Scorecard vs. DashboardAs a follow-on to my earlier post concerning effective use of scorecard systems, I'd like to highlight the distinction between scorecards and dashboards. This is a topic that Raef Lawson, William Stratton, and Toby Hatch (LSH), the authors of the report on use of scorecards cited in my earlier post, bring into focus in another recent Management article.
LSH list several issues that managers face that are related to the choice of appropriate metrics for monitoring what's happening in a business. I'd emphasize these five:
- Needing to respond faster to market changes and competitive pressures
- Strategy having little or no impact on the day-to-day actions employees take
- Little accountability for, or confidence in, long-term plans
- The budget not being tied to the strategy
- Needing to be able to do better at executing the strategy
Scorecard a strategic management tool that helps an organization measure, monitor, and communicate its strategic plan and goals throughout the organization, in a way that is understood by everyone.1
Dashboard a style of user interface designed to deliver user-specific information relating to the health of the business, typically represented by key performance indicatiors (KPIs) and links to relevant reports. Provides visual cues and graphs and focuses user attention on important trends, changes, and exceptions.2
Drawing on the results of the International On-Line Scorecard Study, on a set of nine case studies in a variety of industries, and on personal experience, LSH enumerate these typical characteristics of a scorecard:
- Data updated relatively infrequently, e.g., quarterly, semi-annually, or annually.
- Data visualized in grids, maps, and trend charts, with all users seeing the same display.
- Contains metrics explicitly related to the strategy, and used to monitor progress toward achieving strategic goals.
- Focus on forward-looking, strategic information.
- Supports collaboration and communication about strategic goals and progress in achieving them; does not drill down to transaction-level detail.
- Provides textual explanations of results.
- Focuses primarily on outcome measures (as opposed to output, or throughput, measures).
- Frequently updated data (some may be real-time).
- Data displayed in graphs and dials with little or no textual description; visualizations can be customized by users.
- Metrics that are either not related to strategy, or only implicitly related.
- Focus on historical information and analyzing what has already happened.
- Focus on results, and on comparisons to benchmarks.
- Often allows drilling down to detail, sometimes to the transaction level.
- Focuses primarily on input and output measures for processes, e.g., measures of efficiency and throughput.
If the purpose is operational, i.e., to support day-to-day decision-making concerning the running of the business, a well-designed dashboard is appropriate. It provides data on KPIs that enable timely response to operational issues.
On the other hand, if the purpose is strategic, i.e., to support:
- decision-making concerning how best to meet strategic objectives
- development of a culture of customer focus and of accountability for meeting strategic objectives
In the case studies they reviewed, LSH found that "organizations had actually implemented a scorecard system for dashboard purposes." LSH go on to say,
By the same token, based on our experience, organizations that implement dashboards often push the functionality to help align the organization with their strategy and measure progress towards it.In other words, scorecards and dashboards have distinct purposes, but both are powerful tools in helping an organization be successful. LSH suggest that ultimately, as software improves and organizations become more sophisticated in how they use metrics, the two tools may actually converge.
This makes sense. A well run and successful organization really requires aspects of both scorecards and dashboards to be truly successful in the short and long term.
1 Originally taken from an article in the Financial Gazette, a publication in Zimbabwe that is not currently online.
2 From a 2003 IDC (International Data Corporation) article.