[Post by Chuck Krugh, February 21, 2023]
After laying out the basics of the Plan-Do-Check-Act (PDCA) Business Operating System (BOS), we have spent the past few weeks adding more depth to the actions and systems for each quadrant. In particular, we have focused on cascading these actions down through each level of the company. We started with cascading our annual operating goals down to the deckplates in Cascading – A Method to Communicate Targets and Progress, which takes place in the Plan quadrant. We then moved on to our communications and our meetings, which are part of the Do quadrant. As we continue around the Business Operating System, we are now in the Check quadrant.
If you go back to the blogs Inputs to the Business Operating System as well as the Cascading blog I mention above, I describe how our strategy enters into the BOS through the form of the Annual Operating Plan. High-level targets and a scorecard to measure progress are important tools that help us turn our strategy into results.
Once we have set the strategy, we need to know whether we are making progress as we conduct our business. Our teams also need to know what we as a company and they as a unit or crew are doing to hit our targets. Last, using our Check process, we need to determine whether we must problem solve or make adjustments in order to meet our targets. How we monitor our progress, track what we are doing, and determine whether we have to make adjustments is what this blog is about.
We have two tools at our disposal to measure our performance to our goals – Balanced Scorecards and Dashboards. We also have a communication medium known as viz-boards. I thought it would be good to provide a deeper explanation of these topics.
This week I will focus on the Balanced Scorecard.
A Balanced Scorecard translates the high-level strategy into meaningful, numerical targets for us to hit. The number is a measurement of how effective we are at meeting the goal. Whether it’s safety, quality, revenue, cash, attrition or whatever may be important for us, we need to interpret our targets in a way that can be measured as well as understood by everyone in the company. We all have a role to play in our company’s success so we all need to know how we measure up!
While the Balanced Scorecard translates the strategy into numbers, it is only used two times per year – at the beginning of the year after strategy translation and at the end of the year to measure our overall performance. Between the beginning and the end of the year, we use the Dashboard to measure our performance daily, weekly and monthly. The key difference between the two tools is one translates the strategy and measures annual performance to goal attainment, while the other keeps regular score throughout the year. It’s important to understand the difference between the two tools and how we use them!
Once the strategy is translated into numbers we can measure, we cascade that down. Remember, the cascade is how we stay aligned. If you look at the two examples from the blog Cascading – A Method to Communicate Targets and Progress, in both VP level down to the Deckplate and VP level down to the Recruiter, the cascade progresses from high-level to detailed goals. In each of those examples, I specifically worded the description so that you could see how the high-level strategy rolls down through the organization to the point of execution.
Next time, we’ll talk about how we measure our success in achieving our targets using the Dashboard!
See you on the deck plates!
Safely Execute High-Quality Work
Chuck
President, General Dynamics Bath Iron Works
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