Proposing a basic methodology for developing balanced scorecard by system dynamics approach

Abstract

Purpose – Successful future has inspired organizations to measure long-term and non-financial measurements and key performance indicators (KPIs). Kaplan and Norton proposed balanced scorecard (BSC) for this issue and have extended it to one of the most preferred strategic management system’s tools. However, available planning tools like BSC have some limitations, like dependency to the developer, weakness in showing time delays, and also mathematical relationships between lead and lag indicators. In this paper, the authors would present a new methodology for developing BSCs, which would be able to overcome these limitations. Therefore, the purpose of this paper is to develop an integrated framework for developing BSC with system dynamics approach (a dynamic BSC (DBSC)) which has lower limitation in compare with traditional BSC. The other purpose of this paper is developing a DBSC for an Iranian public transportation company. Design/methodology/approach – Based on this purpose, related literature was thoroughly reviewed and the proposed methodology designed using the system dynamics and BSC concepts. This methodology is a composition of original BSC development methodology and system dynamics principles. An assumed organization has been used for showing methodology’s capability and procedure. Furthermore, a case study has been accomplished in this paper. This case study is a DBSC which has been developed for an Iranian public transportation company. The purpose of this case study is to ensure about proposed methodology implication in action. Findings – The authors proposed a methodology which can be applied for developing BSCs. This methodology consists of six different steps which are: developing a system for organization, selecting stakeholders’ most important objectives and target, identifying organization’s objectives and their KPIs for different BSC aspects, developing strategy map, targeting, and selecting initiatives. In the proceeding of this paper, the proposed methodology and its steps would be explained in detail. Originality/value – The system dynamic approach has precedents in business studies; however, this research makes this approach operational in BSC designing and analysis. BSCs, which developed by this methodology can show time delays between an organization’s objectives, its KPIs’ relationship and also planning for it. Selecting achievable and rational vision and objectives’ targets, change management, scenario planning and policy analysis are other values which can be achieved by DBSC deployment which need further researches. In summary, this research has shown an integrated framework for developing DBSC and then applies it to an Iranian public transportation company. Therefore, another contribution of this paper is the application of this method for an Iranian public transportation company.

Assessing the Effects of Climate Change Regulations on the Business Community: A System Dynamic Approach

“…In general terms, this paper proposes a four step methodology for constructing simulation models so as to investigate the behavior of a particular system, namely (a) problem definition, (b) qualitative analysis of the system, (c) quantitative analysis of the system and (d) scenario design and analysis process (Figure ). These steps are in accordance with the methodological issues discussed in the system dynamic literature (Yim et al , ; Vlachos et al , ; Sterman, ; Barnabè, ; Khakbaz and Hajiheydari, ).…”

Using a balanced scorecard to manage corporate social responsibility

“…A conventional PMS is oriented towards financial measures such as operating profit, revenues, or costs to gauge their organizations' performance (Elgazzar, Tipi, Hubbard, & Leach, ). However, given the growing competitive pressures and shifting external demands, nonfinancial measures have gradually superseded the traditional PMS in the wake of the weaknesses of those approaches (Achterberg, Beeres, & Vriens, ; Khakbaz & Hajiheydari, ; Taylor & Taylor, ). The importance of contemporary PMS usage in alleviating the problems of traditional financial indicators and also helping organizations in reaping competitive benefits has been widely acknowledged by both practitioners and academics (Kaplan & Norton, , , , 2006, 1992).…”

Toward a dynamic balanced scorecard model for humanitarian relief organizations’ performance management

“…We developed our conceptual DBSC following the methodology proposed by Khakbaz and Hajiheydari (2015). Towards this end, we implemented the following two phases for developing the model, as illustrated in Figure 2:  In Phase 1 (Section 2), we analyzed the literature to identify the KPIs of the humanitarian supply chain related to the four perspectives of BSC.…”