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We are designing a reporting system for our company, should we base it on Kaplan's balanced scorecard?

We want to create a set of standard metrics and reports that we can use to view financial and operational performance across multiple businesses.  I'm familiar with the Balanced scorecard approach and would like to adopt it for our reporting taxonomy.  My question is this: is this a good approach or are there more recent approaches that I may not be aware of?

Answers

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Donald,

I like the scorecard in that it forces some structure onto planning; I don't use it anymore, however, in that my approach differs somewhat. However, for reporting across multiple businesses, I think there is a benefit (I just wouldn't use it for planning those objectives).

The two tools that I tend to use for the goal-setting phase are 1) A combination of stakeholder identification and a hybrid of an ishikawa diagram / market research laddering (happy to hold forth on what this entails if it isn't self-evident) and 2) Mind Mapping.

Neither of these two have output that is appropriate to reporting, however. What they do is create the structure for determining what *is* important, and how to measure it. You could back into a Scorecard to do that, and some of that comes very naturally from the outputs (my reports don't look dissimilar from Scorecards...they're just not based on that premise so they're not explicitly structured based on the quadrants).

Cheers,

Keith

Donald Koscheka
Title: Principal
Company: Bluecloud Communications
(Principal, Bluecloud Communications) |

Thanks Keith, I'm familiar with the techniques you suggest, but as you point out, they are not designed to provide a reporting taxonomy. We decided to use the Kaplan framework as it appears to fit our needs.

Topic Expert
Charley Kyd
Title: Founder
Company: ExcelUser
(Founder, ExcelUser) |

I take a different approach, which probably will offend the purists...

To me, "dashboard" defines a way to present data, usually trended data. It consists mostly of small line charts, along with a few small tables. It replaces page-after-page of numeric reports.

Using small charts with a consistent format allows you to track many different trends in one view. Quickly, you can compare measures, see inconsistencies, find exceptions, and discover interesting trends.

If you want to include a Balanced Scorecard among your views of the data, that's fine. But I wouldn't stop there. Set up other dashboards that display any other data you want to follow, both internal and *external*.

Think of these dashboards as perpetual prototypes. As certain measures grow less interesting, replace them with measures that are more interesting. If related measures are widely separated, rearrange the dashboard so the related measures are grouped together. If your dashboard doesn't work for you, change it.

Keep your charts small, simple, and consistent. This allows you to glance at your charts quickly without needing to mentally adjust for a variety of different chart types and display techniques.

Gauges are expensive chart junk. They're just a fancy way of dressing up a couple of numbers. Avoid them like the plague. Instead, use area charts with line plots, or bullet graphs. For more information about this issue see:

http://exceluser.com/excel_dashboards/dashboard-gauges-are-still-a-terrible-idea.htm

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