Balanced Scorecards

It’s going back some years now, but I remember working in a design office before the days of dashboards, balanced scorecards and policy deployment. In fact when it was suggested that we should have some measures similar to the ones used by manufacturing, our boss very clearly replied that there wasn’t anything to measure in product development.

The reality was that we were actually very good at managing releases of parts against a defined project timeline, which, in turn created a product which satisfied specific design requirements, many of which were verified by the use of specific functional tests. The programme of testing was also usually completed on time.

Since then, most large organisations seem to have adopted the belief that every department needs a scorecard, and I have had to contend with several examples of measures that feel like they aren’t really encouraging me to do ‘the right thing’. When forced to spend time on tasks that don’t seem to add value or don’t seem to be aligned with the needs of the customer (internal or end user), this inevitably leads to a cynical attitude towards the targets.

There are some classic examples of targets driving the wrong behaviours. These include increasing output at the cost of quality, or reducing inventory at the expense of lead-time. In the world of engineering and product design we are often tasked with saving money or reducing cost. On its own this is a very simple task, but to reduce cost without compromising safety, reducing functionality or increasing the chance of failure or breakdown is usually very difficult.

Design is almost always a compromise and during development we have usually achieved what we think is the best mix of attributes based on our understanding of the design requirements.

Furthermore at the development stage there is a budget to draw on. Too often, in my experience, financial departments expect cost reductions after launch for little or no investment.

The way to ensure that targets don’t force the wrong behaviour seems to be by getting the right balance of measures. For example high volume and high quality or low inventories and short customer lead times. So a balanced scorecard might make sense, but this can tend to drive too many measures. I have had about 20 measures to chase this year, some of which seem difficult to influence as I have little direct control over them.

So was my old boss correct when he said that targets don’t work for engineering? Well I think he knew what mattered because we had a track record of delivering successful products on time. I think if he were in charge now, he would be required to put some things that he probably tracked in his head onto a board on the wall. 

He would have a few important targets, but he would make sure they were balanced and that they helped to make sure that the right things got done on time.  It sounds deceptively simple when you put it like that, doesn’t it?