In the 1980s, Apple’s mission was “to make a contribution to the world by making tools for the mind that advance humankind.” The company’s values have since shifted from technology (i.e., tools) to a more seemingly altruistic, people-centric perspective. This was evident when Apple decided to develop its own customer surveys instead of working with third parties, recognizing the diversity of its customer base.
Market Share
Market share is another essential indicator, especially for a company in the tech industry. This is due to the fact that, by acquiring as much of the market as it can, Apple not only increases its profits but also attracts and retains more software developers.
Core Competencies
Under Apple’s BSC, the company’s employees are expected to possess core competencies, such as creating user-friendly interfaces, powerful software architectures, and effective distribution systems. However, many Apple leaders believe that measuring the impact that these have is a complex task. Over time, the tech company has experimented with quantitative measurements to see if enabling employees in this fashion can nurture their skill sets.
Employee Commitment and Alignment
Apple believes employee commitment and alignment are important. In line with this, they conduct a thorough employee survey for every organizational branch every two years. Random employee surveys are done more frequently. The questionnaires aim to determine how well each employee comprehends the company’s overall strategy and whether they are delivering results that contribute towards accomplishing that strategy.
Shareholder Value
Apple views shareholder value as a performance indicator, despite it being a performance result instead of a driver. Doing so enables the company to offset its former reliance on measuring performance via gross margin and sales growth, which did not take into account investments that would bear fruit in the future.
Did Apple make the right choice? It appears so, as the company’s use of the BSC has yielded several net positives throughout the years. It has dominated the market, consistently ranking among the top five smartphone vendors in the world since 2009. The company has also frequently ranked at the top of the American Customer Satisfaction Index, holding the number one spot for two years in a row (2021 and 2022). Moreover, Apple also holds a very high employee satisfaction rating on Glassdoor, with many of its employees praising its culture and values—indicative of the company’s strong employee commitment and alignment. Like many large companies, Apple has also faced its share of challenges. However, its ability to adapt is reflected in its progress, demonstrating the beneficial impact of the BSC.
Another major shift in the business landscape today that’s also reflected in Apple’s recent efforts is sustainability. The need to incorporate sustainability into the BSC can no longer be ignored. Beyond being a responsible choice, it is a strategic move to stay competitive, as today’s consumers increasingly favor brands that align with environmental values.
Although Apple has not publicly disclosed an updated version of its BSC that incorporates sustainability, its recent results—such as achieving carbon neutrality for corporate operations in 2020 and generating 20% lower carbon emissions in 2023 compared to 2022—are evidence of the company’s commitment to sustainable practices.
Harness the Power of the BSC
Whether you’re a consultant or the owner of a small, medium, or large organization, knowing the ins and outs of a BSC and how it can best be used to propel an organizational entity to a higher level of performance is paramount. As such, The KPI Institute offers the Certified Balanced Scorecard Management System Professional, along with resources like templates and webinars, for those looking to deepen their knowledge of the BSC, from design and implementation to managing key performance indicators (KPIs) within the framework and how its components work.
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Editor’s Note: This article was originally published on September 10, 2021. It has been updated as of May 2, 2025, with the help of Paolo Orduña, Senior Editor at The KPI Institute.
Considering innovation as a system and having a goal to embed it within one’s organization is neither an easy task nor an impossible one. If this is the primary objective, and if this aligns with the consensus of all stakeholders, it becomes crucial, before commencing any actions, to adopt a mindset focused on innovation, akin to how one concentrates on developing the organizational direction to enhance revenue and profit.
This implies that to succeed, the same level of effort and methodology must be directed towards developing the organizational strategy and executing the most effective and efficient innovation methods. This involves clarifying the purpose, establishing the right mission (the reason behind the initiative and the desired impact), and defining values (principles guiding all stakeholders). Internal environmental analysis (identifying organizational strengths and weaknesses related to capabilities, resources, assets, skills, and competencies) and external environmental analysis (recognizing external opportunities and threats) are also crucial. Subsequent steps include performing SWOT analysis (aligning external opportunities and threats with internal strengths and weaknesses), conducting scenario planning (suggesting strategic scenarios based on SWOT analysis alignment to set necessary objectives), and identifying value drivers (features distinguishing the value generated from the innovation strategy).
Based on the aforementioned, it’s imperative to create a vision (the long-term goal for the innovation system), establish SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound) objectives, select appropriate and balanced key performance indicators (KPIs), develop sound and aligned initiatives (supporting the achievement of selected KPI targets and objectives), and consequently, disseminate the entire innovation strategy throughout the organization at all levels.
Consequently, all stakeholders must align themselves, identify their needs and expectations, and determine how to meet these through the innovation strategy. Subsequently, they should proceed with the execution process, understanding and acknowledging the clear alignment between the innovation strategy and the organizational strategy.
It is essential to view the innovation strategy as a core success domain for the organization, understanding that progress, improvement, and profit growth are interdependent with the innovation system. Moreover, it’s crucial to ensure the involvement of all stakeholders in this system, while embedding continuous improvement as the primary driver in maturing the system over time. Similar to excellence, innovation maturity is an ongoing journey that continually brings added value, which should be appreciated and built upon.
The fourth industrial revolution has commenced. Linking it with innovation, transformation, future forecasting, and future change is pertinent, as they are all directly driven by and enabled by data management. Nowadays, the primary infrastructure for any company worldwide transitions from physical premises and branches to the cloud, where data are structured, organized, and interconnected, drawn from various sources such as customer interactions, product and service utilization, service and product development phases, defect management, product degradation, input and output resources.
This transition highlights that numerous data sources have been in place, yet not all have been utilized, analyzed, and transformed into information and knowledge. The shift towards big data and the advancements in artificial intelligence and conditional monitoring have changed the landscape. Decisions are now based on data, not just analyzed to reflect the current state but also organized and correlated to predict the future, facilitating decisions that secure not only the present or short-term future but also the long-term future.
This evolution underscores the importance of starting with the development of the right architecture to link various data sources, leveraging their mutual support and integration for greater benefit. It involves embedding in this architecture the correlation of data from different sources to build new components in the system architecture, adding value to the overall system. Understanding this aspect emphasizes the need to benefit from all data sources and install more sensors in development processes, products, streets, houses, cars, and everywhere, moving towards a products-as-a-service paradigm and eventually achieving the end goal of a planet-as-a-service, where data from everywhere are fed, analyzed, and used to identify new information and knowledge for the benefit of all.
The case study “Apple’s Future: Apple Watch, Apple TV, and/or Apple Car?” narrates Apple’s journey focusing on three products: smartwatches, smart TVs, and smart cars. It highlights how Apple has targeted the market and addressed customer needs to increase global market share and profit while enhancing the brand image. While this approach appears commendable, it aligns with the traditional viewpoint that continuous profit growth sustains a business.
However, from an alternative perspective, Apple has consistently aimed to shift from the red-ocean to the blue-ocean strategy, moving away from competition. The increasing number of competitors, open-source software, and global innovations necessitates larger leaps. Apple’s success also stems from co-creating value with its customers, understanding their needs, and embracing innovation and change.
Another facet is that Apple’s current endeavors represent a short-term strategy aimed at long-term value generation and delivery. Data serves as the primary driver, with all products and services yielding valuable data. This contradicts the notion that customers don’t know what they want; rather, it underscores the importance of understanding customer pain points and co-creating value with them.
Apple’s products evolve based on collected data and usage behaviors, generating new value with each iteration. The incorporation of health data into products like the smartwatch and analyzing consumer behaviors allows Apple to add value beyond traditional usage scenarios. Ultimately, Apple’s strategy mirrors a child playing a PlayStation game, controlling and directing the world.
While this may seem daunting and scary, proper use of data-driven strategies can benefit everyone, provided they are employed ethically and responsibly and not end up as Mikhail Kalashnikov puts it: “The fact that people die because of an AK-47 is not because of the designer, but because of politics.”
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About the Author
Malek Ghazo is a seasoned Senior Management Consultant with over 14 years of experience in the realm of organizational excellence (EFQM, 4G, Malcolm Baldrige), performance management, strategy planning/execution, and sustainability/CSR management. Throughout his career, he has cultivated expertise in developing benchmarking studies on an international scale. His clientele primarily consists of both public and private sector entities, to whom he provides invaluable services in organizational excellence, strategy planning and agile execution, KPIs and performance management models development and deployment, as well as EFQM model adoption and implementation. Geographically, Mr. Ghazo has dedicated his efforts to Europe (with a focus on the UK) and the Middle East, particularly in KSA, UAE, Qatar, and Jordan. Currently, he is engaged in pursuing his PhD at the University of Pécs in Hungary, with a focus on exploring the correlation between circular economy and organizational excellence and sustainability, aiming towards global sustainability.
Editor’s Note: This article was originally published on March 26, 2024 and last updated on September 17, 2024.
