“Today’s organisational value-creating activities are not captured in the tangible, fixed assets of the firm. Instead, value rests in the ideas of people scattered throughout the firm, in customer and supplier relationships, in databases of key information, and cultures of innovation and quality.” – Robert S. Kaplan and David P. Norton – creators of the Balanced Scorecard approach
This statement exemplifies a key shift in modern management thinking championed by Robert S. Kaplan and David P. Norton. Historically, companies measured their worth by physical assets—machinery, buildings, inventory, and other tangible resources. However, by the late 20th century, breakthrough research and business transformations revealed that intangible factors—knowledge, innovation, relationships, and organizational culture—were often the real drivers of sustainable value and competitive advantage.
Kaplan and Norton addressed this gap by developing the Balanced Scorecard in the early 1990s, arguing that traditional financial measures alone were insufficient to capture an organisation’s true value-creating processes. Their framework encouraged leaders to assess performance not just in terms of revenue and profit, but also through perspectives such as internal business processes, customer satisfaction, and—critically—the innovation and learning (or learning and growth) perspective. This emphasised how assets like employee expertise, informational capital, and organizational learning drive future performance and adaptability.
The quote reflects their conviction that in the knowledge economy, ideas, relationships, and a culture of continuous improvement are at the core of lasting organizational value. Kaplan and Norton’s holistic perspective reshaped global management practices, making companies far more aware of the hidden, intangible strengths that sustain growth and excellence.
About Kaplan and Norton: Theorists Shaping Strategy and Measurement
Robert S. Kaplan is an influential American academic and Emeritus Professor at Harvard Business School. Trained as an engineer and economist, Kaplan’s early research revolutionised management accounting through innovations like Activity-Based Costing. His engagement with performance measurement deepened when he collaborated with David P. Norton.
David P. Norton came from a background combining engineering, business, and consultancy, ultimately crafting a career as a management strategist and executive. Norton’s work translated academic insights into practical tools for organisations across sectors.
In 1990, Kaplan and Norton undertook a pioneering research project into how organizations measure performance. Their collaboration resulted in the creation of the Balanced Scorecard—a system designed to link strategy formulation with execution, and to provide executives with a balanced view of their organisation’s progress. Rather than relying on isolated metrics, their model integrates four perspectives: financial, customer, internal processes, and innovation & learning. This approach compels organisations to consider whether they can continually improve and create value, not just deliver short-term results.
Over the years, Kaplan and Norton continued to evolve their ideas, expanding the Balanced Scorecard approach into broader theories of strategy maps and organisational alignment. Their joint work has had profound influence, helping leaders around the world realize that a company’s most valuable assets are often those you cannot see on a balance sheet, but that can be measured, nurtured, and leveraged to achieve enduring success.
