Metrics_ How to Improve Key Business Results - Martin Klubeck [49]
The Answer Key is a shortcut for many of the metrics you’ll encounter. It includes the metrics I recommend organizations start with when they are seeking to implement a metrics program for the first time.
The Balanced Scorecard and the Dashboard
The Balanced Scorecard was introduced in 1987 by Art Schneiderman, a manager at the semiconductor company, Analog Devices. It has its most well-known proponents in Robert S. Kaplan, a professor at Harvard Business School, and Dr. David P. Norton, a founder and director of the Palladium Group. The basic concept consists of four perspectives: Financial, Customer, Internal Business Processes, and Learning/Growth. By looking at these key areas, leadership can gain a pulse of the organization through the use of measures and targets.
While I don’t agree with the concept of “targets” and I have reservations on the Balanced Scorecard as a whole, it has strengths I have to respect. The Balanced Scorecard has been used successfully by many organizations and continues to be popular.
The “Dashboard” is a later promotion of metrics in a more balanced manner. Created in the spirit of its namesake, it is a dynamic metric tool. Like the Balanced Scorecard, the Dashboard employs multiple measures, but includes a more real-time component built around Key Performance Indicators. There is no shortage of metric processes and tools to choose from. The good news is that what I offer can be applied to any of these popular methods or you can embark on a personal journey where you build your own metrics from scratch.
The Answer Key helps you determine where you need to go with your metrics. It also identifies other questions that may relate to the one you’re starting with. It can also help you keep from going in the wrong direction and dispersing your efforts too broadly, with no focus.
The Answer Key is made up of tiers that branch out from left to right. Each tier has more measures and data than the previous tier. The following sections will describe each of these tiers in more detail.
Answer Key: First Tier
The first tier isn’t so much of a tier as it is a starting point. Is your root question an organizational information need? Does your root question deal with information about an organization; specifically, about the health of the organization? If so, your question will probably fall under one of the following two concerns:
How well you provide services and products to your customers
How healthy the future looks for your organization
Answer Key: Second Tier
If your root question fits within one of the first two tiers of the Answer Key, this tool will help you focus your efforts and find viable measures without spending inordinate amounts of time hunting for them. But, if your question does not fit into the Answer Key, don’t change your question so you can use this shortcut!
Also don’t ignore the need for developing the root question first. In other words, don’t start with the key. If you do, you’ll end up short-circuiting your efforts to develop useful metrics and more importantly, to answer your questions.
Tier two provides a framework for strategic-level root questions. If your root question is at the vision level, the second tier may represent actual metrics. When you find your root question is based on improving the organization, the question is often based on a need to understand “where the organization is” and “where it is going.” The Answer Key shows that this need for information flows into two channels, one to show the return (what we get) vs. our investment (what we put in) and the other to assist in the management of resources. I call these two branches “Return vs. Investment” and “The State of the Union.” Figure 5-1 shows this branching.
Figure 5-1. The Answer Key, tiers one and two
Return vs. Investment
Return vs. Investment is the first of the two main branches of organizational metrics. It represents the information needed to answer questions concerning how well the organization is functioning and how well it is run. Are we doing the right things? Are we doing