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past performance. As we discussed in Chapter 1 , the measures on a Balanced Scorecard should be used in a different way—to articulate the strategy of the business, to communicate the strategy of the business, and to help align individual, organizational, and cross-departmental initiatives to achieve a common goal. Used in this way, the scorecard does not strive to keep individuals and organizational units in compliance with a pre-established plan, the traditional control system objective. The Balanced Scorecard should be used as a communication, informing, and learning system,
not
a controlling system.
    The four perspectives of the scorecard permit a balance between short-and long-term objectives, between outcomes desired and the performance drivers of those outcomes, and between hard objectives measures and softer, more subjective measures. While the multiplicity of measures on a Balanced Scorecard may seem confusing, properly constructed scorecards, as we will see, contain a unity of purpose since all the measures are directed toward achieving an integrated strategy.

Internal-Business-Process Perspective
    In the internal-business-process perspective, executives identify the critical internal processes in which the organization must excel. These processes enable the business unit to:

deliver the value propositions that will attract and retain customers in targeted market segments, and

satisfy shareholder expectations of excellent financial returns.

    The internal-business-process measures focus on the internal processes that will have the greatest impact on customer satisfaction and achieving an organization’s financial objectives.
The internal-business-process perspective reveals two fundamental differences between the traditional and the BSC approaches to performance measurement. Traditional approaches attempt to monitor and improve existing business processes. They may go beyond financial measures of performance by incorporating quality and time-based metrics. But they still focus on improvement of existing processes. The scorecard approach, however, will usually identify entirely new processes at which an organization must excel to meet customer and financial objectives. For example, a company may realize that it must develop a process to anticipate customer needs or one to deliver new services that target customers value. The BSC internal-business-process objectives highlight the processes, several of which it may not be currently be performing at all, that are most critical for an organization’s strategy to succeed.
    The second departure of the BSC approach is to incorporate innovation processes into the internal-business-process perspective (see Figure 2-1). Traditional performance measurement systems focus on the processes of delivering today’s products and services to today’s customers. They attempt to control and improve existing operations that represent the
short wave
of value creation. This short wave of value creation begins with the receipt of an order from an existing customer for an existing product (or service) and ends with the delivery of the product to the customer. The organization creates value from producing, delivering, and servicing this product and the customer at a cost below the price it receives.
    Figure 2-1
The Internal-Business-Process Value-Chain Perspective
    But the drivers of long-term financial success may require an organization to create entirely new products and services that will meet the emerging needs of current and future customers. The innovation process, the
long wave
of value creation, is for many companies a more powerful driver of future financial performance than the short-term operating cycle. For many companies, their ability to manage successfully a multiyear product-development process or to develop a capability to reach entirely new categories of customers may be more critical for future economic performance than managing existing operations efficiently,