measures of firm performance that indicate how well firms are changing their product and service offerings to adapt to changes in the internal and external environments. A firm's ability to improve, innovate, and learn is tied directly to its value. Simply put, only by developing new products and services, creating greater value for customers, and increasing operational efficiencies can a company penetrate new markets, increase revenues and margins, and enhance shareholder value. A firm's ability to do well from an innovation and learning perspective is more dependent on its intangible than tangible assets.
Managers must make frequent changes to existing products & services as well as introduce entirely new products with extended capabilities. This requires:
-Human capital (skills, talent, knowledge)
-Information capital (information systems, networks)
-Organization capital (culture, leadership)
= measures of firms financial performance that indicate how well strategy, implementation and execution are contributing to bottom-line improvement. Periodic financial statements remind managers that improved quality, response time, productivity, and innovative products benefit the firm only when they result in improved sales, increased market share, reduced operating expenses, or higher asset turnover.
Managers must measure how the firm's strategy, implementation, and execution are indeed contributing to bottom line improvement. Financial goals include:
-Profitability, growth, shareholder value
-Increased market share
-Reduced operating expenses
-Higher asset turnover