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Analog Devices: 1986-1991

The First Balanced Scorecard©


Arthur M. Schneiderman

Setting the Context

Analog's Vision and Mission:  The Corporate Objective

The QIP component of the strategic plan was deeply rooted in a document called The Analog Devices Corporate Objective.  I've always viewed it as Analog's articulation of its Vision and Mission.  It's not your typical set of ubiquitous one-liners; instead, it identifies Analog's stakeholders and succinctly describes the company's specific commitment to each of them.  In effect, it segments each of the stakeholder groups by identifying which segments it has chosen to serve.  Later attempts to replace it with more traditional vision and mission statements proved ineffectual.  It is prerequisite reading for an understanding of how Analog forged the linkage between its performance measurement and strategy.

The Analog Devices Corporate Objective was first created by Ray Stata in the mid-1970’s.  He was strongly influenced by a similar document developed earlier at Hewlett-Packard, a long-time role model and strategic partner of ADI.  It underwent periodic “fine tuning,” usually after completion of a new five-year strategic plan.  The version shown here was published in May of 1985.  The highlighted text was modified in October of 1989, based on the 1988-1992 Strategic Plan.  The changes reflect refinements in Analog’s strategy, uncertainty as to appropriate financial goals, and some minor clarification in the wording.  Taken together, they describe Analog’s Corporate Objective during my tenure from 1986 through 1992.  

The Corporate Objective

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This document provided me with the necessary context for identifying the vital few non-financial performance measurements that would be the focal point of my contribution to the strategic plan.  The first step in this process was to look for a common thread that ran through Analog's commitments to each of its stakeholders.  I concluded that that thread was achievement of three basic business objectives:


Market leadership:  ADI was the strong leader in the high performance linear integrated circuit market with a relative market share (RMS) of 2.7 (revenues 2.7 times that of its nearest competitor).  By all contemporary strategic measures, this placed us in a dominant competitive position and entitled us to all of the benefits associated with such a leadership position.


Sales Growth: Analog's historic cumulative average growth rate (CAGR) for the period of 1970 to 1986 was just over 27% per year.  The combination of high RMS and high growth rate placed us in the "star" quadrant of the Boston Consulting Group's Growth/Share matrix.  And that's where we wanted to stay for as long as possible.


Profitability: Maintenance of operating profits before taxes in excess of 15% represented a reasonable expectation given our market position.

In the long term all of our stakeholders benefit from the achievement of these business objectives.  Employees maintain pride in their company, financial rewards (all non-commissioned employees participated in a significant quarterly profit sharing system) and opportunities for unblocked career advancement.  Customers benefit from the continued flow of a broad range of new products (fueled by an annual R&D investment averaging 15% of revenues) manufactured in state-of-the-art, world-class manufacturing facilities.  And our stockholders are rewarded by the value created through delighted customers and highly motivated employees.  Achievement of our business objectives would provide the glue that bound the stakeholders together in the presence of occasionally conflicting objectives.  I captured this mutuality of interest of our stakeholders in a symbolic description of our QIP that I used in presenting the ADI Story.

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

Last modified: August 13, 2006