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Oleg Tumarkin, JD, MBA, CSSBB is an Adjunct Professor of Business at Lakeland College and Concordia University of Wisconsin. His firm, FutureWorks, in partnership with Bucket Brigade and AKS-Labs provides business coaching and Balanced Scorecard implementations.  His life’s passion is the development of a universal business measurement and management system that would cause management in to the realm of a repeatable, replicable, yet humane and flexible science.

There are several reasons why managers have certain misconceptions about Balanced Scorecard System.  One of the reasons is an aggressive advertising campaign which sometimes presents Balanced Scorecard System as a treatment for all “illnesses” which boosts company performance and immediately increases revenue.  Lots of managers view balanced scorecard system as a robot that runs business.  Who doesn’t want to control company performance and reach strategic goals by monitoring several figures on the dashboard?

Sure, Balanced Scorecard System has received its portion of criticism, and no one claims this is a perfect solution of all business problems.  At the same time, balanced scorecard system proved to be quite effective if applied properly.

So what is the truth about Balanced Scorecard System?  As they say the truth is the golden mean – you don’t have to believe in the extreme criticism, but at the same time it is unwise to view balanced scorecard system as a magic tool.  Inefficient use of balanced scorecard system may cost companies big money.  That’s why it is imperative to dispel myths about this performance evaluation tool.

1. Balanced scorecard system helps create effective corporate strategy.

BSC works from the top

Well, Balanced Scorecard System is the tool which implements goals and links strategic and operational management based on key performance indicators and relations between them.  Balanced scorecard system is built from the top which means that strategic goals are formulated into individual elements that become goals of the linear management.  So, it is easy to guess that if wrong strategic goals are set this will result in mistakes in the work of individual employees and goals/key performance indicators of individual departments.  Eventually the strategy will remain just a theory, no matter what measures of personnel motivation were taken.  This is not something business owners would want to happen to their companies.  It is also important to keep goals realistic.  Imagine that you set a goal of wiping out all competitors in one year, while your current market share equals 2%.  Obviously all measures to reach such goals will fail and balanced scorecard system will turn out to be helpless. We need to take into account human factor.  Goals are formulated by people.  It seems like no software and no IT solution can change such course of things.

2. Balanced scorecard system is effective for all organization and needs no other additional tools of business management

This is the way many managers tend to think – balanced scorecard system is a major tool or a treatment for all “business illnesses” which needs very little time to turn a small company into an international corporation. NBA slogan “Where amazing happens” does not work here.  There is no magic in business.  If a company has a very complex structure in which there is no fruitful cooperation between departments and there is no strategic planning, Balanced Scorecard System will not be helpful and will remain just a pile of useless documents with figures and graphs.  Successful implementation of the Balanced Scorecard System does not force company management to give up traditional planning and budgeting methods, although they undergo certain changes.

One should be very careful when implementing Balanced Scorecard System in the developing markets. As known such market are volatile.  It would be quite problematic to introduce changes in BSC if market conditions drastically change every three months.  Stability is one of the preconditions for successful implementation of Balanced Scorecard System.

3. The more key performance indicators, the better.

Top managers do not need to control a large number of KPI

This misconception is based on a manager’s desire to control operational part of business activity. Such managers mistakenly think that if they control more indicators, employees would work better.  However, the more does not always mean better.  It is very difficult to process such huge amount of information.  Moreover, there is no need to do that.  A top manager would lose much time if he attempts to control such KPI as expendables per employee, or daily reject item rate per employee.  Balanced scorecard system is a tool to reach STRATEGIC goals.

To the contrary, there is a misconception that the less KPIs are measured, the more effectively Balanced Scorecard System works.  A top manager is convinced that he needs one or two KPI that will make it possible to evaluate business performance and control its development.  Well, it is possible theoretically, but in such a case a top manager looks like a business owner who doesn’t take part in strategic planning and operations, pain he’s attention only to net revenue.  Under such circumstances neither Balanced Scorecard System nor other tools will help.

A manager’s dashboard should include only those KPIs which directly influence reaching strategic goals, not more not less.  As a rule a number of KPIs in the traditional set varies from 15 to 25.  Only in such a case Balanced Scorecard System can really work and live up to the expectations of business managers and owners.

4. It is impossible to use balanced scorecard system without ERP solutions.

Many top managers do not want to use complex Corporate Information Systems to work in combination with Balanced Scorecard System. “Well, my employees can make some mistakes, and as a result I will get the wrong data in the form of weird columns full of figures.  It is better to have a look and diagrams with comments and instructions,” many managers would say.

In fact Balanced Scorecard System automation is a must only often it has been successfully implemented and tested.  There is a big risk to distort information.  Employees may not feel confident in operating the program while the software itself is not easy to use.  As a result it produces pressure on management system.  Besides, in 40% of cases Balanced Scorecard System undergoes changes during the first half year of implementation, and changes in software solutions require additional investments.

There are some examples of companies that first used simple ways to implement Balanced Scorecard System.  For instance, MS Excel was first used to automate the process.  This program is known by most office employees, and only sometime later sophisticated automation tools are introduced.  As you can see the company management gives employees opportunity to test the system and see how it works (learn its mechanics) before using ERP systems.

5. It is easy to develop and implement Balanced Scorecard System without professional assistance.

Implementation of BSC System is not as easy as it may seem

This is the most common myth about Balanced Scorecard System.  Such statement is articulated by top managers who start developing the system.  They do not only lack experience in this field, but also have no idea about under water rocks and obstacles in the way of “manual” implementation of Balanced Scorecard System.  There are no qualified employees who are ready to take this serious job, no necessary tools for personnel, and what is more important there is no time to do the job.  As a result chances of successful implementation of Balanced Scorecard System equal to zero.

Norton and Kaplan (creators of BSC) often say that only 27% of top managers are satisfied with independently implemented Balanced Scorecard System, while this figure increases to 93% if Balanced Scorecard System is developed and implemented by qualified specialists. But as they say, a man is the king in his house. It is up to the top manager to make a final decision.

5 most common myths about BSC system

For all the awareness and vision, an ideal manager is an actor, a doer, somebody who does not get stuck analyzing trends or dreaming up new markets, rather someone who quickly plans and rapidly executes activities in such a rapid succession that people are unable to comprehend how things can be done so quickly.

Finally, no manager can be truly excellent without the comradeship of his staff, without being keenly aware of their feelings and emotions, without being able to empathize with and support his co-laborers.  Communicating effectively, workload balancing and such are only possible when the manager is aware of both mental logic and emotional state necessary to successfully engage their team.

So, to summarize the foundations of good management are based on four variables that are listed in no particular order: 1) awareness; 2)task management/ability to execute; 3) cohesiveness of the team; and 4) ability to dream/use imagination.

If you think of these four variables, they are also the four ways in which we perceive the world and think. To borrow the language of Myers-Briggs and Jung these are 1) Sensing; 2)Thinking; 3)Feeling; and 4)Intuition. And while the whole old theory about the brain is questionable, these same four elements are often referred to as 1) Left Front; 2)Left Back; 3)Right Front; and 4)Right Back. To use our everyday language these four ways of thinking are 1) Thinking with our senses, eyes, hands; 2)Thinking with our mind, using logic; 3)Thinking with our heart; and 4)Thinking with our gut.

Awareness of these four ways to think is ancient, and yet the application of the awareness that all four must be developed and trained to work in a cohesive union has not been systematically applied to the development of leaders in the fields of management and business.

Conventional wisdom is that we typically have only one of these thinking approaches well developed, may be two, but rarely all four. I submit to you that it is true, but it does happen. Perhaps, what is more important then classifying and pigeon holing everyone to a specific mental process, it is more valuable to help us all develop our brain in such a way that we get better in all four approaches to thinking. Rather than seeing people as a particular personality type, let’s work together to insure that we all have a wonderful personality that is flexible enough to be the type that is necessary under the circumstances and tolerant enough to accept and appreciate people who deal with things differently than we do.

There are two ways to build teams that are much stronger than the sum of their parts. One is through a relationship of people who while personally lean toward one or two of these mindsets but can recognize and value others, who think in a way that is different from theirs and who grow in their specialization on the team. Another is in a team that is constantly cross training and consists of people who can perform all other functions on the team as well. These two are not mutually exclusive. But rather they both point to growth. Growth of each team member in their field, as well as growth in their ability to help out in the fields that are the specialty of their teammates. As well as growth in the closeness and effectiveness of the interconnectedness of the team that so greatly reduces the transaction costs of doing business.

This brings us to the actual measurement of the management team’s growth and business development. We can take a more combinatorial approach. By first measuring the change in in each manager’s skill in each of the four thought approaches and then combining those numbers as a total team score, while keeping in mind the team cohesiveness variable. This may be more precise and may even allow us to compare individual managers against other managers, across business units, thus assuring that we deploy our best talent on our most important projects, but it has two, in my mind, fatal flaws. It is great in theory, but the amount of measurement and calibration involved to assure this measurement may well be prohibitive for most organizations. Perhaps even more importantly, even if we can get past the difficulty of measuring the metrics precisely enough to avoid type one and type two errors that are so demoralizing to  the individual and the team, we still have a motivational problem.  The problem that emerges in the environment of individual measurement an internally competitive environment  that discourages cooperation is bred.  This environment vastly increases the transaction costs, lowering the cohesiveness of the team and defeating the whole value of the measurement.  This  introduces the death spiral of reduced organizational performance that is paralleled by the inevitable inflation of the individual ratings and of the egos. The whole fiasco resulting in the rejection of the measurement tool altogether, in light of better performance by the organizations who do not employ it.

Thus, I propose a different measurement route, one that is at the heart of a growth and development activity that all organizations should embrace anyways and that is collaborative gaming where monthly, or weekly a team is challenged to perform a task together that involves sensing awareness of the five senses and intuitive sixth sense of the gut, logic of the thinking brain and sensibility of the feeling heart. By performing this activity regularly, a change in the performance can easily be tracked and thus provide a crucial indicator of the quality of the management team, while acting as a tool for the improvement along this, most essential,  KPI.

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Oleg Tumarkin is an Adjunct Professor of Business at Lakeland College and Concordia University of Wisconsin. His firm, FutureWorks, in partnership with Bucket Brigade and AKS-Labs provides business coaching and Balanced Scorecard implementations.  His life’s passion is the development of a universal business measurement and management system that would cause management in to the realm of a repeatable, replicable, yet humane and flexible science.

However, the Balanced Scorecard does not hold the spotlight to the management’s learning and growth too tightly, allowing the leeway to pick the the Key Performance Indicators that either don’t really monitor their performance in a meaningful ways, or worse yet, apply to only lower echelon of workers in the organization.

Two thousand years ago,  James, brother of Jesus, made a statement that I think is highly applicable to managers today. Just substitute the word teacher for the word manager and you will get the point:

“Not many of you should presume to be teachers, because you know that we who teach will be judged more strictly. We all stumble in many ways. If anyone is never at fault in what he says, he is a perfect man, able to keep his whole body in check.

When we put bits into the mouths of horses to make them obey us, we can turn the whole animal. Or take ships as an example. Although they are so large and are driven by strong winds, they are steered by a very small rudder wherever the pilot wants to go. Likewise the tongue is a small part of the body, but it makes great boasts. Consider what a great forest is set on fire by a small spark. The tongue also is a fire, a world of evil among the parts of the body. It corrupts the whole person, sets the whole course of his life on fire, and is itself set on fire by hell.

All kinds of animals, birds, reptiles and creatures of the sea are being tamed and have been tamed by man, but no man can tame the tongue. It is a restless evil, full of deadly poison.

With the tongue we praise our Lord and Father, and with it we curse men, who have been made in God’s likeness. Out of the same mouth come praise and cursing. My brothers, this should not be. Can both fresh water and salt water flow from the same spring? My brothers, can a fig tree bear olives, or a grapevine bear figs? Neither can a salt spring produce fresh water.”

I believe that the description he has for the tongue and for teaching readily applies to the management of the organizations, as well. It is a lot easier to manage millions of dollars than it is to manage oneself and our own tongue.  One management decision can influence the fate of many resources, entire organizations. A failure by the manager is by far more devastating than that of an entry level employee. So, managerial development is essential for the organizational growth and development. It is crucial for organization’s health and survival that there is a significant emphasis on the development of the organization’s management team, or the organization is gambling with that which is the foundation of all else.

In most organizations you see precisely the opposite:  a lot more effort is spent on measuring and managing the performance of lower level employees than on those of the executive team. Nobody wants the spotlight pointing toward them. Yet, who has the most impact on the organizational performance? Is it the person who is capable of sending a shipment to the wrong location, or is it a person who can hire and fire that person, or a person who can institute policies and processes that eliminate the opportunities for these kinds of mistakes?

With that said, what are some good Key Performance Indicators that would help an organization insure that there is a culture of learning and growth that permeates its executive ranks? Well, the output variables are pretty easy to track: Engagement of the workforce, a clear result of great management can most easily be tracked by the number of improvements that are recommended by the workers and are implemented per employee.  Unlike good attendance or other such measures that can be forced by just paying or punishing for them, it cannot be achieved without a good working relationship between the managers and the workers. But while this is a valuable Key Performance Indicator, it looks at the output not the input.

Another variable that might serve as KPI for good managers, is dollars or Return on Investment generated by the new initiatives of the management team, but this variable takes years to materialize and can be affected by a bunch of factors that have nothing to do with the talents of the management team.

In all reality every KPI on the scorecard is a reflection on the management, but they are mostly all outputs.  In the next article I will discuss some inputs of good management.

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Oleg Tumarkin is an Adjunct Professor of Business at Lakeland College and Concordia University of Wisconsin. His firm, FutureWorks, in partnership with AKS-Labs provides business coaching and Balanced Scorecard implementations.  His life’s passion is the development of a universal business measurement and management system that would cause management in to the realm of a repeatable, replicable, yet humane and flexible science.

I have already in other articles alluded to a need for more than four dimensions. More than four views or voices to truly have a comprehensive view of business.  In fact, later in the article, I propose eight on which I will be writing extensively in the near future. But there is quite a bit more that can be done without drastically departing from the current Balanced Scorecard that you may already have in place.

One weakness that I consistently see in most Balanced Scorecard implementation is the use of non-statistically controlled metrics. Thus, if we have a variable that tends to fluctuate over time due to reasons beyond our control, or because the process has that much of a variance, a given Scorecard may force us to periodically be overjoyed and at other times to panic about the variable being in and out the desired range. Yet, without having statistic controls for our variables we are entirely unable to separate special cause variation from systematic drifts, from variance within the normal range of the given process. While it is a bit more work in planning the variables and in documenting measurements, it is my experience that without it Balanced Scorecard becomes a source of frustration and is eventually abandoned by management, because their raw intuition can produce better results than this aid.

Long range plans. Aside from the variables being not statistically controlled, perhaps the biggest problem that leads to the development of unrealistic scorecards and thus to their eventual abandonment is the problem of setting too precise a goals too far in to the future. Richardo Semler, in his now famous lecture, Management by Omission, states that one of the most radical planning aids that his Semco experienced was when he ordered that the organizational plans would focus on the six month window rather than a year. As he says, before that all the plans always showed that all the good stuff will happen in the second part of the year. This is not to say that you should not keep your eyes on the horizon. It’s good to think long term, strategically. It’s just futile to wrap that thinking in the precise numbers in to seemingly independent constants when in fact those numbers are a result of variation in so many input variables.

Richardo Semler also addresses another bane of wishful unrealistic thinking that plagues the Balanced Scorecard planning and causes many organizations to disregard any kind of planning as an exercise in futility and that is of the unrealistic, and typically round numbered goals. “We always seem to want hundred million something”, he says and asks if we would be “dissatisfied if we got eighty four million”. He wisely suggest that we abandon these kinds of pursuits, by focusing on the pursuits that are more driven by our actual market conditions, opportunities and strength of our team.

If you have already mastered these basics it might be a good time for you to start looking at my more advanced Balanced Scorecard. To make it easier to remember I named each  all by starting with a letter M. These dimensions are: Management, the foundation of business and deserving of individual attention apart from the rest of people management, since if we are unable to manage ourselves effectively, how can we manage the business. Manpower, the people who make up the organization. Means, the business tools, resources, facilities, in accounting terms fixed assets of the business. Method, the process of coordinating Means and Manpower to serve the next M- Market. Market, is the customer and the judge of the firms performance, it is also the product that was developed and delivered with the right Method to support the Customer desires. Money is our sixth M, it is the traditional accounting/financial focus of the business, managing the cash flows, monitoring the financial accountability. While unfortunately the traditional Balanced Scorecard stops there, I propose we keep going to things that are more important than money and to insure which we actually do earn the money.  Mitigation of Risk is one such area, since no money in the world will do you any good if you are terminally ill, dead or in jail, if you blow up our lowly planet or kill all that is dear to you. Mitigation of Risk is an area that most resembles voodoo witch doctor approaches in that it is a new discipline that has not had a chance to fully form, but the fact that is so amorphous and imprecise nevertheless does not mean that we can disregard it in the decision making. But we must not stop there, unless that is your only goal is to survive. The final broad category is all inclusive, it is the Mission of the organization, it focuses on the very purpose of the organizational existence and begs the question: Why does we exist? It is only few and very blessed organizations that are in the position to wrestle with this tough question because it takes a degree of success and competence in the other seven focus areas before the managers can face the ultimate question of human existence and in a sense become philosophers, lovers of wisdom. But as Plato argues in his Republic no country is as blessed as one that is governed by the philosopher king. And I might add that the same holds for an organization that has reached the levels of success that allow such a reign.

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Oleg Tumarkin is an Adjunct Professor of Business at Lakeland College and Concordia University of Wisconsin. His firm, FutureWorks, in partnership with AKS-Labs provides business coaching and Balanced Scorecard implementations.  His life’s passion is the development of a universal business measurement and management system that would cause management in to the realm of a repeatable, replicable, yet humane and flexible science.

I am not convinced that we have experienced such a transition in the world of business. Much about management is shrouded by mystery that seems to say that it is an art that can only be mastered by the talented few. Not that I am denying that there is an aspect of the unpredictable in management or for that matter anything that deals with human relationships, but as society develops and we all have to become more and more managers of, if nothing else, our own destinies, management has to transition from an art form to a repeatable, predictable discipline that can be learned systematically.

Balanced Scorecard is one of the steps in the transition from the world where truly talented managers could outperform mediocre ones by purely relying on their intuition, often by having an internal equivalent of the Balanced Scorecard in their head, to a world where management tools are going to finally become sophisticated enough where it will not take the same level of genius to just make the day to day decisions. In the world where there is a degree of precision to the decision making the truly talented managers will finally be able to focus on solving new problems, developing new markets, creating new products, engaging in new relationships instead of just doing the same worn out things that can now be put on autopilot.

Balanced Scorecard tools not only allow for the truly talented managers to focus on the new and exciting, but they help develop internal talent pool of the younger generation, since now, equipped with the tools and for the first time understanding the logic of the interrelationships of organizational objectives, even people who historically were not in a position to make business decisions have an opportunity to participate in working together to manage the organization to the benefit of everyone involved.

While the Balanced Scorecard does not quite get us to the world I am describing, it has set the foundation and provided a framework that will aid in the development of the more advanced models that are capable of achieving the promise of simplified, more consistent, straightforward management that is based on explicit principles, rather than on management that is based on a strictly unaided intuition, or worse yet, in many cases management based on strictly financial view of the business world.

In the engineering community community Genrich Altshuller brought about similar revolution by introducing the Theory of Inventive Problem Solving. Even though his first major publications became available in the late sixties, most engineers and inventors have never heard of him and his ideas, however, many who do are considered the elite in their field, and are usually employed by the invention powerhouses like Intel and Siemens.

The dynamic that is happening in that field is quite common in that for example, it took nearly a century for many people to adopt Mendeleev’s Periodic Table of Elements in spite of its clear superiority. Before periodic table we had craft of alchemy, after we have the science of chemistry, but the adoption rate was still painfully slow.

It is so also in business. The effective measurement systems that have to be developed around the framework of a Balanced Scorecard are not yet. Even the Scorecard may have to become more than four dimensional to truly represent the variables that are significant for business management. But the organizations that place themselves at the forefront with this new technology – technology of thought – can, if they use it wisely gain a tremendous edge on their competition.

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Oleg Tumarkin is an Adjunct Professor of Business at Lakeland College and Concordia University of Wisconsin. His firm, FutureWorks, in partnership with AKS-Labs provides business coaching and Balanced Scorecard implementations.  His life’s passion is the development of a universal business measurement and management system that would cause management in to the realm of a repeatable, replicable, yet humane and flexible science.

There are two major problems with this kind of thinking.

First one is occasionally picked up by my students when they start to speak in terms of  maximizing shareholder value. When they do that, often a debate ensues that results in the class realizing that risks, as well as returns are crucial to long term success of the company. No amount of short term profit can justify fraud that will lend everyone in jail, for example. And even though risk is a very pesky, hard to measure concept, on the intuitive level most people seem to get that it is worth keeping in mind.  While Kaplan and Norton’s Balanced Scorecard does not directly address risk, it at least gives us room to include those variables in the final equation, which is a lot more than what we can say for the traditional, strictly financial view of business.

Second problem is not apparent to most MBA students, unless they have had Six Sigma training, or they work in a role and for a company that really emphasizes non-financial performance. The problem is that financial variables by a vast majority are dependent output variables. Which means that they cannot be effectively changed directly. For example, Revenues cannot increase unless we do something to boost our actual sales and we cannot increase our sales without either changing our process, or improving our people, or forcing it by squeezing the juice out our employees. The last one being what typically happens in the companies with a strictly financial view.

Perhaps more importantly, the financial variables, by the time we find them out can no longer be changed, they are in our past. Thus, unless we are content chasing our own tail, it becomes essential to identify and monitor the input variables that feed in to these outputs. For example by focusing on Human Development, an organization is typically impacting its financial performance three to five years down the road. The bigger the organization, the longer is the delay. Yet, in a short run such a focus looks like an added expense, with no immediate value. Intuitively, we all get that it is important, but the financial statements tell us to cut out any human development and if our only focus is the financial objective, there is a good chance that we will.

Just as human development is the real bedrock of growth in an organization, so we also have to value the process and customer as an investment in our medium term future. For example, any investment in process improvement will likely require six months to three years to really recoup itself. The investment in marketing and customer relationships has the quickest payback and is easiest to measure for a non-financial objective, thus it gets almost as much lip service as financial perspective. But even the customer relationship issues, which can often pay for themselves in three to six months are often neglected because they are not as precisely measured and monitored and because many of those issues are really just outcomes of good human development and effective processes within the organization.

Thus, the organization which employees a balanced scorecard where human development and innovation are the only true input variable, the process and the customer view, which build on each other, all are there to support the financial view, the output variable that everyone wants to focus on has a much stronger path to long term success than an organization that simply ignores all non-financial variables.

If you want your company to do great this quarter, and be as it may six months from now, avoid balanced scorecard implementation at all costs. However, if you are in for the long haul, a meaningful deliberate participatory implementation of the balanced scorecard is essential to your continued long term survival and growth.

But my challenge to you is to not stop there. Don’t just settle for concepts that were first introduced close to 50 years ago with the total house of quality and Toyota’s view of People, Process, Product, Profit, which has an eerie resemblance to the Balanced Scorecard’s:

• Financial;
• Customer;
• Internal Business;
• Innovation and Learning.

Don’t get me wrong, it is a great place to start. Even Andrew Carnegie’s 19th century assertion in his Gospel of Wealth that to be successful a business must focus on People as well as profits will get you ahead of many companies that stubbornly only look to their accounting books.  But don’t stop there, I have already mentioned Risk Management as a dimension that trumps even the Financial dimension and can be integrated in to your implementations of the balanced scorecard. In the near future I will be discussing a few other dimensions and a comprehensive system of management that I have been working on by broadening or occasionally focusing the balanced scorecard implementations with many of my clients.

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Oleg Tumarkin is an Adjunct Professor of Business at Lakeland College, an Adjunct Instructor of Business at Concordia University Wisconsin and Adjunct Instructor of Business and IT at ITT TECH Institute. He is the owner of FutureWorks Business Expert, which in partnership with AKS-Labs provides business coaching and Balanced Scorecard implementations.  Mr. Tumarkin  is a graduate of Milwaukee School Of Engineering, received his Masters of Business Administration from Concordia University of Wisconsin and is currently pursuing a Doctorate from William Howard Taft University. His life’s passion is the development of a universal business measurement and management system that would move the world of management out of the realm of alchemy and in to the realm of a repeatable, replicable, yet humane and flexible science.

The earlier articles described basic the operations aimed to creating and managing categories and indicators. But more features are to be added and now it is time to show data management within time progress. It is certain that business is a constantly developing structure and its indicators’ values are time changed as well. This article will guide you through the time management process in Balanced Scorecard concept and in the particular software product BSC Designer.

The following features and tools related to time points with BSC Designer will be described:

• What the calendar is and where is it placed;
• How to assign values for indicators for different dates;
• What program shows if there was not value assigned for certain item for certain date, but you have selected this date.

Calendar

While working with the program viewing strategy tree tab in top right corner the calendar could be found. BSC Designer fills up its calendar by taking the information directly from the user’s operation system’s date. That is why the current date is always boxed. There is no clock showed in the program but there are dates, months, years. Month and year could be found and changed on top of calendar’s field, the right vertical line shows weeks from the beginning of the year and all the other field’s space presents days of the week and dates.

The calendar field

In order to select the particular date of the calendar just click on it. If some other month is needed use arrows on top of calendar field until the proper month is selected. If some other year is needed click once on sign the current month and year like “November 2009”. Calendar field will be changed into year-and-month mode and clicking on arrows will allow selecting of the year and left click on month will select it as well. After the proper moth and year is selected click on the date to choose it.

Selecting the certain date: November, 3

Selecting the certain month: August

Selecting year and month: February, 2006

How to assign values for indicators for different dates

In the article “How to manage indicators and performance values with BSC Designer” values’ management was described. But referring to time line every indicator’s value might be changed as well. BSC Designer’s calendar function allows user to input values for the certain date. That function makes it possible for managers and specialists to fill up the project with actual information for every indicator. Also a monitoring process could be easily performed by top management with help of the program’s calendar function. Viewing the certain date a manager could see all the values starting with the whole project’s performance value and finishing with the particular indicator’s value.

In order to assign values for indicators for the certain date at first the date needs to be selected. The process of selecting date was described in previous paragraph. As an example select yesterday date. After the date has chosen click on any indicator and change its value. Certainly the performance of updated indicator will be changed as well as category’s and the whole project’s performance. Now return to the current date by clicking on it in calendar and check out the indicator. As you can see some dynamics appeared. It could be viewed on the graph located right under the calendar field. The graphs and diagrams will be fully described in future how-to articles. Using this simple logic of filling up the project with up-to-date information every indicator could be managed. Congratulations! The project now starts living its own life!

Changing yesterday’s value of KPI

Return to the current date – dynamics appeared

Dynamics also appeared for the whole project (“Balanced Scorecard” in our example)

Updated and not updated signs for certain date

At first indicator’s values for few more dates are to be added. Let’s fill up the project with KPI’s values within 3 days including current date.

KPIs have been changing for 3 days

Those three dates are now showed with enhanced font in calendar field. Let’s try to click on the date before any changing been applied. In current project this could be November, 15. As you can see every indicator has Grey color meaning that it was not changed. But if one of those 3 dates is selected a blue color of indicators as well as little “up” and “down” arrows will mean that some dynamics took its place.

Selecting certain date the item was not updated on

Selecting certain date the item was updated on

Continuing how-to articles we aim to establish advanced viewing of categories and KPIs management. Last time we created the four categories and few indicators for every perspective. Also basic parameters’ weights were changed. But after that more controlling and management operations need to be done in order to organize the project’s proper work linking to a successful business management as well.

Processing categories and KPIs management special measures need to be set to change the performance value of categories and the whole project. Our task will be to understand how to control such parameters as KPI’s values and analyze its influence on the project’s performance.

KPI’s Values

We have already learned that every indicator and category has its weight but it tells a program the only importance of those parameters. To make any summary of the project itself KPIs Values are have to be added. Those numbers describe what percentage or score does every indicator have at the moment. Let’s look at few examples of value to be set.

Percentage Value

Such indicator as “Return on investment” in financial perspective shows the amount of money gained or lost on an investment relative to the amount of money invested. Using BSC Designer with default settings the value of this indicator might be set as the percentage of money gained. If $1,000 invested and 300 have returned at the moment the value of “Return on investment” KPI will be 30 with “%” selected as measure option meaning that 30% of money invested had returned.

In order to set up this KPI’s value select the indicator and change its name into “Return on investment”. Now in the same indicator’s bottom dialog field find” Value”, “Measure”, “Min” and “Max” fields. Then change the Measure option, selecting “%” sign instead of “Score” and also type “30” number in Value field. Leave “Min” field with “0” and “Max” field with “100” that means you measure the percentage from 0 till 100. After that click on the projects tree dialog for changes to become set. Congratulations! The first KPI now has its value!

Setting up indicator’s percantage value

Score Value

The example for score value could be “Number of products manufactured monthly” in internal process perspective. This KPI’s value should show how many products the organization produces during the calendar month comparing to the manufacture plan. Here the actual number needs to be set without any calculations but the maximum have to be corrected according to organization’s plan. If 200 bikes were planned to be produce but actually just 130 were manufactured this KPI’s value will show 130->200.

Let’s input this information into the BSC Designer’s project. Select a KPI in “Internal process perspective” category and change its name into “Number of products manufactured monthly”. Now look at the bottom dialog field where you have just changed the name and type 130 in Value field. Then choose the measure option, selecting “Score” in “Measure” field. After that set a proper maximum number by typing “200” in “Max” field and leave “Min” field as “0”. That is it.

Setting up indicator’s score value

Optimization direction

Not every indicator needs to grow in case of company’s performance. There are several factors that are needed to be minimized. The option of optimization direction choice in BSC Designer is used for such KPIs. Such indicator as “Complains number” in “Customer perspective” category could be a good example. It is certain that the best number of customers’ complains is 0 what means everybody is satisfied with the product or service. So in case of project’s balanced scorecard optimization this KPI’s value needs to look like X->0 where X Is the number of complains at the moment. If the company has 3 complains about its goods there will be the KPI’s score value of 3 with minimize optimization direction.

To fill up the project with this data select an indicator in “Customer perspective” category. Change this KPI’s name into “Complains number”. Now let’s fill up the fields referring to the KPI’s values. Type the number “3” in “Value” field. Now choose the measure option selecting “Score” in “Measure” field. Leave “Min” as “0” and set “Max” as the number of product the company sells monthly or some average number of complains. Let the “Max” number be “100” in our example. After that change optimization direction selecting “Minimize RP = MP * (Max – Value) / (Max – Min)” in “Optimization” field. Click on the projects tree dialog for changes to become set and that is it.

Setting up indicator’s score value to be minimized

Performance

While the new data was input into the project the value of “Performance” were changing as well. The performance is the most important metric in BSC project and it is not possible to change it directly. The performance of the whole project depends on its categories weight and performance values while the categories’ performance depends on its indicators weights and values.

To fill up the project and make its performance proper count at least one more KPI’s value needs to be set in “Innovation and learning perspective” category. Let it be “Illness rate” indicator meaning calculation by comparing employee illness-related absences against planned working time within a month. It is calculated using the formula of (illness-related absence time, days) / (planned working times, days) and has the measure of percents. As we already know the minimize optimization direction is needed to be used in this case and also “%” measure fits here. Let’s set the value of 13% as example. Now every of the four categories has its performance value and it equals 60.26%

Project’s total performance

Minimal project’s performance

In order to look what might cause a zero percent performance of the whole project let’s change numbers in ”Value” field of every KPI as at worst. KPIs “Return on investment” and “Number of products manufactured monthly” have a maximize optimization direction so its values are needed to be decreased down to “0”. KPIs “Illness rate” and “Complains number” have a minimize optimization direction that is why its values are needed to be increased up to maximum number. When all the parameters are set the whole project’s performance value becomes 0 which means the company is not effective at all.

Minimal project’s performance

Maximal project’s performance

To reach the performance of 100% every indicator’s value needs to be set for the best perspective. KPIs “Return on investment” and “Number of products manufactured monthly” have a maximize optimization direction so its values are needed to be increased up to the maximal nuber (“100″ for “Return on investment” and “200″ for “Number of products manufactured monthly”). But “Illness rate” and “Complains number” indicators have a minimize direction of optimization so its values are needed to be decreased down to zero. After the proper changing the whole project’s performance increases its rate up to 100% which means the business works absolutely perfect.

Maximal project’s performance

Conclusion

In Balanced Scorecard concept KPIs are determined within each company or company’s market niche according to organization’s strategy and plans. That is why this article aims to show the logic of KPI’s management process with BSC Designer software so you could be able to set any special parameter you actually need.