Kaplan and Norton co-created the Balanced Scorecard to address, amongst other things, the lagging nature of Financial Management. They presented a leading management system that looks into leading factors that are affecting performance, to allow managers to intervene before it is too late. The idea was to balance between short term and long term objectives, financial and non-financial measures, lagging and leading indicators, and between external and internal perspectives. It includes five principles:
- Principle One: Mobilize Change through Executive Leadership.
- Principle Two: Translate Strategy to Operational Terms.
- Principle Three: Align the Organization to the Strategy.
- Principle Four: Motivate to Make Strategy Everyone’s Job.
- Principle Five: Govern to Make Strategy a Continual Process.