Google BSC
The balanced scorecard is a concept used in strategy to bring about a sublime alignment of different stakeholder interests within an organization. The concept arises from the understanding that shareholders are just one of many stakeholders for a given organization. For the organization to sustain success, it must be able to meet the needs of all critical stakeholders. Thus, the most effective strategy will create a symbiosis between the interests of different stakeholder groups. The balanced scorecard is an output-based perspective, with the outputs being in one of four different categories -- financial, internal business process, knowledge and innovation, and customer. This perspective is the opposite of the traditional approach that only places the interests of shareholders (i.e. The financial interests) as important in the business. It is understood, in the balanced scorecard, that financial interests are most effectively met when all of the other interest are met as well. Google is an example of an organization that today is meeting the myriad interests of its critical stakeholders. Google, thus, is a shining example of balanced scorecard-style management, and serves as an excellent case study for understanding the concepts that underlie the balanced scorecard approach.
Four Steps
Kaplan and Norton (2000), the creators of the balanced scorecard, have developed what they see as the optimal four-step process for implementing the balanced scorecard in an organization. The four steps are to watch a variety of metrics, to connect the metrics to strategy, to develop a "strategic budget" and then to involve the organization in tracking the metrics. Each of the categories within the balanced scorecard should have metrics, and those metrics need to be aligned with the overall strategy. The strategic budget concept specifies that the organization should "authorize the initiatives necessary to attain scorecard targets" (Kaplan and Norton, 2000). Measuring the metrics ensures that the metrics play the valuable role in strategic control.
Google -- the Metrics
The financial element of the balanced scorecard is probably the easiest component for most organizations, because all corporations look at financial metrics already. In that sense, Google probably has a number of internal and external metrics. External metrics tend to be highly standardized and widely understood -- revenue, market share, gross income, net income, EBITDA, EPS, share price and a variety of financial ratios. Within these, the company must arguable choose to focus its energies on the most important. Google certainly wants to maximize its revenues, net income, and share price, as these are the basic measures that shareholders look at when evaluating a company.
On these, to this point, Google's performance has been exemplary. The company's numbers are such that they are self-explanatory: A market cap of $381 billion, EPS of $21.02, $59.8 billion in revenue with $12.9 billion in net income (MSN Moneycentral, 2015), 5 of the world's top 20 websites including the #1 (Alexa, 2015), and dominant market share in its industry (eMarketer, 2014).
In terms of internal business processes, the company will have a number of different metrics that it uses. These might not be known to the public. Google will definitely evaluate the efficiency of its ads -- clickthroughs in particular. The company will also have metrics that measure how well it turns over its accounts receivable. Some financial measures, especially managerial efficiency and return measures like return on assets or return on capital employed, would also provide indications of the company's internal business processes.
Knowledge and innovation -- the organizational capacity measures -- are critical for a company like Google. One of the ways in which this company will build for the future is by diversifying its business. To that end, it would probably want to look at non-advertising revenue as a percentage of total revenue. The number of copyrights and patents that it owns -- especially the latter -- will also reflect on its capacity. In many companies, advanced degrees are also a measure, but that is something that Google downplays (Andersen, 2014).
Customer metrics are also critical, as customers are central to the business. Market share, and share growth, are both reflections of this. But Google can also measure repeat customers, average revenue per customer, and it can take polls of customer satisfaction as well, as all of these reflect the degree to which Google is meeting the needs of its customers.
The theory behind the balanced scorecard is that the company will direct its resources...
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