Developing a Balanced Information System : Establishing Strategic Superiority for Service Organizations

Many service organizations′ corporate mission is “to be number one in delivering service to customers”. The use of traditional financial accounting measures as performance indicators has led to an inappropriate reliance on internal information resulting in an unbalanced information system and, therefore, by definition a dysfunctional strategy. A balanced information system must provide information on both internal operations and external customer satisfaction. In order to optimize overall performance in service organizations, a balanced information system is critical. The long run survival of a service business depends on the appropriate balance between internal information (efficiency) and external information (effectiveness). Both internal information (efficiency) and external information (effectiveness) must be used as complements to each other in order to fulfill long‐term corporate goals. Reliance on internal information or the substitution of internal information for needed external information will not result in the long‐term fulfillment of the corporate mission. Obviously any organizational system that is closed to the environment will develop entropy.