155LIMITATIONSOFBALANCEDSCORECARDMarkoRilloTallinnTechnicalUniversityTheobjectiveofthisarticleistofollowcertainaspectsofBalancedScorecardthathaveprovenproblematicandhavedemonstratedthattheinitialmodelelaboratedbyKaplanandNortonisnotasflawlessasduringthelasttenyearsthemostauthorshaveclaimed.Alsosomeaspectsofpossiblereductionoftheseproblemsareshortlyanalysed.ShortintroductionofBalancedScorecardTheobjectiveofBalancedScorecardistotranslateorganisationalvisionandstrategyintoaspecificobjectivesandmeasuresinfourmainperspectives:finances,customers,internalbusinessprocessesandlearning/growth.Managerstodayareactinginsuchacomplexenvironmentthatsettingrightobjectivesandfollowingthemappropriatelyisabsolutelyvitaltoensurethesustainabilityanddevelopmentofanyorganisation.Ithasalsobeendiscussedthatinordertofollowtheobjectivesaccurately,itisveryimportanttomonitortheachievementofthoseobjectivesbyusingasoptimalandasstrategy-focusedmeasurementsystemaspossible.During1985-90leadingtheoristsinthisfieldreachedtheconclusionthatthemeasurementsystemsthattothedatewereconcentratingmainlyonfinancialinformation,werenotsufficientanymoretofulfilthecontrolfunction.OneofthesegroupsthatwereactiveinHarvardBusinessSchoolundertheguidanceofRobertS.KaplanandDavidP.Nortonpublishedin1992theirproposalstotheproblemsthattheyanalysedduringtwoyearsprojectthatleadtointroductionofBalancedScorecardconcept(KaplanandNorton,1992).KaplanandNortonexplain(ibid)thatindividuallynomeasurementcanestablishclearguidanceforaction.Astheorganisations’set-upisinmostcasesverycomplexandneedstofollowseveralfactorssimultaneously,thenitisnecessarytopayattentiontobothfinancialandnon-financialdata.Wemayarguethatalreadyseveralorganisationshadstartedtousenon-financialdataalreadywaybeforeKaplanandNortonhadpublishedtheiropinionsthenBalancedScorecardwas,indeed,thefirsttocapturetheorganisation’sentirestrategyandestablishedmethodologyaccordingtowhichthemeasuresarederivedbylogicalcascadefromorganisation’svisionandmissionandareimplementedfromtopmanagementtothelowesteffectivelymeasuredlevelpossibleintooneholisticset.ManyinternationalresearchprojectshaveshownthatBalancedScorecardconceptisaverypopulartoolaroundtheworld.Atthesametimetogetherwithnumerous156successstoriestherehavebeenalsoseveralcaseswheretheimplementationprojectisnotfinalisedatall.Thereforetheauthorofthearticledecidedtoresearchwhetherthereareanypossiblewaystosummarisetheshortcomingsofthemethodinordertofacilitatefurtherresearchwheretheseshortcomingsmightbeovercome.Tofacilitatethis,theauthoranalysedseveraltheoreticalconceptsfocusingonimplementationofBalancedScorecard.AdditionallyheexaminedseveralalternativeperformancemeasurementmethodstoverifywhethersomeoftheiraspectscouldbeusedinmanagingBalancedScorecard.InadditiontheauthoralsousedhispracticalexperienceinBalancedScorecardprojects,duringhislecturesandusinghisInternetørreklit(2000)claimsthatintherealityKaplanandNortonhavenotdiscussedthecausalrelationshipsintheirpublications(1992,1996a,1996b)withthelevelofdetailnecessary.NørreklitconsiderstheHumecriterionforcauseandeffectrelationshipasabase,whichisdefinedasoneactivityprecedesanotherintime,theyarelogicallyindependent,andaccordingtoempiricalobservationitispossibletoestablishthecausalconnectionbetweenthosetwoactivities.IncriticisingKaplanandNorton,NørreklitarguesthattheBalancedScorecardisastaticmodelwithoutdimensionoftimethatwouldestablishorfollowsequentialset-upofmeasuresofBalancedScorecard,andtherefore,thecausalrelationshipdoesnotfollowthedefinitionbyHume.Furthermore,inbuildingupstrategymapaccordingtomethodpresentedbyKaplanandNorton,cause-and-effectrelationsarebuiltupinasubjectivewaythatdoesnotnecessarilyrefertotimefactor.InspiteofthepieceofevidencethatKaplanandNortonstatethatstrategicobjectivesshouldbedividedintobudgetarymeasuresthatmaybefollowedonatime-relatedbasis(1996a,lk224),itcanbesaidthatobservationofdifferentobjectivesmaybecarriedoutaccordingtoBalancedScorecardmodelonlyafterdifferentintervalsandthemethodofmeasurementjustassuchdoesnotprovideastatisticalproofofcauseandeffect,successionofsupposedlyrelatedmeasures.157CauseandeffectrelationsarenotrelatedinrealityItisalsoquestionable