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weekly trips to the supermarket and opted instead for home deliveries, topping up their gro-
ceries with trips to local stores. In fact, Philip Clarke, then Tesco’s chief executive, admitted
that he ought to have moved faster to cut back on planned superstore openings in response
to clear radical changes in shopping habits. He expressed regret at taking time to halt expan-
sion of its struggling network of superstores in favour of investment in online deliveries and
smaller, neighbourhood stores. ‘Hindsight is a wonderful thing. It’s never really there when you
need it’, said Mr Clarke. ‘I probably should have stopped more quickly that [superstore] expansion, I
probably should have made the reallocation faster.’

The balanced scorecard approach
Generally, operations performance measures have been broadening in their scope. It is
now generally accepted that the scope of measurement should, at some level, include
external as well as internal, long-term as well as short-term and ‘soft’ as well as ‘hard’
measures. The best-known manifestation of this trend is the ‘balanced scorecard’
approach taken by Kaplan and Norton:

‘The balanced scorecard retains traditional financial measures. But financial measures tell
the story of past events, an adequate story for industrial age companies for which invest-
ments in long-term capabilities are customer relationships were not critical for success.
These financial measures are inadequate, however, for guiding and evaluating the journey
that information age companies must make to create future value through investment in
customers, suppliers, employees, processes, technology, and innovation.’ 4
As well as including financial measures of performance, in the same way as tradi-
tional performance measurement systems, the balanced scorecard approach also
attempts to provide the important information that is required to allow the overall
strategy of an organisation to be reflected adequately in specific performance meas-
ures. In addition to financial measures of performance, it also includes more opera-
tional measures of customer satisfaction, internal processes, innovation and other
improvement activities. In doing so, it measures the factors behind financial perfor-
mance that are seen as the key drivers of future financial success. In particular, it is
argued that a balanced range of measures enables managers to address the following
questions (see Figure 10.5):
● How do we look to our shareholders (financial perspective)?
● What must we excel at (internal process perspective)?
● How do our customers see us (the customer perspective)?
● How can we continue to improve and build capabilities (the learning and growth
perspective)?
The balanced scorecard attempts to bring together the elements that reflect a business’s
strategic position, including product or service quality measures, product and service
development times, customer complaints, labour productivity and so on. At the same
time it attempts to avoid performance reporting becoming unwieldy by restricting
the number of measures and focusing especially on those seen to be essential. The
advantages of the approach are that it presents an overall picture of the organisa-
tion’s performance in a single report and, by being comprehensive in the measures

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