Applying the balanced scorecard for better performance of intellectual capital

Abstract

PurposeOne of the responses to criticisms of traditional forms of accounting reports for knowledge‐based firms has been the development of the balanced scorecard (BSC), a strategic performance measurement framework and methodology based on a family of performance measures. This paper aims to examine the issue of measuring performance in relation to a major Australian company, The Fosters Brewing Group, where a newly appointed CEO reversed a decline in performance by adopting, among other initiatives, the balanced scorecard approach to management.Design/methodology/approachThe paper takes the form of a case study, applying the theoretical framework of the BSC to a declining business in order to achieve a turnaround.FindingsThe paper discusses how a newly appointed CEO of The Fosters Brewing Group reversed a decline in performance by adopting, among other initiatives, the balanced scorecard approach to management.Research limitations/implicationsThe BSC is a practical framework to deal with the intangible nature of knowledge, while ensuring that such investments in knowledge and management align with and contribute to their strategic direction.Practical implicationsThe paper provides an example of a company using the BSC to deal with the imperative of making investments in knowledge and management skills.Originality/valueThere is a growing body of literature on the limitations of traditional accounting statements that measure tangible, physical assets to capture the current and future value of knowledge. This paper illustrates a framework using the BSC to manage and measure the intangible nature of knowledge.