I hope by now that you have recognized
the immense organizational effort that went into the creation, deployment and
management of the first balanced scorecard. I would not be surprised to
find, had we tracked the effort, that the number of man-years associated with
its development and use, and the development of the supporting non-financial performance
measures, totaled more than ten. And this involved everyone from the CEO
down. So what was the return on this very significant investment?
Well, I don't know the answer, and I
wouldn't even venture a guess.
But I can tell you that in 1989, Analog
was ranked by HP as their number one IC supplier, up from eighth among its
linear IC suppliers in 1986. And that in 1990 and again in 1991 Analog won
Dataquest's mid-sized semiconductor "Supplier of the Year" award for
"exhibiting extraordinary dedication to product quality and customer
service" (starting in 1992, the previous year's winner was not eligible).
That award was based on a survey of several hundred purchasing decision
makers. And these were not isolated examples of honors that would have
been unheard-of at our 1986 performance levels. Why these accolades from
our customers? Let's look at the scorecard results for 1990 in the context
of the five-year plan:
Analog had achieved significant
improvement in all of its strategic plan QIP goals. In the process of
doing so, we learned many important lessons, that had they been known in 1987
would have led to less ambitious 1992 goals. Most of these lessons were
business rather than improvement related. For example, customers may not
want you to redesign old product for improved manufacturability. Shorter
time to market may not produce a higher return on R&D investment. I
refer you to my University of Dayton presentation (see: October
1991 University of Dayton presentation with transcript) for a more detailed explanation.
Now let me forewarn you: do not take what
I'm about to say too seriously. But if you are one of those people who don't
mind confusing correlation with causality, I'd like to throw this into the arena
of unsubstantiated claims of the miracle curative powers of the balanced
scorecard. We all are willing to agree that there is some lag between most
non-financial scorecard metrics and the bottom line. There is much debate
about the length of that lag. But I've argued that it's measurable in years
rather than months; how many is unclear. But if you're a believer, I'd
like to point out that Analog's market value increase one hundred fold since
1990! That's more than $25B in value creation. I'll let you decide
what part of that is assignable to its balanced scorecard implementation.
But be fair, apply the same criteria to those other claims.