The Business Model Canvas and the "Balanced Scorecard"

In my last Blog post, I was (and I continue) looking for some way of measuring "business value" for a Crown corporation at both the strategic (portfolio) and project levels of analysis.

I've found two articles that are, in my view, worth reading:

The first article struck me, in particular, because the Crown corporation that I'm working with is currently using the Balanced Scorecard system.

When you look at what the Balanced Scorecard measures, it breaks down to:

  1. Financial
  2. Customer
  3. Internal Business (Processes)
  4. Learning and Growth

I am now trying to "map" these measurement perspectives to the Business Model Canvas.

  1. It seems clear that the Financial perspective, in the Balanced Scorecard model, is the same one that Alex's model defines (i.e. Revenues Streams and Cost Structure).
  2. It seems equally clear that the Customer perspective, in the Balanced Scorecard model, is the same one that Alex's model identifies as the Client perspective.
  3. Internal Business (Processes) perspective seems very similar to the Activity perspective in Alex's model except perhaps for the "Partners" consideration which is not highlighted within the Balanced Scorecard model.
  4. Learning and Growth "includes employee training and corporate cultural attitudes related to both individual and corporate self-improvementincludes employee training and corporate cultural attitudes related to both individual and corporate self-improvement". Reference

It's this fourth perspective that seems ellusive. One could argue that it's a meta-level perspective to the entire model within Alex's canvas since it talks about "culture". One cold argue that it's part of the "activity perspective"; more specifically learning activities that can be defined within the Key Activities consideration.

Notably the Balanced Scorecard does not appear to measure anything related to the Value perspective in Alex's model. Or does it?

I look forward to your comments.

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Comment by Martin Fanghanel on August 29, 2011 at 3:17pm

The Balanced Scorecard is a tool to translate the strategy into operational terms and to measure the progress of its implementation, not so much to create it. The BMC is (at least for me) a great tool to formulate new strategies. The moment you design a new business model you must have a tool to translate the BMC into operational terms. The Balanced Scorecard is the tool to do that.

The latest book from Kaplan and Norton (the best one)  “The Execution Premium: Linking Strategy to Operations for Competitive Advantage” shows all steps in how to plan and execute a strategy (Strategic planning + strategic execution) but does not show how to innovate successfully in a the Business Model. My succession is to use the BMC to create new strategies and implement the new strategy with the Balanced Scorecard.

Comment by SK Jeon on August 9, 2011 at 10:21pm

I think it's a good real world approach to use both methods,

My immediate idea is that the BSC modified the numbers(quantitative) scorecard to include qualitatives, so to map the BSC to BMC, the learng and growth can be matched to key activities, key resources, key partners and cost structure, and then you may ask the Crown and the customers it is strongly related to the value propostion as to either activities, resources, partners or cost. I think you want reverse engineer the crown's business model from the BSC as it is the business measurement and then you may try to find the effectiveness and efficiency of the each bulding block to improve the business. Based on my experience I'd suggest you may let the Crown do the job as you being the coach.

Comment by Mike Lachapelle on June 2, 2010 at 12:57pm
@Nicholas: That is a excellent observation. Let me add another corruption I have recently experienced. An organization with whom I am currently working listed BSC as a 'financial management' tool. Their logic was built around the belief that the core component of the BSC is the financial outcomes to be achieved. I tried to disabuse them of this notion by showing them the government perspective in which the financial component is not and end (goal) but a means (enabler). The core outcomes of the public service is client satisfaction, not profit. In that environment the financial component drops to the bottom layers of the BSC as part of the enablers; same as the capacity (knowledge) component.
Comment by Kenneth McGrath on June 1, 2010 at 9:35pm
@Nicholas: Good point! The client I am dealing with has been using the BSC to measure not to strategize. What I need is to ensure that they're getting project-level metrics for IT that supports their model and can be related back to their scorecard.
Comment by Nicolas De Santis on June 1, 2010 at 9:33pm
Juts a comment that might come useful in my use of the BSC: Some organizations turn to the Balanced Scorecard in an effort to formulate their strategy. This is a mistake, one that can derail your implementation efforts, since the tool was designed specifically to translate strategy, not create it. Best Nicolas
Comment by Kenneth McGrath on May 31, 2010 at 4:02pm
@ Martin: Can you please elaborate on your approach or maybe send me an example off-discussion so I can see how you're doing this? If you can't because of client or company confidentiality reasons, no worries. I'm trying to do what you're doing. My off-discussion (direct) e-mail is so feel free to contact me there.
Comment by Martin Fanghanel on May 30, 2010 at 4:14am
I use the Business Model Canvas to determine the business strategy (great tool, great results) and transfer the results to the Balanced Scorecard (Strategic Map, Goals, Indicators, Projects, strategic actions) and employ a Balanced Scorecard software to manage and execute the strategy.
Comment by Kenneth McGrath on May 27, 2010 at 6:16pm
@Mike: Once again thanks. This is awesome help.
Comment by Mike Lachapelle on May 27, 2010 at 5:36pm
Since the original conversation was a bout the Balanced Scorecard approach let me add to this discussion by including and example of a strategy map which was used in the transition from BM innovation to implementation of changes.

Having created a new (to-be) business model for procurement, we had to make the transition to the projects to implement and track the changes to achieve the innovations. The intermediate stage was to develop a Strategy Map, based on the balalnced scorecard approach. see below.

The first thing you see is that in a government environment the financial layer is not an end (goal) but actually a means (enabler), so we drop the layer to the bottom of the map. In delivery of the business the most important driver is satisfying the needs of the client. On the left of the map you have the objectives established for each of the layers. In each of the layers there are sub-elements to be considered, e.g. in processes - changes to operational processes or client interaction processes or regulatory driven processes.

From this map we can then identify the required projects to deliver that strategy and track those projects in whatever portfolio management approach you take. The project portfolio layer is where the Balanced Scorecard comes into play. You can track and measure performance of each of the projects.
Comment by Kenneth McGrath on May 27, 2010 at 4:05pm
@Mike: Thanks. This is very clear. Diagrams always seem to help (me at least).

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