There are many variables that determine where balance is. It is a very fluid position, changing as the dog moves, stock moves, you move, all of it affected by the terrain and desires of the stock. Balance is often not straight across at twelve o'clock, it may be off to one or the other side to account for the stock's draw toward a particular direction. The dog must read and adjust for all of these things.
Some young dogs find balance easily and right away on their own. They innately know where it is although they may first want to hold stock to a fence or other place where the stock can't get away and must be taught to hold to the handler or a place the handler indicates. Others must be shown how to find balance before they recognize it or realize there is a job to be done and a point to all this! Some will always have to be told where to be, which way to go, where to stop, to mechanically create balance. A dog that doesn't know where to be needs helped to be useful but you can also take the balance out of a dog by over commanding him to where he gives up control to you and then must be told.
Many individual traits go into the collective package called "good balance." For a dog to find balance first he must look for it and for him to look for it he must desire to control. Some traits that affect a dog's ability to find balance are his feel for livestock's flight zone: how close he wants to be. He won't find balance three feet from the stock as he will likely be causing them to move and he cannot see the whole picture. Some dogs we must push them out to help them find balance. Pace is another trait that interacts with balance. If a dog wants to push in too fast he will again wind up too close and shoving the stock causing him to have to continuously move to keep them from getting away.
Some dogs are what we call "line dogs" in that right from the get go they will hold a direction and just drive along, pushing the stock on their own. This doesn't necessarily mean that they won't head the stock, it's just that it's not a big priority for them or they don't feel the same anxiety to do so, they don't think the stock is getting away and they feel in control. They will make short flanks to either side to correct the direction the stock is going without coming around far enough to stop them or catching the eye of stock. This is not the same thing as a dog that just likes to bite heels and chase stock. These dogs tend to have minimal movement and are actively controlling the stock from behind with a steady presence.
Speaking of minimal movement, this means that a dog does not flank needlessly or for no reason, he flanks only to cover the stock and keep things tucked or to change the direction the stock is heading. If you hired a person to help you move your cattle and they galloped their horse back and forth behind the cattle would you tolerate that? So why would you accept the same type of work in a dog? This is a trait that somewhat goes hand in hand with eye and power. A dog with power moves stock by walking calmly straight into them, he may or may not be crouched showing eye, but he is not dashing back and forth spooking cattle forward with his movement. Instead he applies steady pressure on the animal(s) that need it and backs his presence up with a bite if need be. The next video demonstrates a medium eye dog applying steady pressure with minimal movement.