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1.     Optimum Quality Costs and Zero Defects: Are they Contradictory Concepts?” Quality Progress.  November 1986, p. 28.

This article provides a mathematical proof that minimum cost can occur at a defect level of zero.  It also provides an explanation as to why conventional calculations of optimum quality levels overestimate these optima by failing to include many important costs associated with producing defects and overstating the cost of prevention.

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Article reprinted in “Quality Costs: Ideas & Applications, A Collection of Papers” by ASQC Quality Costs Committee, Jack Campanella, Editor, Quality Press, American Society for Quality Control, Milwaukee, Wisconsin, 1989.

2.     Setting Quality GoalsQuality Progress.  April 1988, p. 51.

This article introduces the half-life method, a normative model for predicting rates of improvement in processes being addressed by TQM.  It analyzes nearly 100 improvement efforts and shows that the rates of improvement were constant over many improvement cycles and were determined by process complexity.  It characterizes complexity along two dimensions: organizational and technical.  The article discusses several applications as well as possible misuse of the method.

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The application of the half-life method at Analog Devices, Inc., a mid-sized semiconductor company, is described by its CEO and Chairman in: Ray Stata, "Organizational Learning — The Key to Management Innovation," Sloan Management Review, Volume 30, Number 3, Spring 1989.  This article also describes an early versions of the first balanced scorecard that was initially developed at Analog in 1987.


The half-life method became the subject of a Harvard Business school case: Robert S. Kaplan, “Analog Devices: The Half-life System” Harvard Business School Case Number 9-190-061, 3/16/90 (revised 7/12/91).  Also, Teaching Notes, 05-191-103, 11/27/90.  This case also appears in: Cooper, Robin., and Kaplan, Robert S., "The Design of Cost Management Systems" (Englewood Cliffs, N.J.: Prentice Hall, 1991), ISBN 0-13-204124-3, pp. 226-239.


John K. Shank of the Amos Tuck School of Business Administration at Dartmouth College accompanied Kaplan on his site visits.  His independent view of the half-life method and its application is given in Robert A. Howell, John K. Shank, Stephen R. Soucy, and Joseph Fisher, "Cost Management for Tomorrow: Seeking the Competitive Edge" (Morristown, N.J.: Financial Executives Research Foundation, 1992), ISBN 0-910586-85-3, pp. 127-149.


A more recent Analog Devices case study was prepared by Kirk Hendrickson of Dartmouth College under the supervision of Professor Vijay Govindarajan.  It appears in Robert N. Anthony and Vijay Govindarajan, "Management Control System, 9th Ed.," (McGraw-Hill Professional Publishing, January 1997), ISBN 0256168784, Case 11-1.  This case not only describes the half-life method and its application at Analog Devices, but also the development of the first balanced scorecard and its evolution through 1997.

Professor Govindarajan has recently revised this case and published it in Robert N. Anthony and Vijay Govindarajan, "Management Control System, 10th Ed.," (McGraw Hill College Div., August 2000), ISBN 0072316357.


3.     “Metrics for the Order Fulfillment Process” Journal of Cost Management.  Part 1: Vol. 10, No. 2, Summer 1996, p. 30.  Part 2: Vol. 10, No. 3, Fall 1996, p. 6.

This 2-part article defines the characteristics of good (and bad) metrics and applies these definitions in a real case study.  It also describes the use of these metrics in the first balanced scorecard.

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Articles 1-3 are reprinted in Emerging Practices in Cost Management, Performance Measurement, 1997 Edition, Barry J. Brinker, Editor.  Warren, Gorham & Lamont, Boston, Massachusetts, 1996, ISBN 0-7913-2404-4.

4.     Measurement, the Bridge between the Hard and Soft Sides”, Journal of Strategic Performance Measurement, Vol. 2, No 2, April/May 1998, p. 14. 

Organizations can be viewed from both a process and people perspective.  Unfortunately, many practitioners take this as an either/or situation.  This article attempts to bridge the gap using data as the vehicle.  Admittedly starting from the “hard” side, it defines measures of process and organizational learning and shows real examples of how these data can be used to drive behavioral change.  It also introduces the use of fuzzy logic as a way of dealing with degrees of truth and language data.

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5.     Are there Limits to TQM?”,  Strategy & Business, Issue 11, Second Quarter 1998, p. 35.

The declining interest in TQM partly results from its proponent’s failure to apply the basic principles of TQM to itself.  Among these principles are customer focus, conformance to specification and fitness for use.  But, who are the customers of TQM and what are their explicit and latent needs?  What are the specifications of TQM?  Under what circumstances is TQM fit for use?  The lack of clear answers to these questions has created expectations among senior managers that TQM cannot currently meet.  These unmet expectations have driven managers to discount TQM’s overall value, and to look elsewhere for solutions to their most important challenges.  This article develops a model for defining the region of usefulness for TQM by examining the effectiveness of its evolving tool set for processes of varying complexity.  With this distinction, managers can refocus their organization’s TQM efforts to those areas, which still have vast potential payback.

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Strategy & Business


An abridged version of this article appeared in Measuring Business Excellence, Volume 2, Number 2, Second Quarter 1998, p. 4.  

6.      Why Balanced Scorecards Fail!”, Journal of Strategic Performance Measurement, January 1999 Special Edition, p. 6.

Most Balanced Scorecards fail because they lack a sound foundation.  Basic structural requisites include processes to guarantee that the right things go on the scorecard, with properly defined metrics and rational, time based goals.  To assure successful implementation, the scorecard must be deployed throughout the organization, teams equipped with state-of-the-art improvement tools, and learning and refinement formally embodied in scorecard management.  Executives who underestimate the long time lag between non-financial and financial results may prematurely abandon good Balanced Scorecard systems.

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  1. "Managing System Profit", Journal of Cost Management, Vol. 14, No. 5, September/October 2000, p. 33.

Focusing on cost by product and customer through Activity Based Cost (ABC), or production bottlenecks through the Theory of Constraints (TOC) are two of the many possible ways of viewing the profit equation.  Another, “System Profit,” (product profit minus opportunity cost), combines ABC and TOC considerations and adds competition-based market constraints to provide different, often initially counter-intuitive, strategies for true long-term maximization of shareholder value.  The resulting changes in optimizing product mix can have significantly longer implementation times than occur in most cost management initiatives and produce short-term signals that require unconventional management responses.

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  1. "How to Build a Balanced Scorecard", Handbook of Performance Measurement, Mike Bourne, Ed., Gee Publishing Ltd., London 2001 Chapter B2, ISBN 1 86089 824 6 (CD and looseleaf), 1 86089 940 4 (looseleaf only).

    To successfully create and use a BSC an organization must translate its strategy into the language of its various stakeholders and then identify the critical process improvements that will lead to their satisfaction and delight.  This three-part e-article describes how to do it using a step-by-step process.

    This is an edited version of the material appearing elsewhere on this website.  See

    How to Build A Balanced Scorecard

  2. "Time to Unbalance Your Scorecard", strategy+business, Issue 24, Third Quarter 2001, p. 12.

By its very name, the Balanced Scorecard mandates a “balanced” set of performance measures.  To meet this requirement, scorecard are often populated with unessential measures.  This article argues that in order to have a manageable set of metrics that are the vital few keys to strategic success, metrics must be selected based in strategic impact, not balance.  As a consequence, good scorecards will be unbalanced; containing mostly non-financial, internal, leading, short-term measures.

strategy+business link

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  1. "The First Balanced Scorecard", Journal of Cost Management, Vol.15, No.5, September/October 2001, p. 16.

The first Balanced Scorecard was developed at Analog Devices in 1988 as part of their 5-Year Strategic Plan.  It resulted from a logical process that started with Analog’s written Corporate Objective, which articulated its strategic commitment to its five major stakeholder groups: communities, customers, employees, stockholders and suppliers.  Gaps in stakeholder satisfaction provided the external perspective, and were mapped into required process improvement to provide an actionable internal perspective.  The resulting Corporate Scorecard provided a rallying flag for efforts that led to dramatic improvements in customer satisfaction and operating efficiency, the focal points of Analog’s strategic objectives, and contributed in part to a hundred-fold increase in shareholder value.

This edited article is based on The First Balanced Scorecard that appears elsewhere on this website.  It focuses on the period of 1986-1988.  This BSC is still in use today.

  1. "Moving Ahead ... To the Past", Journal of Cost Management, Vol. 15, No. 6, November/December 2001, p.43.

    There's on old saying that the key to success is "doing the right things right."  Much of today's focus is on identifying and measuring the right things for an organization to do in order to achieve its strategic objectives.  But success is not assured unless an organization can follow the trail to its "pot of gold" faster than its competitors and before the terrain has significantly changed.  To do this, it must be as facile in doing things right as it is identifying the right things to do.  And the key to this lies in the past.

  2. "Setting Goals the Half-Life Way", Encyclopedia of Social Measurement, Academic Press, to be published in Fall, 2003.

The Half-life Method is a normative model for predicting the rate of incremental improvement of non-financial performance measures.  It can be used both as a diagnostic tool and for goal setting purposes.  Because it identifies the fastest rate at which a measure can be improved using current incremental improvement tools and methods, it is particularly valuable in testing the achievability of strategically significant Balanced Scorecard goals without major process redesign/reengineering or outsourcing.

  1. "Cultural and Structural Requirements for a Successful Balanced Scorecard", MBA in a Box, Crown Publishing, to be published in Winter, 2004.

The BSC, like any change initiative must satisfy a general set of requirements shared in common by any change initiative as well as those unique to it.  This article describes seven general cultural requirements and seven more BSC specific structural requirements that must be satisfied for successful implementation.


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©1999-2006, Arthur M. Schneiderman  All Rights Reserved

Last modified: August 13, 2006