By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
SmartData CollectiveSmartData CollectiveSmartData Collective
  • Analytics
    AnalyticsShow More
    customer experience analytics
    Using Data Analysis to Improve and Verify the Customer Experience and Bad Reviews
    6 Min Read
    data analytics and CRO
    Data Analytics is Crucial for Website CRO
    9 Min Read
    analytics in digital marketing
    The Importance of Analytics in Digital Marketing
    8 Min Read
    benefits of investing in employee data
    6 Ways to Use Data to Improve Employee Productivity
    8 Min Read
    Jira and zendesk usage
    Jira Service Management vs Zendesk: What Are the Differences?
    6 Min Read
  • Big Data
  • BI
  • Exclusive
  • IT
  • Marketing
  • Software
Search
© 2008-23 SmartData Collective. All Rights Reserved.
Reading: Dashboards: A Kite with a Broken String?
Share
Notification Show More
Font ResizerAa
SmartData CollectiveSmartData Collective
Font ResizerAa
Search
  • About
  • Help
  • Privacy
Follow US
© 2008-23 SmartData Collective. All Rights Reserved.
SmartData Collective > Analytics > Predictive Analytics > Dashboards: A Kite with a Broken String?
Business IntelligencePredictive Analytics

Dashboards: A Kite with a Broken String?

GaryCokins
Last updated: 2010/04/27 at 5:14 AM
GaryCokins
6 Min Read
SHARE

How do executives expect to realize their strategic objectives if all they look at is financial results like product profit margins, return on equity, earnings and interest before interest, taxes, depreciation, and amortization (EBITDA), cash flow, and other financial results? These are really not goals – they are results. They are consequences. Measurements are not about monitoring the summary dials of a balanced scorecard. They are about moving the dials of the dashboard that actually move the scorecard dials.

Worse yet, when measures are displayed in isolation of each other rather than with a chain of cause-and-effect linkages, then one cannot analyze how much influencing measures affect influenced measures. This is more than just leading indicators and lagging indicators. Those are timing relationships. A balanced scorecard reports the causal linkages, and its key performance indicators (KPIs) should be derived from a strategy map. Any strategic measurement system that fails to start with a strategy map and/or reports measures in isolation is like a kite without a string. There is no steering or controlling.

My belief is there is confusion about what the difference is …


How do executives expect to realize their strategic objectives if all they look at is financial results like product profit margins, return on equity, earnings and interest before interest, taxes, depreciation, and amortization (EBITDA), cash flow, and other financial results? These are really not goals – they are results. They are consequences. Measurements are not about monitoring the summary dials of a balanced scorecard. They are about moving the dials of the dashboard that actually move the scorecard dials.

Worse yet, when measures are displayed in isolation of each other rather than with a chain of cause-and-effect linkages, then one cannot analyze how much influencing measures affect influenced measures. This is more than just leading indicators and lagging indicators. Those are timing relationships. A balanced scorecard reports the causal linkages, and its key performance indicators (KPIs) should be derived from a strategy map. Any strategic measurement system that fails to start with a strategy map and/or reports measures in isolation is like a kite without a string. There is no steering or controlling.

My belief is there is confusion about what the difference is between a balanced scorecard and a dashboard. There is similar confusion differentiating key performance indicators (KPIs) from normal and routine measures that we can refer to as just performance indicators (PIs). The adjective “key” of a KPI is the operative term. An organization has only so much resources or energy to focus. To use a radio analogy, KPIs are what distinguish the signal from the noise – the measures of progress toward strategy execution. As a negative result of this confusion, organizations are including an excessive amount of PIs in their scorecard system that should be restricted to KPIs.

When someone says to me our organization has 300 KPIs, I ask them, “How can they all be a “K”?

A misconception about a balanced scorecard is that its primary purpose is to monitor results. That is secondary. Its primary purposes are to report the carefully selected measures that reflect the strategic intent of the executive team, and then enable ongoing understanding as to what should be done to align the organization’s work and priorities to attain the executive team’s strategic objectives.

The vital and few strategic objectives should ideally be articulated in a strategy map, which serves as the visual vehicle from which to identify the projects and initiatives needed to accomplish each objective, or the specific core processes that the organization needs to excel at. After this step is completed, then KPIs are selected and their performance targets are set. With this understanding, it becomes apparent that the strategy map’s companion scorecard, on its surface, serves more as a feedback mechanism to allow everyone in the organization, from front-line workers up to the executive team, to answer the question: “How are we doing on what is important?” More importantly, the scorecard should facilitate analysis to also know why. As mentioned, the idea is not to just monitor the dials but to move the dials.

To go one step further, a truly complete scorecard system will have business analytics embedded in it. An obvious example would be correlation analysis to evaluate which influencing measures have what degree of explanatory contribution to influenced measures. This way the scorecard becomes like a laboratory to truly optimize size and complexity.

To read more about the difference between a scorecard (strategic KPIs) and dashboards (operational PIs) read my article, How is a Balanced Scorecard and Dashboard Different?

TAGGED: dashboards, kpis, performance measurement
GaryCokins April 27, 2010 April 27, 2010
Share This Article
Facebook Twitter Pinterest LinkedIn
Share

Follow us on Facebook

Latest News

ai can help with nurse burnout
Breakthroughs in AI Are Helping to Prevent Nurse Burnout
Artificial Intelligence Exclusive
AI in marketing
AI Can’t Replace Creativity When Crafting Digital Content
Artificial Intelligence
ai in furniture design
Top 5 AI-Driven Furniture Engineering Design Applications
Artificial Intelligence
data protection regulation
Benefits of Data Management Regulations for Consumers & Businesses
Data Management

Stay Connected

1.2k Followers Like
33.7k Followers Follow
222 Followers Pin

You Might also Like

KPIs
Analytics

5 KPIs and Metrics Membership-Based Businesses Must Track

6 Min Read
business dashboards and big data
Big DataBusiness IntelligenceExclusive

Leveraging Big Data With State-Of-The-Art Business Dashboards

8 Min Read
ways data can help increase kpis
Data CollectionMarketing

4 Ways Data Can Help Increase KPIs For Dispatch Teams

8 Min Read
Image
Big DataData Management

Little Data: The 25 KPIs Everyone Must Understand

6 Min Read

SmartData Collective is one of the largest & trusted community covering technical content about Big Data, BI, Cloud, Analytics, Artificial Intelligence, IoT & more.

ai chatbot
The Art of Conversation: Enhancing Chatbots with Advanced AI Prompts
Chatbots
AI chatbots
AI Chatbots Can Help Retailers Convert Live Broadcast Viewers into Sales!
Chatbots

Quick Link

  • About
  • Contact
  • Privacy
Follow US
© 2008-23 SmartData Collective. All Rights Reserved.
Go to mobile version
Welcome Back!

Sign in to your account

Lost your password?