Seven Tips for Building a Great Dashboard

Transcription

1 Seven Tips for Building a Great Dashboard What's measured improves Peter Drucker Managers at top organizations use metrics to determine current status, monitor progress, and characterize essential cause-and-effect relationships. Leaders assemble their critical metrics into dashboards, allowing them to see performance at a glance and take appropriate action. This white paper shares seven tips to help you create dashboards that rival the best in any industry. Background In the 1960 s, the Bridgestone Tire Company in Japan introduced nichijo kanri, or daily control of key processes throughout the enterprise. i For the Japanese, creating colorful displays to summarize critical metrics in all areas of the business was simply a natural outgrowth of having effective statistical process control on the production floor. Robert Kaplan and David Norton later popularized performance dashboards in their 1996 book, The Balanced Scorecard: Translating Strategy into Action. ii The authors recommended senior executives do the same BUSINESS FUNDAMENTALS PROGRESS TABLE in the U.S. They proposed leaders use a mix Revision: 4.0 Entity: Private Escapes Dept.: Operations Target, Goal & Limits Q1 Q2 Q3 Q4 ITEM Review GREEN YELLOW RED Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec of financial and non-financial as well as leading and lagging indicators to evaluate progress meeting strategic goals. Owner: Ed Powers Key Bus. Process: Member Services 1.0 Delivery DAY Overall Occupancy Monthly <65% 65-70% >70% 52% 65% 67% 58% 48% 62% 62% 62% 46% 45% 49% 53% DAY Overall Occupancy Monthly <50% 50-60% >60% 60% 54% 52% 50% 53% 53% 45% 40% 40% 40% 49% 61% 1.3 Avg. Utilization (nts/cert yr) Quarterly < > Cancellation Rate Monthly <15% 15-20% >20% 28% 21% 25% 15% 13% 14% 13% 11% 9% 12% 10% 12% 2.0 Responsiveness 2.1 Monthly Escapes Monthly <= >= Workload (Calendar Year) 2.2 Monthly Over-time Hours per planner Monthly < > Quality 3.1 Overall Satisfaction Monthly > < Today top performing organizations deploy 3.3 IRS Planner Scores Monthly > < Service Recovery Percentage Quarterly <2% 2-3% >3% 2.1% 1.3% 2.1% 0.8% 92% 86% n/a 93% 3.5 Service Excellence Scorecards Overall Monthly >90% 85-90% <85% 90% 92% 88% 91% 87% 89% 93% 93% dashboards extensively to help managers \\Escapes1\shared documents\operations\[ops BFTs 2007.XLS]BFT Excel workbooks are often used to create simple dashboards. focus on their most important plans, processes and results. All functions monitor performance, from sales to operations to human resources. A modern, well-constructed metrics system helps managers keep things under control and respond appropriately to changes in the environment: customers, suppliers, employees and internal processes. Keeping a watchful eye on the essentials frees up managers to be more proactive, spending less time firefighting and more time improving products and services. Thanks to better connected databases and advanced business intelligence tools, collecting, displaying, and analyzing dashboard data has never been easier. Listed below are seven tips to help you create dashboards that save time, keep your team attuned to the important things, and continually delight your customers, internal stakeholders, and your own manager. Revised July, Service Excellence Partners

2 The Seven Tips 1. Choose Actionable Metrics The dashboard s primary role is to help managers monitor performance and take appropriate action. Simply stating a number (e.g. 5, $281, or 26%) may be interesting, but without proper context it s meaningless. That s why dashboard metrics are always compared with predefined ranges, often showing status with red, yellow, and green stoplight indicators. These signals make it easier for managers to quickly assess the situation without getting lost in the minutia. For example, a green light says the process is producing results as expected, yellow says there may be a problem, and red says to take immediate action. When choosing dashboard metrics, always select numbers to compare against a customer specification (such as Service Level), a statistical process control limit (a calculated value indicating a potential shift in the process) or a goal articulated in a plan (such as keeping expenses within budget). When the dashboard shows red or yellow, set it aside and then analyze using charts and statistical tests to characterize, compare means, study relationships, and evaluate temporal changes in data. Finally, be sure you collect and display numbers over appropriate time intervals (e.g. monthly, quarterly, annually) based on when data are available and when management intervention may be required. 2. Balance the Concerns Measure + You should monitor financial metrics such as revenue and cost, but other factors involved in the process are equally important. TQRDCE is a helpful acronym to consider a variety of metrics to include in your dashboard: -- Status: Time Calibrated dashboards summarize data with helpful, intuitive indicators. Technology adoption rates, innovation rates, obsolescence, etc. Quality conformance to standards, customer satisfaction, Net Promoter Score, etc. Responsiveness turnaround times, cycle times, on-time completion, etc. Delivery output volume (revenue $, units, transactions, etc.) Cost budget performance, productivity, utilization, etc. Environment employee engagement, turnover, workloads, etc. Just like Aesop s fable, a great manager gets the golden eggs without killing the goose that lays them. When you evaluate performance over a range of metrics, you are more likely to keep things in balance. For example, let s say you achieved a green signal for a high volume of closed customer support tickets but saw red signals in employee turnover or customer satisfaction, indicating deeper concerns. It could mean you re pushing your customer support reps too hard or customer problems aren t actually being solved. It s easy to optimize one result at the expense of others for the short term, but to deliver in Revised July, Service Excellence Partners

3 many areas effectively and efficiently over the long term is the mark of management excellence. A broader set of metrics helps you reach that level of performance. 3. Link to Your Value Proposition Your company is successful when it differentiates itself from competitors and keeps the promises it makes to customers. All too often, however, companies lose their competitive distinction when they fail to translate their Value Propositions into day-to-day operations. Deploying the right metrics on management Value Proposition dashboards is one of the most powerful ways executives can create sustainable competitive advantages, and your team s metrics can hold the key. For example, your software company says it has the fastest integration time in the industry and you run the professional services team. One would expect to see metrics like available consultant delivery hours or consultant productivity on your dashboard. These measures would be carefully studied and benchmarked against competitors as well as best-in-class organizations in other industries. You would focus intently on these measures and the processes behind them, improving and innovating continually. Eventually, your diligent work would create a core competency competitors seek to imitate but cannot duplicate. 4. Less is More Operational Excellence Great dashboards reflect Value Propositions in addition to financial and operational metrics. Managers typically use far too few or far too many metrics, and it s a mistake you don t want to make. Monitor no more than ten at any time. Having less could mean you re not considering other factors that influence results (see #2). Having more could mean you re drilling down into too many details or attempting to control things that don t really matter. Regression analysis is a statistical technique that can reduce the number of variables (x) to just those that have significant impact on the outcome (y). For example, you may believe it s critical to monitor employee attendance, tardiness, and hours worked, but analysis shows conformance to work schedule is a better predictor of output volume than any of the three. In addition to choosing more relevant and impactful measures, you can aggregate data, keeping the details hidden but still available for offline diagnosis. For example, schedule adherence may be an important metric for individuals, but rolling the numbers up into a team statistic can allow you hide the non-essential details. 5. Account for Variation Financial Model All processes vary. During each cycle, minor differences in the people, methods, raw materials, equipment, information, and the physical or social environment affect the process and cause results to deviate. Random (also called common cause) variation is always present, but it s predictable. For example, the output of many processes can be characterized by the standard normal ( bell curve ) distribution. According to probability theory, you can be confident that about 66% of the time the next Revised July, Service Excellence Partners

4 observation will be found within one standard deviation (s) of the mean (X-bar), 95% of the time within two standard deviations, and 99% within three. Since this type of variation is intrinsic to the process, your proper response as a manager is either to accommodate the variation or reduce it by making a fundamental change in how the process operates. On the other hand, if the process varies because of Common Cause Special Cause Managers must identify and act upon two types of variation. assignable (or special cause) variation, there is a single factor or unique combination of factors that produced the outcome. Special cause variation often appears as dramatic spikes, long-term drift, or periodic patterns in the data. Your role in this case is to look for an obvious cause and take immediate action to correct it. s X The trick is to tell the difference between common and special cause variation. Faced with the situation, most managers tend to overreact or underreact. Statisticians call overreaction Type 1 Error (a false positive the manager sees a signal when there is none) and lack of reaction Type 2 Error (a false negative the manager sees randomness but misses a signal). Fortunately, a properly calibrated dashboard can tell you exactly what to do. Using the right statistical analyses, you can set your green, yellow and red limits such that your response is completely appropriate for the situation. 6. Align and Integrate Developing an effective dashboard to better manage your processes and lead your team will pay immediate dividends, but the real power of nichijo kanri is aligning and integrating your activities with other departments. As you construct your dashboard, use metrics that strengthen cause-and-effect links vertically and horizontally within your organization to achieve the company mission and promote healthy behaviors. Dashboards at higher levels will emphasize financials, those at the bottom will skew towards operating details, while those in the middle will blend both. For example, if your manager is focusing on productivity, one of your measures should target cycle times productivity is work output divided by hours worked, and if you can increase the rate of completion, you will increase productivity. Be Aligning and integrating dashboard metrics in all functions and sure your metrics also harmonize workflows levels makes organizations run better. you have in common with functions adjacent to yours. For example, if you run a customer service operation and your account management colleagues rely heavily on your team for accurate status, you should have a metric that ensures your technicians enter information into your support database in a timely and accurate fashion. Your team s success is important, but your goal should always be to optimize the customer experience and company s operation as a whole. Revised July, Service Excellence Partners

5 7. Review and Improve A dashboard is useless unless you review and act on the signals displayed. Make metrics review part of your regular staff meetings. If you oversee multiple levels and functions, have subordinate managers present their dashboards and discuss what actions they took corrective action, causal investigation, or improvement projects to build process capability. And when you see a string of green indicators, be sure to celebrate successes! Keep in mind that no system of metrics is ever perfect. While several measures may be relevant for years, others will change because of shifting markets, new knowledge, or moving business conditions. Expect to make minor adjustments in your dashboard, typically replacing one or two measures every year. Conclusion Reading: Interpretation: Action: Special Cause Variation Common Cause Variation Process Not Capable or Limits Set Incorrectly Common Cause Variation Process Capable Identify Root Cause and Prevent Reoccurrence Improve the Process or Change the Limits Improve the Process Proper signal interpretation is the first step to appropriate action. High performing organizations deploy a web of dashboards at all levels to run their businesses. These firms are uniquely customer-centric and process-focused, and they use metrics as an essential tool for achieving high performance. By designing your dashboard thoughtfully with these seven tips, you can pave the way for your organization to reach elite levels in your competitive marketplace. About Service Excellence Partners We help increase customer loyalty and business performance in the cloud computing industry. Specializing in reducing customer churn, we help clients diagnose root causes across the enterprise and then help systematically improve products, processes, customer experiences and management systems. When it comes to dashboards, we assist teams choosing and calibrating metrics using specialized tools, including advanced statistical methods. Contact us today to learn more: [email protected] i Soin, S. (1992) Total Quality Control Essentials: Key Elements, Methodologies, and Managing for Success. McGraw-Hill, ISBN ii Harvard Business School Press, ISBN Revised July, Service Excellence Partners