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Analog Devices: 1986-1991

The First Balanced Scorecard

by

Arthur M. Schneiderman

Phase 2: 1988/1991 - Deployment

The CEO goes public:

1989 Sloan Management Review Article

The sometimes heated internal debate over external communication of ADI's current non-financial performance and our specific long term goals ended abruptly when Ray Stata, our CEO, included the five-year Corporate Scorecard in an article that he published in the Sloan Management Review (see relevant excerpts from Ray's SMR article).  Here is how Ray described it:

"Using the half-life concept, at Analog Devices we set very aggressive five-year goals for quality Improvement (see Table 1). The results of continuous improvement with nine to twelve month half lives over an extended period are awesome. The first reaction of our organization was to recoil from what looked like unrealistic objectives. But we reminded our managers that if a company really gets its quality improvement act together, there is no fundamental reason why these goals cannot be achieved. There are companies in Japan already operating at these levels on some of these measures."

This article sent a strong message from Analog's CEO.  To customers, it offered proof that we were committed to improving their satisfaction and were confident enough to make that commitment public by publishing data that heretofore was considered highly proprietary in the semiconductor industry.  To Analog's employees, it cemented our commitment to manage by fact and to use non-financial metrics as a major data source in that pursuit.

All presentations that I gave while at Analog, both internally and externally, used the most current actual data rather than disguised or indexed versions.  I always received positive feedback on this practice and I'm unaware of even a single instance in which this practice had an adverse impact on our business.

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1999-2006, Arthur M. Schneiderman  All Rights Reserved

Last modified: August 13, 2006