A Comparison between Two Balanced Scorecards: Optimal vs. Kaplan and Norton Model

 Abstract—This paper compares two Balanced Scorecard models, an optimal construction based on a time-managed approach to identify the evolution of the key contributors to the current organization's strategy and a model based on Kaplan and Norton methodology. Both Balanced Scorecards are generated using financial and non-financial strategic indicators collected directly from the company. The paper proposes a process to construct an optimal structure of a Balanced Scorecard model based on the Partial Least Square equations. The optimal model is based on a modified version of bootstrap technique that seeks and chooses the most predictable cause-and-effect sequence among all possible combinations. The Kaplan's model is grounded on the authors' methodology as presented in their articles and books. The comparison between the two models will be analyzed and validated using a practical example from a Swiss medical establishment. It will be concluded that the Optimal Balanced Scorecard (OBSC) is superior to the Kaplan's model in terms of statistical validation and, thus, OBSC advantage to accurately represent and study the company's strategy. Index Terms—Balanced scorecard (BSC), key performance indicators, performance measurement, structural equation modeling (SEM), partial least squares (PLS), principal component analysis (PCA), bootstrap.