Designing performance measurement systems using business models

Purpose: The purpose of this paper is to explore how business models (BMs) can guide the design of a performance measurement system (PMS) and to shed light on the advantages and disadvantages of using BMs as a platform for designing a PMS and identifying key performance indicators (KPIs). Design/Methodology/Approach: First, a normative approach is adopted to both reflect on the process leading from BMs to KPIs and highlight the role of concrete BM tools that management can use in this process. Second, a case study illustrates the applicability of the process and explores advantages and disadvantages that may arise when using the BM as a basis to identify KPIs. Findings: Designing KPIs from the BM increases the relevance of the resulting PMS. Furthermore, BM tools support the identification, coordination, and prioritization of value drivers (VDs) (and the related KPIs), increasing the likelihood that managerial choices are focused on corporate value creation. However, the path leading from the BM to KPIs is strenuous and complex and it requires an in-depth knowledge of BM tools. Research limitations/Implications: While the general limitations of case-based research should be acknowledged, the wider-ranging implications of the research are important not only for BM researchers, but also for scholars and practitioners working with management control. Practical Implications: The paper describes a practical implementation process that managers can use to map their company's BM, to identify and organize VDs, and, from that design, KPIs. This process has the potential to support the decision-making process in choosing relevant KPIs based on the BM, to aid in the management of the company's performance and to help manage, innovate, and benchmark the BM itself. Originality/Value: This paper advances our knowledge by addressing the usefulness of BMs from a performance measurement perspective.