business acrobatics
Kaplan and Norton suggest that when putting lead to upset customers. Upset customers can
the Scorecard to use, “companies should lead to poor sales. The cycle goes round and
articulate goals for time, quality, performance round. Making smart financial decisions can
and service, and then translate these goals into empower a company with the resources to
specific measures. keep the cycle moving strongly.
-Financial Perspective -Innovation & Learning
The Financial Perspective asks managers Perspective
how the company looks to its shareholders. Competition in the marketplace is driven by
It measures income, profits, losses, cash innovation. To put this concept in perspective,
flow, etc. The financial perspective, closely consider the last time you purchased a VHS
tied to other perspectives, also measures tape, bias-ply tires, or a floppy disk. Each of
the opportunity of growth into the future. these items has met, or at least come close to
Kaplan and Norton suggest that the Financial the end of its product life cycle. Companies
Perspective is closely linked to operational that refuse to innovate slowly go the way of
efficiencies. They suggest that Financial the buffalo. An example of this phenomenon
Perspectives and operational efficiencies are lies in the story of a company called the
not only interrelated, but also interdependent. Baldwin Locomotive Works. Baldwin built
At the same time they note that fixing financial some of the largest and most powerful steam
woes won’t necessarily fix operational locomotives in history. For years they led the
problems, and fixing operational woes won’t railroad industry in the production of large
necessarily fix financial problems. The key powerful locomotives. Unfortunately for
to understanding the Financial Perspective Baldwin, entering the diesel market proved
doesn’t lie in being a professional at reading fatal as Baldwin’s diesel locomotives proved
income statements and balance sheets, or unreliable. In addition, when the market was
in being a CPA, but rather in understanding asking for diesel, Baldwin remained fond of
how a company’s financial position affects steam and continued producing products
other parts of the company, and how other of little interest to the railroad industry. By
parts of the company affect finances. For the time Baldwin had really jumped into the
example, poor sales lead to small revenues. diesel scene, much of their market share had
Small revenues lead to an inability to afford been lost, as General Motors with their Electro
to invest in the future. An inability to invest Motive Division, and American Locomotive
in the future leads to an inability to meet Company were able to produce products the
demand. An inability to meet demand can market demanded.
What is it that we can learn from the railroad
We can continue to improve and create
industry that can apply to the scrapbook
industry? First, you need to recognize what
value if (and it is a big if) we understand
went wrong for Baldwin. Although it might
the needs of the marketplace, remain
seem obvious, Baldwin made two major
competitive, and continually strive to
mistakes. First, they failed to understand what
make our products better. the market was asking for. The market was
32 scrapbook business
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