5 years ahead. Shorter-term objectives for 12 months are more likely
to drive the activities at the operational level. However short-term object-
ives have to fall within the overall direction of the longer-term objectives.
Budgets and targets generally are based on these short-term objectives
and are essential for management control. But unless they are developed
within a long-term framework they are not strategic in nature.
According to Aaker (1995) short-term financial measures such as sales,
return on investment and market share are the dominant objectives in
businesses. Even where other objectives exist they are eclipsed by these
quantitative ones. This often leads to a bias in strategic choice towards
squeezing a business and starving it of investing in order to improve the
short-term financial performance. One way to avoid this bias is to use the
balanced scorecard approach – this would also have helped Komatsu to
avoid their concentration on one key objective.■ The balanced scorecard
Objective setting is not an isolated process. As has already been discussed
there is a need for managers to know the key criteria by which their per-
formance against objectives will be measured. There is a clear link
between setting objectives and the setting of performance measures. The
balanced scorecard (Kaplan and Norton, 1992, 1993) is an approach that
more clearly links these two activities. Kaplan and Norton suggest that
a balanced set of objectives should be created and at the same time a coher-
ent set of performance measures should be developed alongside them.
At the core of the balanced scorecard approach is the belief that man-
agers have to be able to look at a business from four key perspectives:
1 Customer perspective: How customers see a business is critical, but
financial measures alone do not provide this view. Customers are gen-
erally concerned with, quality, performance, service and time. For each
of these categories the organisation should develop objectives and per-
formance measures. Obviously how these categories are defined has to
be from the customer’s perspective. This will allow the organisation to
track how customers view the business overtime.
2 Internal perspective: Managers have to identify the critical internal
processes that will allow them to satisfy customer needs. Identifying
the processes that are important to customer satisfaction allows man-
agers to identify the functions and competencies in which they need to
excel.
3 Innovation and learning perspective: An organisation’s ability to create
value is inextricably linked to its capacity to continually improve
through innovation and learning.
4 Financial perspective: This allows the organisation to see how the busi-
ness looks from the shareholders point of view. This financial perform-
ance measures the success, not only of an organisation’s strategy, but
also of its implementation.144 Strategic Marketing: Planning and Control