In this section, we focus on the final step of the five-step decision-making process—implement the decision, evaluate performance, and learn—by tracking changes in time-based measures, evaluating and learning whether these changes affect financial performance, and modifying decisions and plans to achieve the company’s goals. We use the structure of the balanced scorecard perspectives—financial, customer, internal business processes, and learning and growth—to summarize how financial and nonfinancial measures of time relate to one another, reduce delays, and increase the output of bottleneck operations.
To see the cause-and-effect linkages across these balanced scorecard perspectives, consider the example of the Bell Group, a designer and manufacturer of equipment for the jewelry industry. A key financial measure is to achieve a higher profit margin on a specific product line. In the customer-measure category, the company sets a goal of a 2-day turnaround time on all orders for the product. To achieve this goal, an internal-business-process measure requires a bottleneck machine to be operated 22 hours per day, 6 days a week. Finally, in the learning-and-growth measures category, the company trains new employees to carry out nonbottleneck operations to free experienced employees to operate the bottleneck machine. The Bell Group’s emphasis on time-related measures in its balanced scorecard has allowed the company to substantially increase manufacturing throughput and decrease customer-response times, leading to higher revenues and increased profits.
Managers use both financial and nonfinancial measures to manage the performance of their firms along the time dimension. Nonfinancial measures help managers evaluate how well they have done on goals such as improving manufacturing cycle times and customer-response times. Revenue and cost measures help managers evaluate the financial effects of increases or decreases in nonfinancial measures, such as manufacturing cycle time and customer-response times.