Panorama Business Intelligence

If a company thinks about Scorecarding as just a technology or a tool, they’re not seeing it as something they do. And it’s not just something they do once in a while – it’s something they do all the time, because it is a part of everything else they are already doing as part of their day-to-day work. In fact, if everything is perfect, BI & Scorecardng should be almost invisible – like the air you breathe.

Of course, BI isn’t perfect yet – far from it. With all this in mind, let’s look at how well Scorecarding does the job it should do: The Good, The Bad, and The Ugly of Scorecarding.

The Good

The very best thing about Scorecarding and BI right now is that it has the power to change the way companies think about themselves.

Most workers and even managers and executives think about their company in terms of the products it sells. If they are any good at all, they also think about the company in terms of the vision statement or even strategic objectives. When they think about themselves in relation to the company, they think about the jobs they do: I am the shipping clerk, I am the manager of customer support, I am the Chief Financial Officer. And they think about their jobs in terms of they’re daily tasks or their yearly objectives.

But the promise of Scorecarding is that it can completely change how workers think about both their own jobs and the purpose of the company. Products come and go, but the key vision and strategy of your company should remain the same. People may come and go, and they may move around in your organization, but they should remain focused on the key vision and strategy of your company.

For instance, say your chair manufacturing company has determined that customer satisfaction is absolutely critical to its success. It implements a Scorecarding system. It defines Key Performance Indicators that measure the many aspects of customer satisfaction, taking into account measures that touch on all parts of the organization. Now all of a sudden your company isn’t in the business of making chairs, it’s in the business of making satisfied customers.

Each person in your company will view a customer satisfaction KPI or objective tailored to his or her job. They can see how the way they do their job increases or decreases customer satisfaction and have an objective that aligns with the bigger goal the company has defined around customer satisfaction. Manufacturing will probably be measured on quality and shipping on their ability to make it on time. This will become a strategic goal where everybody is accountable and aligned to.  Now all of a sudden the work your employees do isn’t shipping product or answering phones or designing chairs, it’s helping create satisfied customers.

That’s the good part about Scorecarding – it allows every person in your company be aligned to the strategy, contribute to the big goals and stay focused…. The company now achieves a great alignment of strategy and action.

The Bad

The biggest obstacle to getting Scorecarding in your company working that well is that it’s just not easy. It’s not obvious what a company’s core business drivers are, and it’s not obvious how to measure those drivers.

Part of this is the chicken and egg problem: you get a coherent vision of your strategy when you deploy scorecards, but you need that coherent strategy to implement Scorecards in the first place. But part of it is also the nature of Scorecarding.

Scorecarding is to a large extent the merging of information technology and business practice. But the people who know your business best and the people who know you IT systems best are never the same people. They generally see only their own side of the problem, and can’t see the bigger picture.  

A business person might decide to measure a specific KPI for the business, what he doesn’t know is that the systems in his organization do not support his vision and do not have the data to feed into that KPI.

For instance, your forecasting system may need to take into account the political or economic outlook in a foreign country. But your corporate IT systems are not likely to have that information.

So you have to improvise. You may need to manually input some measures. You may need to use proxy measures instead of the real thing. You will probably have to settle for something less than the theoretically perfect measurement of your key business drivers.

The Ugly

Scorecards are oversold…. The promise today is for scorecards to be able to replace many BI solutions by showing people the KPIs and how the organization is performing in each area…

Well…. That’s not how things work, scorecards are just the beginning. Scorecards tell you what: how are we doing in our sales goals, how are we doing in our expenses goals and so forth….

What scorecards don’t tell you is why. Why are your sales costs so high? Why are your customers not satisfied? Why does it cost so much to make a chair? To answer the whys, you need advanced analytics. This is the advanced business critical thinking that sorts through the data and the advanced analysis tools to test your theories.

Scorecards also do not help you forecast the future….

That is also the subject for another blog.