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 just 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. more

January 1st, New Year Day, is a chance for proposing changes. The tradition is to make resolutions such as to lose weight or exercise more. Typically they are personal ones made by the individuals, but I have a new twist by making a resolution for CEOs, heads of government agencies and executive teams of all organizations.

I propose these types of managers enlist in a yoga class. My reasoning is that they need to periodically detach themselves from the hustle and bustle of the flurry of daily distractions and have some solitude and be introspective. I was inspired by this idea by reading a lecture by William Deresiewicz that was delivered to the plebe class at the United States Military Academy at West Point in October, 2009. more

Metaphorically, belief and disbelief in business analytics as a competitive edge, and not just a passing fad, meet at a door. On one side is passion, and on the other, fear. Passion always lives with fear. Those with passion for a methodology, like embracing analytics to support decision, have fear that others will reject them and their ideas. What position for analytics will come out ahead? Opposition or proposition?

Technology is no longer the barrier to analytics

What is it about accepting a new idea like applying analytics? There is a lot. And it mainly has to do with the natural resistance to change with people. People like the status quo. The main barrier to the acceptance of applying analytics is no longer technical but rather is behavioral and cultural. The software tools are proven. The use of analytics by casual users, not just a team of trained statisticians, has become widespread. more

For those of you who are my regular readers, you may know that the number of my obituaries that honor special people are very few. I believe this my fourth one in the four years that I have been blogging.

Jeremy Hope (1948 – 2011) was a special type of management consultant. He started a revolutionary movement when he co-authored with Robin Fraser the book, Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap (Boston: Harvard Business School Publishing, 2003). Their basic message was that the annual budgeting process is so broken and dysfunctional that the best solution is not to reform it but rather to abandon the process altogether. Their solution was to understand the underlying purposes of a budget and apply methods, like driver-based rolling financial forecasts, that fulfill the purposes of a budget.

I personally knew Jeremy, however, to read a much better memorial tribute and description about Jeremy and his like than I could write I encourage you to read a piece written by my friend and fellow enterprise performance management (EPM) visionary, Steve Player. more

How will the rapidly evolving movement of analytics go mainstream from its being a niche solution? My prediction is through sports fans. And one boost for the acceptance of analytics in business and government may be triggered from the movie Moneyball starring Brad Pitt.

The movie is based on the book by Michael Lewis, Moneyball: The Art of Winning an Unfair Game. It describes how the Billy Beane, the general manager of the then poorly performing Major League Baseball Oakland Athletics, applied analytics to convert a perennially losing team into a champion based on a low budget. more