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Question

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Business environments are often marked by uncertainty and complexity, meaning that the relationships between and among decisions which impact on a company's financial performance are often times difficult to predict. After reading the Kaplan & Norton articles for the week--particularly the original article on the Balanced Scorecard--how do you think that a formal framework like the Balanced Scorecard (BSC) helps us better understand the elephant which comprises the modern business operation?

i am not able to attach my pdf file here ,i can provide that also , pls need help on this ,thanks

Explanation / Answer

At the heart of the traditional approach to strategy lies the assumption that executives, by applying a set of powerful analytic tools, can predict the future of any business accurately enough to choose a clear strategic direction for it. The process often involves underestimating uncertainty in order to lay out a vision of future events sufficiently precise to be captured in a discounted-cash-flow (DCF) analysis. When the future is truly uncertain, this approach is at best marginally helpful and at worst downright dangerous: underestimating uncertainty can lead to strategies that neither defend a company against the threats nor take advantage of the opportunities that higher levels of uncertainty provide. Another danger lies at the other extreme: if managers can't find a strategy that works under traditional analysis, they may abandon the analytical rigor of their planning process altogether and base their decisions on gut instinct. Making systematically sound strategic decisions under uncertainty requires an approach that avoids this dangerous binary view. Rarely do managers know absolutely nothing of strategic importance, even in the most uncertain environments. What follows is a framework for determining the level of uncertainty surrounding strategic decisions and for tailoring strategy to that uncertainty. Four levels of uncertainty Available strategically relevant information tends to fall into two categories. First, it is often possible to identify clear trends, such as market demographics, that can help define potential demand for a company's future products or services. Second, if the right analyses are performed, many factors that are currently unknown to a company's management are in fact knowable

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