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Analog Devices: 1986-1991

The First Balanced Scorecard

by

Arthur M. Schneiderman

Appendices

How the Scorecard Became Balanced

As the only staff (i.e. not line) manager reporting to Jerry, the COO, if fell on my plate to organize and create the agenda for the ADI Operating Council's quarterly meetings.  I had heard the story of how Bob Galvin, Motorola's CEO, signaled his commitment to quality improvement:  He had review of the quality metrics placed at the start of the agenda of their Operating Committee's meeting (which he previously did not attend) and promptly left the meeting upon completion of the review.   So I decided to follow his lead.  Each meeting, I'd put the metrics review as the first agenda item and I placed review of the financial results somewhere later in the agenda.

And at each meeting, when I put up the agenda slide, Jerry would change the order to place his primary interest, the financials at the start of the meeting.  But I persisted.  After several of these meetings, Jerry called me into his office and said:  "I understand your motives and you understand mine.  This game that we're playing is not productive.  You figure out a way to satisfy both of us, or we'll just do it my way."  Nice challenge!!  

At home a few nights later, I was half-watching the TV when a familiar commercial aired for Reese's Peanut Butter Cups, a candy bar consisting of a core of peanut butter covered with milk chocolate.  As I remember it, a jar of peanut butter and a chocolate bar are walking along two intersecting streets and as they round a building they collide.  The resulting exchange went something like, chocolate bar: "you got peanut butter on my chocolate", peanut butter jar: "no, you got chocolate on my peanut butter."  Suddenly the light bulb lit: combine the financial and non-financial metrics as a single agenda item.  So I added a small number of key financials at the top of the scorecard, and the problem was solved to everyone's satisfaction.  The argument that we should limit the number of financials because they had such high historical organizational weight was persuasive and so we adopted a rule of 1:6 for the ratio of financial to non-financial metrics.

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1999-2006, Arthur M. Schneiderman  All Rights Reserved

Last modified: August 13, 2006