Combining Value-focused Thinking and Balanced Scorecard to Improve Decision-making in Strategic Management

Goal orientation is key to strategic management. In this field, the Balanced Scorecard is one of the most widely used management tools. It structures a company's main objectives from different perspectives based on the strategy of the firm and uses performance indicators to measure the achievement of objectives and strategy. However, its method of creation is not theoretically sound. Value‐focused thinking is a decision‐making philosophy that fits perfectly with Balanced Scorecard creation. It provides methods and techniques for the identification and structuring of objectives that are suitable to systematically derive a scorecard from a means‐ends network. However, such a means‐ends network is often too complex for enduring use in strategic management. By adapting the network's structure to the Balanced Scorecard's layout, the profound and clear set of derived objectives and their measures serve as a reasonable basis for applying methods of multi‐criteria decision‐making in an organization. This paper aimed to outline a procedure that merges the Balanced Scorecard and value‐focused thinking by preserving each concept's strengths while eliminating their weaknesses. A six‐step process was developed theoretically and employed empirically in a case study. This process included (1) identifying objectives; (2) structuring objectives; (3) characterizing clusters of objectives; (4) formulating mission, vision, and strategy; (5) designing the scorecard; and (6) monitoring and adapting to change. On the basis of this approach, a Management Scorecard was produced that enabled strategy development and execution, put forth a clear and comprehensive means‐ends network, and visualized a company's most important objectives and their relationships structured through perspectives roughly following the Balanced Scorecard. It acts as a foundation for research to generalize and compare findings regarding goals of organizations. Our procedure demonstrates how scientific methods, such as value‐focused thinking, can yield benefits to practitioners' instruments, like the Balanced Scorecard, and how management tools can likewise improve scientific methods.