Linking the Balanced Scorecard to Strategy Alan Butler, Steve R. Letza and Bill Neale "Effective measurement must be an integral part of the manage- ment process. ''~ "What you measure is what you get."2 These two edicts by Kaplan and Norton encapsulate the philosophy which is the driving force behind many companies' attempts to overhaul their per- formance measurement systems. Of course, it is a tru- ism to say that effective management depends on the effective measurement of performance and results. However, it is increasingly becoming accepted that 'traditional' measures centred on financial criteria are inadequate for the contemporary business environ- rnent. :~ Attention to a wider range of measures related to quality, market share, customer and employee sat- isfaction can yield a greater insight into the factors which drive financial performance. Most crucially, a shortfall in these non-financial performance mea- sures may provide an early warning of an impending shortfall in financial performance and enable timely remedial action to be taken in order to moderate the damage to the financial results. Yet the protection of short-term financial per- formance is by no means the main driver behind the search for a more complete set of performance measures. Broader performance measurement sys- tems are increasingly seen as a device for delivering long-term strategic objectives. The heightened interest among both academics and practitioners in performance measurement has stem- med from a confluence of factors. First, the observation that successful companies both elsewhere in Europe and also in the Far East seem to place less reliance on narrow financial criteria than those in the so-called 'Anglo-Saxon' countries 4 and pay more attention to long-term strategic issues. 5 Second, the rise of the Total Quality Management (TQM) movemenP drew the attention of managers to the importance of focusing on the customer and to providing quality products and services as a means of maintaining competitive advantage. TQM, of course, has both an internal, or process, focus and also an external, or service, focus. 7'8 Third, Johnson and Kaplan's work 9 on the alleged failings of conventional management accounting drew attention to over-dependence on financial num- bers by managers schooled in the Dupont and similar systems. Fourth, the 'revolution' in information technology has facilitated the collection, access and interpret- ation of a vast amount and range of information. It is not entirely clear why concentration on fin- ancial criteria should necessarily militate against suc- cess, yet observations that leading companies in the ~ Pergamon PII: SOO24-63O1(96)0O116-1 Long Range Planning, Vol. 30, No. 2, pp. 242 to 253, 1997 © 1997 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0024-6301/97 $17.00+0.00