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The Balanced Scorecard – Flying on Instruments

Flight Simualtor Cockpit   

Flying as I mentioned in my last post is a difficult business,  If you have ever seen the flight deck of a modern aircraft it’s a daunting array of instruments and switches with no obvious sense to them.  The screen grab above is just from a little light aircraft and even this looks confusing.  However an experienced pilot will concentrate on just six instruments and I have magnified and numbered these :

  1. How fast you are going (airspeed indicator)
  2. The orientaton of the plane in the sky (artificial horizon)
  3. How high you are (altimeter)
  4. How the plane is turning (bank indicator). This is how a pilot can turn the plane tightly while you don’t notice and your coffee doesn’t end up over the next passenger.
  5. Which direction you are going (compass)
  6. Whether you are going up or down (vertical speed indicator)

Notice too that they are right under the pilots nose and are grouped together.

It’s a 70’s disaster film, the pilots have had the fish and are unconscious.  You had the veggie option and are in the cockpit.  Looking at all the dials is just going to give you a headache.  Concentrating on just one dial, say maintianing altitude looks like a good idea, but the plane may be upside down and going around in circles.  So you need to keep watching all six and occasionally check other things like fuel and the radio.

Running a successful business is also difficult.  There is lots of information and stats available and like flying it can very hard to know what to focus on.  Not being focused and focusing on one thing are as bad as each other.  Lack of focus often equates to concentrating on lots of detail and this either impossible or can be seen as micro-managing by subordinates.  Focusing one thing like the balance sheet is also going to lead to problems in the future perhaps because all the best staff have left in search of better pay and conditions.  

So just like flying a balance has to be struck and each business to work out what is important to it, for example:

  • Winning new customers
  • Keep existing customers satisfied
  • Grow the Business
  • Be Innovative
  • Keep the employees happy

The idea of a balanced approach to managing a business was developed by  Prof. Robert Kaplan  and  Dr. David Norton in a theory called the balanced scorecard.  It is in wide use throughout the industry and I have implemented several BI solutions around this theory.  Many BI vendors have toolkits to support this and you won’t be surprised that Microsoft have had a product in this space for several years called the Business Scorecard Manager.  However a tool like this is only part of the story.  A good dashboard will show where the big issues are and give some indication of where the problems lie, but deeper analysis may be needed and then plans put in place to address the issues. 

Introducing Microsoft Office PerformancePoint Server 2007

There won’t be another version of Balanced Scorecard Manager as is it is now going to be rolled up into the New Microsoft Office Performance Point Server (MOPPS).  MOPPS combines The Business Scorecard Manager with the analytics capabilities of ProClarity together with a new forecasting and planning engine so that diagnosis and analysis can lead to planning and action. 

MOPPS is being officially launched in London on 16th October with a keynote speech by that same Prof. Robert Kaplan and if you want to find out how all this is going to work from source register for the launch event here.