In this article in a series on Lean thinking and the balanced scorecard we look at how operational measures are represented in balanced scorecard terms and the increasingly popular “Performance hub”.
At an operational level it is extremely useful to categorise measures. Take for example the increasingly popular “Performance hub” idea that provides a place next to the factory line or service operation and that provides a real time display of the operational activities of the team that can see it. A performance hub is often an area of the office or shop floor devoted to displaying the statistics on the performance of the unit. This might be real time information, if that is available, or the results of yesterday and the plans for today. In lean thinking these are designed to ensure the team understand where they are, how they are performing and what they need to achieve.
These hubs typically display information in categories. For a factory, these might be:
1) Productivity: Production volumes against plan
2) Health and Safety: Records of incidents or injuries
3) Quality of output: Any variations or problems with the quality of finished products
4) Coordination & timing: How this cell of production relates to other cells in the production schedule
5) Stock availability: Is the material ready for production
6) Staff issues: Team availability, absenteeism, or leave
7) Maintenance: When are parts of the line out of use?
I have seen examples of this where the team are reviewing their measures, issue sand actions at the start of each day so everyone knows what they have to achieve and what needs fixing. If necessary, issues can quickly be escalated from the shop floor to an appropriate level of management for resolution.
These views of the production line are useful. However it is important to realise these are simply a breakdown of one perspective of the balanced scorecard, the process perspective. It is obvious why. It is the view on the factory floor.
Of course these teams might look at the source of problems using a lean diagnostic tool, or cause and effect analysis, which will take them into the learning and growth perspective of the balanced scorecard. They might also look at costs and how the customer eventually felt when they received the product from their perspective. But their immediate focus is the detail of the operational process (the process perspective of the balanced scorecard). Hence the performance hub for that part of the operation.
So the categorisation is useful at an operational level. The perspectives are far more useful from a management view thinking through what will drive change and create value for the organisation.
However these categories are NOT a substitute for the balanced scorecard’s perspectives. The perspectives of the balanced scorecard, financial, customer, process and learning and growth) each ask questions of these categories. However from the production line’s perspective the measures are primarily measuring different aspects of the process. That makes sense because that is most relevant to them, but this should not be confused with the role the balanced scorecard’s perspectives play in describing how value and change are driven through the organisation.