1.
0 INTRODUCTION
MedTech Solutions Ltd., a global leader in medical diagnostic technology, is
navigating the complexities of rapid expansion and digital transformation. In its pursuit
of sustainable strategic execution, the organization has adopted the Balanced Scorecard
(BSC) as a central framework for performance measurement.
Kaplan and Norton argued that "what you measure is what you get," highlighting the
need for a more balanced set of metrics to steer organizational behavior toward strategic
objectives. They demonstrated through case study research that traditional financial
metrics like ROI and EBITDA often failed to capture the drivers of future performance,
such as process capabilities and employee competencies. This four-pronged approach to
grading a company was introduced by business scholars Robert S. Kaplan and David P.
Norton in a Harvard Business Review article in 1992. To remedy this, the authors
proposed adding customer, internal process, and learning & growth measures to financial
data, creating a multidimensional dashboard that reflects an organization’s strategic
priorities. This integration enabled managers to focus on leading indicators of success,
rather than relying solely on lagging financial results that could mask emerging
opportunities or risks.
This analysis evaluates the effectiveness of the current BSC in aligning operational
activities with strategic goals. The assessment explores the relevance of existing KPIs,
identifies measurement inconsistencies, recommends alternatives, and outlines how
interdependencies among BSC perspectives can be better managed.
2.0 Evaluation of the Relevance and Appropriateness of KPIs
The Balanced Scorecard developed by MedTech includes four essential dimensions:
Financial, Customer, Internal Processes, and Innovation & Learning. Each perspective
includes defined objectives and related performance indicators. The relevance of these
KPIs can be assessed as follows:
a. Financial Perspective:
The financial dimension seeks to ensure profitability, revenue sustainability, and capital
optimization. The KPIs — such as EBITDA, ROCE, and gross profit margin — are
conventional yet valid tools for tracking organizational financial health. However, while
revenue is growing annually, declining margins suggest that the KPIs are not fully
capturing underlying cost inefficiencies, especially in production and supply chain areas.
Focusing on these metrics ensures that an organization's strategic initiatives generate
tangible financial outcomes, instead of just abstract targets. The absence of cost
breakdowns by product line is a notable omission.
b. Customer Perspective:
MedTech aims to increase customer satisfaction and loyalty while also improving its
market position, particularly in high-value areas such as AI-driven diagnostics. Indicators
like the Net Promoter Score (NPS) and repeat purchase rate are helpful, yet they do not
capture performance in these strategic niches. Moreover, while customer satisfaction
appears high, the failure to increase market share points to a potential disconnect between
customer perceptions and competitive positioning. Company builds brand loyalty and
encourage repeat business by aligning their operational procedures with customer
requirements. But the case shows a problem even though customer satisfaction is high,
market share in strategic areas like AI-enabled diagnostics is not increasing.
c. Internal Business Processes:
Efficiency, quality, and innovation speed are focal points here. KPIs such as first-pass
yield and order cycle time are aligned with operational goals. However, current delays in
product development and inconsistent supply chain performance indicate that existing
metrics may not adequately reveal bottlenecks or inefficiencies. A more nuanced view of
internal collaboration and supply chain agility is needed. For example, MedTech might
be measuring the cycle time but not investing enough in research tools, technology, or
team coordination. The KPI is present, but there is no strong follow up or support to
improve it. The company needs to include KPIs that measure reasons behind delays, such
as approval time between departments or staff availability for innovation teams.
d. Innovation and Learning:
This perspective emphasizes employee development, organizational learning, and
technological integration. While training hours and engagement scores are tracked, there
is insufficient emphasis on the tangible outcomes of learning — such as innovation
output or capability building. Moreover, low employee engagement in ideation suggests
that current metrics do not capture motivation or innovation alignment effectively. As
explained by Franco-Santos and Doherty (2017), measuring innovation and learning must
go beyond numbers the system must build a real culture of participation, feedback, and
recognition. MedTech should consider adding KPIs that measure how many staff ideas
are actually implemented or how many innovation projects are led by non-managers.
Also, conducting regular feedback sessions could be part of the KPI system.
3.0 Identification of Gaps and Overlaps in Performance Measurement.
Despite the structured approach to KPI selection, several gaps and overlaps exist that
undermine the BSC’s effectiveness.
Gaps: Gaps in performance measurement occur when current performance doesn't meet
desired goals or objectives. For example, if an organization's customer satisfaction scores
are consistently low, it indicates a gap in performance that needs to be addressed.
Overlaps: Overlaps occur when multiple performance measures or processes are measuring
or influencing the same aspects of performance. Overlapping measures can lead to
confusion, inefficiency, and a lack of clear accountability.
a. Measurement Gaps
i. Strategic Innovation Metrics Missing
Many innovative companies fail to measure the actual performance of their strategic
products after launch. According to Bhatti et al. (2014), one of the most common oversights
in performance management is the lack of KPIs that monitor the success rate or revenue
contribution of new products. MedTech's strategic push into AI-based diagnostics lacks
clear measurement of their market success or operational performance.
ii. Interdepartmental Collaboration
Marr (2012) argues that collaboration across departments significantly impacts the speed
and success of innovation. However, few organizations include metrics to track
collaborative efficiency. MedTech similarly fails to evaluate the effectiveness of cross-
functional projects, which can hinder innovation and responsiveness.
iii. Supply Chain Responsiveness
While MedTech tracks lead times, it doesn’t measure agility, resilience, or risk exposure in
the supply chain. Chopra and Sodhi (2014) stress that in today’s volatile markets,
responsiveness to external shocks is as important as efficiency. Metrics like "supply chain
flexibility index" or "recovery time from disruption" could fill this critical gap.
b. KPI Overlap
i. Redundant Customer Feedback Metrics
MedTech uses both the Net Promoter Score (NPS) and a Customer Satisfaction Index. These
tools often reflect similar customer sentiments. Kaplan and Norton (2004) warned that such
redundancy can dilute decision-making clarity. If not clearly differentiated (e.g., NPS as a
loyalty measure and satisfaction index for service quality), these metrics can lead to
misinterpretation and inefficiencies.
ii. Learning & Development Confusion
Measuring both training hours and employee engagement can be misleading if not properly
distinguished. Parmenter (2015) notes that KPIs should be either input-driven (like training
hours) or outcome-driven (like innovation success). Without clarifying which metric
supports which objective, overlaps can confuse teams and impair performance reviews.
The following are the Recommendations to Address Gaps and Overlaps;
Innovation Revenue Ratio: Track the percentage of revenue generated from products
launched in the past 2–3 years, as suggested by Marr (2012).
Cross-Departmental Project Success KPI: Measure the success rate and efficiency of
collaborative projects to support organizational agility (Bhatti et al., 2014).
Customer Experience Index: Instead of multiple overlapping customer metrics, create a
composite index combining loyalty, satisfaction, and complaint resolution data (Kaplan &
Norton, 2004).
Outcome-Based Learning KPIs: Tie learning metrics to innovation outcomes, such as the
number of new ideas implemented or improvements generated post-training.
4.0 Recommendations for Additional or Alternative KPIs
To better align KPIs with strategic goals, MedTech should consider refining its
measurement system with more targeted metrics:
a. Financial:
- Cost-to-Serve Analysis: Evaluates cost allocation per customer or product to highlight
inefficiencies.
- Segment-Level Profitability: Tracks profit margins by product category or region,
especially emerging markets.
b. Customer:
- Customer Lifetime Value (CLV): Estimates long-term value of client relationships,
aiding prioritization.
- Market Share by Innovation Category: Tracks presence in AI and digital tool markets,
aligning with growth objectives.
c. Internal Processes:
- Time-to-Market for Innovations: Complements NPD cycle time by including post-
development readiness.
- Cross-Functional Project Success Rate: Measures the effectiveness of collaborative
efforts in operations or product design.
d. Innovation and Learning:
- Innovation Conversion Rate: Tracks the percentage of ideas implemented that result in
commercial or operational benefits.
- Digital Capability Index: Measures the maturity of technology usage across departments
beyond simple adoption rates.
5.0 Managing Performance Interdependencies Between Perspectives
What you measure is what you get. Senior executives understand that their organization’s
measurement system strongly affects the behavior of managers and employees.
Executives also understand that traditional financial accounting measures like return-on-
investment and earnings-per-share can give misleading signals for continuous
improvement and innovation—activities today’s competitive environment demands. The
traditional financial performance measures worked well for the industrial era, but they are
out of step with the skills and competencies companies are trying to master today.
As managers and academic researchers have tried to remedy the inadequacies of
current performance measurement systems, some have focused on making financial
measures more relevant. Others have said, “Forget the financial measures. Improve
operational measures like cycle time and defect rates; the financial results will follow.”
But managers should not have to choose between financial and operational measures. In
observing and working with many companies, we have found that senior executives do
not rely on one set of measures to the exclusion of the other. They realize that no single
measure can provide a clear performance target or focus attention on the critical areas of
the business. Managers want a balanced presentation of both financial and operational
measures.
During a year-long research project with 12 companies at the leading edge of
performance measurement, we devised a “balanced scorecard”—a set of measures that
gives top managers a fast but comprehensive view of the business. The balanced
scorecard includes financial measures that tell the results of actions already taken. And it
complements the financial measures with operational measures on customer satisfaction,
internal processes, and the organization’s innovation and improvement activities—
operational measures that are the drivers of future financial performance
Strategic performance rarely exists in silos; improvements in one area can
influence outcomes in another. Recognizing and measuring these interdependencies is
essential.
a. Innovation → Customer Value:
Innovative solutions such as AI diagnostics can significantly enhance the quality and
efficiency of services provided, directly impacting customer loyalty and market
expansion. Measuring the impact of new product introductions on NPS or CLV would
help connect innovation to customer satisfaction.
b. Internal Processes → Financial Outcomes:
Improvements in process efficiency — such as shorter lead times or higher first-pass
yield — directly reduce production costs and enhance margins. A linked dashboard
showing how operational KPIs affect EBITDA or cost per unit would reinforce
accountability.
c. Learning → Innovation and Operations:
Training and staff engagement play a critical role in supporting innovation and internal
efficiency. A well-trained workforce is more likely to contribute to ideation, reduce
errors, and adopt digital tools. Linking employee development KPIs to innovation
success rates can help measure these indirect effects.
6.0 Practical Recommendations to Improve BSC Engagement and Data Management
One of the most important aspects of using a balanced scorecard is to evaluate and
improve it based on feedback and data analysis. A balanced scorecard is not a static tool,
but a dynamic and adaptive one that should reflect the changing needs and goals of your
organization. By collecting and analyzing data from various sources, such as customers,
employees, partners, and financial reports, you can assess how well your strategy is being
executed and what areas need improvement. You can also use feedback from
stakeholders to identify gaps, challenges, and opportunities for innovation. In this section,
we will discuss how to evaluate and improve your balanced scorecard based on feedback
and data analysis. We will cover the following steps:
I. Define the criteria and metrics for evaluation. Before you can evaluate your balanced
scorecard, you need to define what criteria and metrics you will use to measure its
effectiveness. These should be aligned with your strategic objectives and key
performance indicators (KPIs). You should also consider the frequency, scope, and
format of your evaluation. For example, you may want to conduct a quarterly review of
your balanced scorecard at the organizational level, and a monthly review at the
departmental or team level. You may also want to use different formats, such as
dashboards, reports, or presentations, to communicate your results to different audiences.
II. Collect and analyze data from various sources. Once you have defined your criteria
and metrics, you need to collect and analyze data from various sources that can provide
insights into your performance. These may include customer surveys, employee
feedback, partner feedback, financial statements, operational data, market research, and
benchmarking data. You should use both quantitative and qualitative methods to gather
and interpret data. For example, you can use surveys and interviews to collect feedback
from customers and employees, and use statistical analysis and data
visualization to identify trends and patterns. You should also compare your actual
performance with your targets and benchmarks, and identify any gaps or deviations.
III. Identify strengths, weaknesses, opportunities, and threats. Based on your data
analysis, you should identify the strengths, weaknesses, opportunities, and threats
(SWOT) of your balanced scorecard. Strengths are the areas where you are performing
well and have a competitive advantage. Weaknesses are the areas where you are
performing poorly and have a competitive disadvantage. Opportunities are the external
factors that can help you improve your performance and achieve your goals. Threats are
the external factors that can hinder your performance and prevent you from achieving
your goals. You should use a SWOT analysis to summarize your findings and prioritize
your actions.
IV. Implement and monitor improvements. based on your SWOT analysis, you should
implement and monitor improvements to your balanced scorecard. These may include
revising your strategic objectives, KPIs, or initiatives, adding or removing perspectives or
measures, adjusting your targets or benchmarks, or changing your data collection or
reporting methods. You should also communicate your changes and results to your
stakeholders, and solicit their feedback and suggestions. You should track and measure
the impact of your improvements, and make further adjustments as needed. You should
also document your lessons learned and best practices, and share them with your
organization.
V. Monitor and evaluate your balanced scorecard and your strategy. Finally, you should
continue to monitor and evaluate your balanced scorecard and your strategy on a regular
basis. You should use the data from your balanced scorecard to measure your
performance, identify strengths and weaknesses, and learn from successes and failures.
You should also use the feedback and input from your organization and stakeholders to
validate your assumptions, test your hypotheses, and refine your strategy. You should
also be prepared to adapt and improve your balanced scorecard and your strategy as
needed to respond to new opportunities and challenges.
For example, let's say you are a software company that uses a balanced scorecard to
measure and manage your strategic performance. Your vision is to be the leading
provider of innovative and user-friendly software solutions in your market. Your mission
is to create value for your customers, employees, and shareholders by delivering high-
quality software products and services that solve their problems and meet their
needs. Your balanced scorecard consists of four perspectives: financial, customer,
internal process, and learning and growth. Each perspective has several objectives,
indicators, and targets that are linked to your vision and mission.
7.0 Conclusion
MedTech Solutions Ltd. has laid a solid foundation by adopting the Balanced Scorecard
to guide strategic performance. However, the effectiveness of the system is hindered by
imbalanced KPI selection, missing metrics in strategic areas, and limited recognition of
cross-functional interdependencies. To enhance the impact of its performance
management approach, the company must refine its indicators, improve engagement, and
ensure that data and decisions are tightly aligned with its innovation-led growth strategy.
By doing so, MedTech can bridge the gap between strategy formulation and execution,
securing long-term competitiveness and value creation.
8.0 References
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into action. Harvard Business School Press.
2.Niven, P. R. (2002). Balanced scorecard step-by-step: Maximizing performance and
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3.Parmenter, D. (2015). Key performance indicators: Developing, implementing, and
using winning KPIs (3rd ed.). John Wiley & Sons.
4.Armstrong, M. (2021). Armstrong's handbook of performance management: An
evidence-based guide to delivering high performance (6th ed.). Kogan Page.
5.Harvard Business Review. (2020). Measure what matters: Online article on KPI
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6.Nudurupati, S. S., Bhattacharya, A., Lascelles, D., & Caton, N. (2016).
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Operations & Production
7. Bhatti, W. A., Zaheer, A., & Rehman, K. U. (2014).The effect of innovation on firm
performance: A study of pharmaceutical industry in Pakistan. Journal of Global Business
and Technology, 10(1), 25–38.
8. Marr, B. (2012).
Key Performance Indicators: The 75+ Measures Every Manager Needs to Know. Pearson
Education.
9. Chopra, S., & Sodhi, M. S. (2014).
Reducing the risk of supply chain disruptions. MIT Sloan Management Review, 55(3),
73–80.
