3.2 A Third Approach to Measuring Performance: The Balanced Scorecard

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From the course by University of Pennsylvania

Social Impact Strategy: Tools for Entrepreneurs and Innovators

306 оценки

University of Pennsylvania

Social Impact Strategy: Tools for Entrepreneurs and Innovators

306 оценки

This course offers an introduction to social impact strategy and social entrepreneurship, including key concepts, an overview of the field, and tools to get started as a changemaker. Students will learn how to innovate and design new ideas and new organizational forms to implement those ideas. Students who take this course will be better prepared to launch social impact organizations of their own invention. By moving through four stages, Define, Design, Pilot, and Scale, students will turn their passion for changing the world into concrete plans for launching a nonprofit or for-profit venture designed to achieve a social goal. This course will allow students to systematically think through problems; develop and test an innovative solution; assess risk, competition, and performance; and spread impact in a way that is financially sustainable. Students who complete the course become eligible to apply for an in-person educational experience, called the Global Social Impact House. GSIH is a seven-day residential program that provides fellows with the tools, community and training they need to advance their ventures. Workshops are customized to the needs of fellows and explore advanced concepts in business models, design thinking and leadership. The program is also designed to help fellows build meaningful, global connections while living together in an inspirational host location. For more information on the Global Social Impact House, please visit: socialimpactstrategy.org/residential/gsih

From the lesson

Pilot and Scale

We must test our ideas in the real world, early and often, to determine if they can truly deliver on either their social or financial mission. Learn to build and use the balanced scorecard, a key tool to assess the real-world performance of a social innovation. The scorecard will allow you to measure and articulate both the initiative's current reach and health, as well as the work that is left to be done. An innovation achieves the intended social impact in a way that is financially supportable may be a candidate for scale. Learn to assess whether and how to approach scale for your social innovation.

3.1 Two Approaches to Measuring Performance: Social Return on Investment (SROI) and Ratings6:05

3.2 A Third Approach to Measuring Performance: The Balanced Scorecard4:31

3.3 Examples of Balanced Scorecards7:18

3.4 How to Develop a Balanced Scorecard - Overview2:19

3.5 How to Develop a Balanced Scorecard - Detail7:03

3.6 What is Scale?3:55

3.7 The Importance of Scale in the Social Sector2:15

3.8 Five Approaches to Scale - Overview3:16

3.9 Five Approaches to Scale - Details and Implications5:01

3.10 Approaching Scale Critically4:56

3.11. Carlos and Coco Pilot and Scale (Scorecard, Marketing Matrix, and Customer Segmentation)5:44

Meet the Instructors

Peter Frumkin
Professor
Nonprofit Leadership Program, School of Social Policy & Practice

[MUSIC]

The third option is a little bit different.

It says no, we're going to create a score card or a dashboard,

but we're going to take a much more varied approach.

We're going to say that there are multiple dimensions and we're going to be flexible

across organizations in terms of what the dimensions are and

what the metrics might be.

So here is the earliest formulation of this idea about Kaplan's balanced

scorecard where his insight was that corporations in the for profit side

traditionally focused on financial matrix to assess how well firm was performing.

But Kaplan's point was we need more than that.

Financial metrics tell us on a lagging basis how well an organization performed.

At the end of the year, you look at the money, you see how the profit turned out.

You measure market share, you look at share value.

You look at a whole set of different financial metrics and you get a sense

of how the organization performed, but it's a backward looking perspective.

And Kaplan's insight was that firms need forward looking, leading indicators.

And so he argued that firms should also be measuring consumer

perspectives on the firm.

How well is it that the firm is regarded by consumers?

Do they like the company?

Do they admire it?

Are they satisfied with the products?

And his claim was that consumer perspectives would be leading indicators.

They would tell us where the firm is heading, not where it's been.

Alongside customer perspective, his second addition to the financial basket

beyond customers is an internal business process or quality perspective.

And here the argument was, we need to know how well a firm is doing in terms of

producing consistently high quality products.

If the quality drops off, people are going to ban the company.

So, we need to know how effective is the organization at

consistently producing high quality outputs.

The final dimension that Kaplan added was a learning and growth dimension.

And here, the idea was, we can't just judge how well our organization is doing

by its financial, customer, or quality dimensions alone.

We need to know how it treats the people inside the organization,

how well it's doing at promoting learning and growth among employees and staff.

Because a firm that has and retains the best people is ultimately going to perform

best over a long period of time.

So the main insight here as this third model says,

performance is multi-dimensional.

It has not just one dimension, but multiple dimensions.

And these dimensions are going to look different, potentially,

across different organizations.

Each organization will need to have its own scorecard,

its own set of metrics across different dimensions to assess performance.

This idea, which was born in the corporate sector,

was eventually translated into the social sector into a slightly different model.

And what I'd like to do, is I'd like to drill down deeper into this idea of

a balance score card, and see if we can develop four social purpose organizations,

an approach that's multi-dimensional, flexible.

But the guess to this question, of how do we assess performance accurately?

In sum, there are some challenges and

opportunities when it comes to measuring performance.

First, there's a fundamental asymmetry between the financial metrics and

the social metrics.

We can assess issues related to funding.

We can assess issues related to liquidity.

We can assess financial metrics very, very accurately.

But when it comes to the social metrics, the measures of social impact,

the other metrics tend to get less precise.

And so what happens is, in many social purpose organization is that there is

a focus on the financials because those are the things that can be measured and

the social impact metrics are left behind so

you have to guard against that asymmetry.

Second, measurement of performance requires patience and

a commitment of money.

This is not cheap.

It doesn't happen overnight.

It requires a long-term commitment to serious data-collection.

I do think that performance measurement has multiple benefits.

It can drive increased performance.

It can drive greater funding.

It can drive greater internal alignment.

In sum, performance measurement is a powerful tool for

any social entrepreneur trying to get results.

Let's drill down now into this question of how do you develop a balance scorecard or

dashboard.

[MUSIC]

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