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Balanced Scorecard Solution

Balanced Scorecard Solution

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There has been much written about the power of performance measurement. Today, the theme is "Balanced Scorecards." From the start, Performance measurement has been one of the eight-basics of our educational materials and we have always identified it as an important kaizen target. 

We have recently completed an update of our Kaizen Lean Based Manufacturing (KBLM) seminar that includes a guide to the structuring and deployment of balanced scorecards. In so doing, we have chosen to give the module a new name to better represent its revised content - KBLM Basic No. 002, is now called "Balanced Scorecards." 

Our lead article this month is on balance scorecards. In the old days, performance measurement was primarily a manufacturing activity. Engineering was content with intangible methods of tracking their performance and Sales and Finance were comfortable with monthly and quarterly progress reporting. Today, we understand that a company's success is optimized only when all four of these functions are integrated into an effective, time sensitive, performance measurement system. This system has come to be called, "The Balance Scorecard." Don't miss reading our lead article: "BALANCED SCORECARD SOLUTION --- A 21ST CENTURY 

An important long-term objective of your Competitive Knowledge Newsletter (CKN) is to help business teams reach their full performance potential. Make sure your key people get a chance to read the article: "BRING TALENT TO THE TEAM."


In response to the many people who have been unable to attend our KBLM Seminars, due to heavy work schedules, I have developed a Kaizen Based Lean Manufacturing Tutorial. This five star tutorial presents our unique and powerful seminar materials in a "do it anywhere-whenever you can" 
self-paced, learning program. It is presented via 171 Power-Point slides with expert commentary by yours truly. It has been called an educational break through by business leaders. For information on the tutorial CLICK HERE 

We suggest that you both print and archive this newsletter for current and future reference. Feel free to make copies and share with colleagues.

This newsletter has reached your desk because we share a common objective -- to help key manufacturing people avoid "burnout" while achieving their full performance potential.


Bill Gaw, President
Business Basics, LLC


Featured Articles in This Month's Edition of CKN

I.    Balanced Scorecard Solution
II.   Bring Talent to the Team 
III.  Mindmap for Creative and Organized Solutions
IV. Reading Our Way to Positive Ideas
V.  Business Anecdotes and Famous Quotations

Performance Management Training for winners. 

I. BALANCE SCORECARDS, A 21st Century Motivational Tool
   By Bill Gaw, CPIM, CmfgE

Performance measurements provide the guidance for an effective kaizen (gradual, continuous improvement). Without metrics to establish and track where we are and where we want to go, there is little incentive to make positive change happen. If we are to be successful in our pursuit of continuous gains in speed, quality and costs, we must develop a rational performance measurement system that is motivational and achieves company wide commitment. Today, balanced scorecards is the choice of manufacturing winners.

To be successful, the balanced scorecard must encompass the key processes that determine the efficiency and effectiveness of a company's total product/service delivery chain. We need to take a systemic tour of the business to determine which functions and what processes require measurement -- determining "which and what" should be included in our scorecard. Performance measurements are then developed for all key process "hand-off" points. 

Below are four key business functions and five relevant performance measurements for each of the functions as an example of a manufacturing company's balanced scorecard. In this example, the balanced scorecard was 
created to track engineering, operations, finance and sales/service performance as each is interdependent in the pursuit of company growth and profits objectives. 

"Balanced Scorecard Solution" 

        Sales/Service                                   Engineering
1. Build Release Timing                        1. ECN Accuracy
2. S.O. Accuracy                                 2. Engrg Quality
3. SER Response                                3. SER Execution
4. Customer Samples                           4. Warrantee Expense
5. On-site Startup                                 5. Equip. Reliability 

         Operations                                          Finance
1. Production Linearity                          1. Accounts Receivable
2. On-time Delivery                               2. Accounts Payable
3. Product Quality                                3. CODs and Checks
4. Supplier Performance                        4. Information Integrity
5. ECN Execution                                 5. Inventory Utilization

The above approach to the balanced scorecard is effective in making positive changes happen in difficult manufacturing work environments. First, the company's strategic, critical success factors are converted into strategic objectives for each of our four key business functions. Then each function 
develops meaningful performance measurements that will support not only the company's critical success factors but also the strategic objectives of each business functions. 

An index can then be developed to converted each of the functional performance measurements into a common metric that could be aggregated at each level of balanced scorecards. Now, each function would have 
visibility and understanding of how each function is progressing. The end result would be an overall aggregate performance measurement of the total company. As long as the performance trends are moving in the right direction, positive bottom line results should follow.

The ability to capture timely and relevant data that provides a valid assessment of how business processes are performing is critical to creating an effective balanced scorecards. To this end, we need to establish personal ownership of the processes and then get the process owners involved 
in defining an appropriate method of performance measurement. Without this happening, there will be no worthwhile commitment to goal attainment.

Listed below are six important must do's that provide a backbone for the balanced scorecard:

Balanced Scorecard Solution Six Critical "Must Do's" 

1. KISS! Simplicity is important - complete understand is necessary - start slow and let it grow. 
2. Negotiations are required and agreements are crucial.
3. The number isn't important, direction is the best focus.
4. Tenacity is everything - good measurements should never die and never fade away! 
5. Timing is paramount - for example: financial data is too aggregate and way too late! 
6. Target selections - cascading structure is good, but performance analysis is best.

Establishing meaningful measurements and gaining team commitments are not easy jobs. They require leadership --- a person that has great people skills and has good connections to corporate power. I call these individuals champions! They are team leaders that have contagious enthusiasm for 
getting tough jobs done on time. Without them, there is little chance of implementing a successful performance measurement system - and no chance at all for developing  balanced scorecards!

Don't get carried away by trying to dot the Is and cross the Ts. The best advise I can give is to keep it simple and don't be too concerned about the preciseness of goal setting. The important thing is to establish a starting point and a trend of your performance as you go through time. If the trend is in the right direction, you know you are winning the battle, and if you win enough battles, you'll win the war. Don't get all hung up on annual goals, a good practice to follow is when you reach or exceed a goal, celebrate it 
and establish a new goal. "Just do it!"

The Balanced Scorecard Solution

Performance Management Training for winners.  

    By Price Pritchett

One of the most basic elements of teamwork is this: Be good at what you do.

Teams need talent. The more of it you bring to the group, the more you can contribute. Build your skills, and. in a very real sense, you are building the team.

You can't have a high-powered team with low-talent people. And sometimes the weakest link in the chain sets the limit on what the group as a whole can achieve.

So keep stretching. Polish your skills and perfect your moves. Master the fundamentals of your job.

Strive for continuous improvement - the Japanese call it kaizen - so the team never stops growing. Keep getting better at your craft, and you can do more to help the team chalk up higher scores. Any time you level off in your learning, the potential of the overall group flattens out a little more, And teamwork always takes a hit whenever people start to lose their touch.

Also keep this in mind - unless you're competent, people really can't afford to count on you. You're best positioned to build a high trust level in the group when you bring talent. Individual ability.

Give teammates good reason to believe in you. Keep getting better at what you do. 

Performance Management Training for winners. 

     By Joyce Wycoff

Do you need a way to help you organize your ideas and boost your creativity at the same time? Most of us do. Tony Buzan, editor of the International Mensa Jurnal, developed an easy thinking technique called mindmapping. 
It's a kind of nonlinear note taking that lets you capture ideas on paper, organize your ideas and make connection between them, and so encourages creativity.

How does mindmapping work? In her book Mindmapping: Your Personal Guide to Exploring Creativity and Problem-solving, Joyce Wycoff suggest following these three steps:

1. Focus. Using just one or two words, write the focus of your problem in the center of a piece of paper. Take your time to find the words that really get to the heart of your problem.

2. Let your thoughts grow out from the central focus. As your ideas arise, print them as key words and use lines, as in a tree diagram, to connect them to the focus. 

3. Put down all of your ideas. Just the act of writing down ideas gets your mind "unstuck," Wycoff advises. It helps you to clarify issues and from there, to think up more imaginative solutions. But don't try to edit your ideas or criticize at this stage, she cautions. The key to this stage is to be flexible and have fun with your mind map.

What can we use mindmapping for? Try it on project organizations, meeting agendas, "to do" lists, presentations, even personal growth. 

So, if it's a jungle out there, try mindmapping your way with tree diagrams. You'll discover more effective and elegant solution to everyday problems.

Performance Management Training for winners. 


What would happen if you devoted twenty minutes each day to reading a book that was educational or inspirational? Assuming that you read at the average speed of 220 words per minute, by year's end you would have read 20 books of average length. That would add up to 18 more books per year than the average person reads. Reading is an excellent way to absorb the beneficial effects of positive ideas.

Or, according to a study conducted at the University of Southern California. it pays to listen to educational tapes while commuting in your car or on the train, If you listened to tapes while you commuted 12,000 miles per year (a little less then 50 miles each day), then in three years you would have the equivalent of two years of college education. 

Performance Management Training for winners. 


From: MANAGEMENT MAGIC, Ideas to Help You Build and Mange a Winning Team.
          By Harold R
Put goals in writing. If you can't put in on a sheet of paper. . . you probably can't do it.

Hire people smarter than you. . . this shows you're smarter than they are.

The best way to determine what motivates people? Ask them! 

Maintain an "action oriented" environment.

All people act out of self-interest. Link individual and organizational goals.

Find the squeaking wheels and don't oil them.

A goal without a deadline is not really a goal . . . it's a wish.

Have an active rather than a reactive style.

Focus on a few - "high impact" priorities

Deal with "causes" not "symptoms" in solving problems

Focus on "continuous improvements" rather than "static perfection."

Build people's self esteem. The more competent people feel . . . the more they are able to contribute.

Allow "intelligent" mistakes.

"People seldom improve when they have no other model but themselves to copy after."
- - - Peter Drucker

"It's what you learn after you know it all that counts."
- - - John Wooden

"Everyone thinks of changing the world, but no one thinks 
of changing himself."
- - - Leo Tolstoy

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