Balanced Scorecard and Hoshin Kanri: Dynamic Capabilities for Managing Strategic Fit

Purpose – The paper seeks to combine the uses of the balanced scorecard and hoshin kanri as

integrative dynamic capabilities for the entire strategic management process. It aims to posit a model

for the combination of these long- and short-term organisational activities as a framework for a senior

level to manage a firm’s strategic fit as an integrated organisation-wide system that links top

management goals to daily management.

Design/methodology/approach – The resource-based view of strategy is explored for its relevance

to how a combined balanced scorecard and hoshin kanri approach serves as a high-order dynamic

capability. Examples are given from Canon, Toyota and Nissan, of how core capabilities are managed

to show how strategy is executed cross-functionally across a firm’s functional hierarchy.

Findings – The study finds that strategic management of the organisation should consider the

long-term strategy as well as the short-term capability. Important to this are core capabilities and core

competences, cross-functional management, and top executive audits, which, when managed properly,

explicate a new view of strategic fit, as a form of nested hierarchies of dynamic capabilities.

Originality/value – The paper is the first exposition of how balanced scorecard and hoshin kanri

practices may usefully complement each other in strategic management. It is a useful framework for

dynamically managing sustained competitive advantage.