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Analog Devices: 1986-1992 The First Balanced Scorecard©
Analog Devices: 1986-1992
The First Balanced Scorecard©
by Arthur M. Schneiderman
The first balanced scorecard was created in 1987 at Analog Devices, a mid-sized semiconductor company. This e-book chronicles its development over the period of 1986-1992. By understanding the environment in which it was born and nurtured, and how it grew over time, I hope you will gain insights that will help you in your efforts at improved organizational performance and competitiveness.
During my tenure at Analog from 1986 through 1992, I was the process owner for non-financial performance measurement and the balanced scorecard. In documenting this history, I've relied heavily on my early audio or video taped presentations. I want to be sure that I'm not inadvertently revising history; time tends to have that effect. My principal objectives are to provide you with period data that demonstrates how Analog linked its performance measurement system to its Corporate Objective and business strategy and the richness and completeness of the improvement infrastructure that we had in place. You can be the judge of how it compares to current best practices.
Much of what has been previously written about this period at ADI is through the eyes of outside observers: Kaplan, Shank, and Hendrickson, for example, whose work was based on extensive interviews at Analog Devices. In reading their writings, it has become clear that even scholars have difficulty in capturing in words the fullness of what really happened. I'm sure I am guilty of the same oversimplifications. For example, it's difficult to publicly talk about failures, particularly when individuals are involved. So recognizing this inherent positive bios, I invite you to relive Analog's scorecard journey through the eyes of a very involved insider.
Finally, I posted my intentions to write this history more than six months ago. I grossly underestimated the effort involved in locating, transcribing, and assembling the material. And it's not over yet, as I continue to discover and correct errors and important omissions. But I took my own advice and reluctantly accepted lower initial performance on my journey to 6s writing.
Many of you offered encouragement through your emails. I hope that the result proves to be worth your wait. Let me know what you think and thanks for your patience.
I've structured this history in three levels of increasing detail:
The "Contents" section below highlights the key milestones in Analog's evolution of the first balanced scorecard.
Each of the sections summarized in the contents then provides a more detailed description of this evolution. Key period slides are shown to demonstrate how the various elements sequentially fell into place. (Left-click on the slide to get a more readable full screen view and then use your browser's return button to resume the story).
Finally, a number of actual slides and presentations given by me in the period of 1986-1991 are made available in various formats. Some of these presentations were video/audio taped and I have faithfully transcribed those tapes. Where actual transcripts are not available, I've tried to briefly describe the relevant slides in as unbiased a way as is possible. (PLEASE NOTE: I know that some of the other presentations were also recorded. If you have a copy, or know where I can get one, please let me know so that I can arrange for its transcription and inclusion.)
Contents
Setting the Context - 1986
• The 1988-1992 Strategic Plan The first balanced scorecard was the offspring of Analog's Five-Year Strategic Planning Process and its TQM activities.
• Analog's Vision and Mission: The Corporate Objective The Corporate Objective defined Analog's long-term commitment to its five constituent groups or stakeholders: customers, employees, stockholders, suppliers and communities. The Strategic Plan provided the roadmap for achieving delight among these stakeholders; TQM was one of the principal tools for getting there.
The Analog Devices Corporate Objective c. 1985, 1989
• What was ADI's QIP? The Quality Improvement Process or QIP was the early TQM framework used to drive improvement of Analog's key business processes. It represented Analog's starting point in its long journey toward effective process management .
Phase 1: 1986/1987 - The
Gestation Period: Developing the "Five-Year Plan"
• Defining The Drivers of Success A first look from the external and internal perspectives: where we're going and what we need to do to get there.
o
October 1986 presentation: starting the process of translating the
corporate objective into specific
actions
• Organizing for
Success Establishing the
organizational infrastructure
(cross-functional and functional councils and teams), deployment
strategy (tops-down AND bottoms-up) and setting five-year measurable
goals (how we'll know we have been successful) leads to an unbalanced
scorecard.
o August 1987-1 presentation: organization setting and ADI's five-year non-financial goals
• Linkage to the annual business plan: The Quarterly Scorecard and performance monitoring
o August 1987-2 presentation: the first balanced scorecard emerges
• Refining the Scorecard Story The logic trail from strategy to scorecard metrics
o January 1988 presentation: telling the scorecard story: linking metrics to strategic objectives
Phase
2: 1988/1991 - Deployment
Internal communications: spreading the word Rolling out the plan within Analog
March 1988
Strategic Plan (with transcript): the ADI QIP Plan rollout
The
CEO goes public: 1989 Sloan Management Review Article Analog's
management puts its commitment on the table for all to see.
Excerpts from the article
External communications: telling the ADI Story Spreading the word outside of Analog.
January 1989 presentation (with transcript): APICS/Babson
The QIP LOGO, a pictorial description
March 1990 presentation (with transcript): The ADI Story (QIPers)
December 1990 presentation: (with transcript) QOAL/QPC Annual Conference
October 1991 presentation (with transcript): University of Dayton
Phase 3: Continuous
Refinement
Evolution of Analog's balanced scorecard: 1987-1990 Step-by-step evolution of the first balanced scorecard
Analog's version of the strategy map: 1987-1990 Telling the story of why achieving scorecard goals will make a difference.
Epilogue
-
ADI Results Was it worth the all the effort?
- Summary Why I
believe that this history is important
Appendices
Guide to period presentations Listing of presentations and how they were recreated.
How the first scorecard became balanced "You got peanut butter on my chocolate."
Pilot: Using an Executive Information System (EIS) for scorecard deployment A war story of automating the scorecard and its deployment
May 1990
presentation: DSS Conference
September 1990 PILOT demo
The Kaplan connection How Bob Kaplan discovered Analog's scorecard.
My July 1990 presentation to Nolan/Norton
Excerpts from Kaplan/Norton reports, articles and book