Implementing a balanced scorecard approach in a software start-up : a case study

Abstract

Purpose: The increasingly challenging environment surrounding software start-ups, has necessitated deep insight into their performance, and its holistic measurement through multidimensional systems, such as the Balanced Scorecard. In this light, the primary purpose of this research is to design and evaluate the Balanced Scorecard approach within the context of a local software start-up. In achieving this, the study primarily establishes the rationale underpinning the introduction of such an approach, based on which, it develops a software start-up scorecard and derives a strategy map. Ultimately, it evaluates the designed Balanced Scorecard in light of the prevailing contextual influences and determines the suitability for introducing the Balanced Scorecard within the case software start-up. Design: In reaching the research objectives, a qualitative case study method was selected. In-depth semi-structured interviews were conducted with the case-company’s three CoFounders and in-house and outsourced workers of the selected Software Development Line. Moreover, this research was also supplemented by a series of validation interviews with the three Co-Founders. Findings: An ad-hoc and unstructured, albeit balanced approach to performance measurement was identified within the case software start-up. This prevailing context motivated the establishment of the rationale for introducing the Balanced Scorecard and the consequent derivation of the case-company’s raison d’être. Stemming from this, the Balanced Scorecard and Strategy Map were designed. Apart from a minor change, replacing the traditional ‘Customer’ with the ‘Client’ Perspective, Kaplan and Norton’s original four perspectives underpinned the proposed designs. Moreover objectives, measures, targets and initiatives were identified for each perspective, and linkages between the perspectives, and to strategy were embraced. Ultimately, the potential implementation and success of the proposed Balanced Scorecard were assessed in light of the case-company’s prevailing contextual influences. Conclusions: In light of the established rationale underpinning the introduction of the Balanced Scorecard and the contextual influences prevailing in the case-company, this study concludes that the introduction of the proposed Balanced Scorecard approach is both feasible and value-adding for the software start-up under study. Moreover, the Co-Founders’ validation of the Balanced Scorecard and Strategy Map further reinforce this conclusion. Value: This study is of particular value to the case software start-up as it confronts teething problems and moves through its life cycle from a start-up to a growing company. Besides, this research could serve as a guide to other software start-ups considering the Balanced Scorecard approach. Withal, against the growing importance of software start-ups, this study could offer great contribution.