Balanced performance measurement system for strategic learning

This paper suggests a dynamic balanced scorecard (DBSC) model employing the concept of system dynamics (SD), which could overcome the limitations inherent in the conventional balanced scorecard (BSC) and facilitate strategic learning process in organizations. The BSC has been a succcessful framework for measuring an organization's performance in various perspectives through translating an organization's vision and strategy into an interrelated set of key performance indicators and specific actions. The BSC, while having significant strengths over traditional performance measurement methods, however, has its own limitations, due to its static nature, such as overlooking two-way causation between performance indicators and neglecting the impact of delayed feedback flowing from the adoption of new strategies or policy changes. To overcome these limitations, we employ SD, a methodology for understanding complex systems where dynamic feedback among the interrelated system components significantly impacts on the system outcomes. The SD simulation model in the form of DBSC we suggest in this paper would serve as a useful strategic learning tool for facilitating an organization's communication process through various scenario analyses as well as predicting the dynamic behavior pattern of their key performance measures over a future time frame. For the demonstration purpose, we apply the DBSC model to Korea Coal Corporation (KoCoal) BSC case.