The Balanced Scorecard and the Strategic Learning Process: A System Dynamics Modeling Approach

Abstract

The main purpose of this paper is to improve on the conceptual as well as the methodological aspects of BSC as a quantitative model by combining elements from traditional balanced scorecard (BSC) thinking with the Systems Thinking. This is done by combining short and long term aspects of measurements. The result is then used to build and construct a balanced scorecard model for strategic learning with the specific aim to maintain satisfied customers and motivated employees. Strategic planning, operational execution, feedback, and learning are some of the most important key features of any performance measurement model. This paper aims to address not only the conceptual domain related to BSC, that is, learning and system dynamics causality and feedback, but also the methodological domain concept of precision solved by differential equations. Our results show how a potential move from a static strategic vision map to a linked and dynamic understanding may be not fully realistic but very useful for learning purposes. The new knowledge obtained from the learning feedbacks fertilizes both decision discussion and decision-making and what may be required in order to move to the next level of BSC and system dynamics integration.

Development of a Dynamic Model of Quality Control Circles: A Case of ABC Packaging Company

“…System dynamics is essentially a modelling methodology made up of two basic elements i.e. "Level" and "Rate" (Nielsen & Nielsen, 2015). The technical phase begins with level and rate variables.…”

Reframing business reporting in a Big Data world

“…More specifically, we investigate how the current framework of Performance Management (PM) should change to accommodate the new insights provided by BD&BA. We consider the Balanced ScoreCard (BSC) as being the benchmark framework for performance management, as it is the most used strategic management instrument, capable not only to assess the business as a hole but also to integrate future perspective (Nielson, 2015). BSC, as a model called the "Closed-Loop Management System", was developed in the latest decades as an integrated framework in which KPIs can be connected via statistical tools and models of analysis (Kaplan & Norton 2015).…”

The Role of Managerial Accountants and the Implementation and Monitoring of the Balanced Scorecard Metrics: A Literature Review

“…Based on the above premise, it is evident that financial managers and managerial accountants play a profound role in providing valuable input from a financial perspective to manage organizational performance. However, from a financial perspective, the input of management accountants, is often overlooked when using BSC as an overarching organizational performance measurement mechanism (Nielsen & Nielsen, 2015). According to the contention of the authors, two factors contribute to this problem.…”

“…The financial perspective is one of the four key perspectives in the BSC tool that supports leaders to manage organizational performance from a financial perspective. Recent study findings (Nielsen & Nielsen, 2015) suggest that the financial manager overrides the management accountant in terms of providing input required to measure the financial aspects of the organization. As a result, role conflict between the finance manager and the management accountant is a common phenomenon that exists in many organizations today.…”

“…As a result, role conflict between the finance manager and the management accountant is a common phenomenon that exists in many organizations today. The two factors discussed above, culture and role conflict, leads to the problem of management accountants input, from a financial perspective, being overlooked, when using BSC as an overarching organizational performance measurement mechanism (Nielsen & Nielsen, 2015).…”