New Economy, New Terminology.

• Author: Marshall, Jeffrey
• Position: Brief Article

Goodbye, balanced scorecard. Hello, business velocity. That's the approach urged by Forrester Research, the respected New Economy consulting firm in Cambridge, Mass., which argues that the balanced scorecard isn't dynamic enough to cope with today's blink-of-the-eye strategic shifts. Business velocity, it says, entails understanding "leading business performance indicators targeting supply, demand and customer satisfaction."

Forrester argues that companies need to stop running their businesses on backward-looking measures. "The majority of firms depend primarily on the financial closing cycle and general ledger for management information, limiting executives from anticipating and reacting to market trends," the firm says in a recent report. "To succeed, companies must move beyond financial management to embrace business velocity management." Forrester's research director, Laurie M. Orlov, adds: "To manage business velocity, we recommend that executives pour energy into developing a customized scorecard that taps internal, external, operational and fiscal sources of business performance."

Business velocity management "allows executives to gain operational visibility across the organization by assembling and adjusting supply, demand, and customer satisfaction indicators," Forrester says, and "executives also gain valuable insights from outside the firm by linking velocity indicators from suppliers, customers, and market watchers. These forward-looking indicators allow the CEO and CFO of an organization to better understand their...