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Phil Green
Phil Green
author, misLeading Indicators: How to Reliably Measure Your Business

Greenbridge Management Inc.
President

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How dashboards mislead

Posted over 9 years ago

The dashboards commonly used to display business key performance indicators (KPI) conjure up images of automobile dashboards or airplane instrument panels. Try an Internet search on “dashboard” and you will find dozens of business software products that arrange KPIs on dials on dashboards or instrument panels.

The machine or automotive metaphor runs deep through the business performance management and measurement literature. The book “The Balanced Scorecard” talks about indicators that “drive” future performance.  In the book “The Dance of Change” the authors even say they find the dashboard metaphor useful because if you tried to drive a car without a dashboard your car would crash or roll to a stop.

This is nonsense. The first cars did have dashboards. But there were no instruments on them. It is perfectly possible to drive a car without a dashboard, because most of the information you need to drive is sensory. Your dashboard cannot tell you that a child just ran in front of your car, or the ambient speed of the surrounding traffic, or the best way to pass a slow vehicle.

A vehicle dashboard is useful for telling you the condition of your vehicle—the fuel level, oil level and so on. Most of this can be done through exception reporting such as red lights that come on when you need to maintain your car.

The dasboard metaphor affects what people measure, how they interpret the measurements, and what they think measurements can tell them.  It may cause managers to think of their companies as machines.  But they are not machines and do not behave like machines.

Like driving a car, some of the most important information you need to run a business comes from the senses.  It is not measurable. Decision-makers cannot make a judgment about many important situations based solely on measurements and KPIs. You need to see the conditions with your own eyes and ears.  This is the Toyota “lean” concept of “Genchi genbutsu,” which  means “go and see for yourself.”

Measurements and dashboards or scorecards are useful. But you should understand their limitations, just as you understand the limitations of your vehicle dashboard.

Comments (5)

Michael Taplin
Michael Taplin
realkpis.com is the home of The KPI Bible and offers the lowdown on KPI modeling

Phil is basically correct but I offer a couple of thoughts to extend his argument.
Dashboards that only extend our knowledge of the condition of a business present the problem of running a business using only a Balance Sheet with no knowledge of the present financial performance.
Secondly, the proposition ignores the value to be gained from tracking leading indicators. Leading indicators like the trend in the value of the forward order book are critical to managers who want to lead by anticipating the future.
Both are possible if the real KPIs are tracked.

Posted over 9 years ago | permalink
Karel van der Poel
Karel van der Poel
Founder Mirror42

David Parmenter used the following analogy: “Running a business is not the same as driving a car. Everybody can drive a car, only a few people can run a company.”

Identifying trends is an important skill in order to improve business performance. Car Dashboards are mostly based on gauges, dials and meters, all incapable of identifying trends and therefor not the most useful visualization techniques for business dashboards.

Posted over 9 years ago | permalink

‘A fool…with a tool…is still a fool" – unknown…that is why the auto industry call them ’Idiot-Lights’…

I strongly support Phil’s position… these are INDICATORS! Genchi genbutsu definately applies to dashboard information.

That said, dashboard can be incredibly effect for the ‘non-foolish’ manager; providing a consistent view into an operational area. I like consistency in tools… if you build it, I can likely impove on it; over time.

I drive a chevy malibu max..great car (hats off to the progress made in detroit!)… engine light comes on (I am fairly good DIY auto maintainer)… I take it to autozone to have the computer code read… codes says the car is running colder than spec… lead cause is the thermostat failed and is ‘open’… bought the a new thermostat for $8.75, with an hour of my time, replaced it just fine…

during this last summer..engine light came on.. similar approach with autozone..la la la..this time the code indicated a pressure failure in the gas system…leading cause is the gas cap..replaced that for $5.90…no joy… did some troubleshooting for broken vacuum lines etc..the obvious still that I could do..finally took it to the shop…$350 to diagnose and replace a failed vent solinoid on the filler neck of the gas tank…I never KNEW there was a solinoid there…

moral of the story is… Indicators certainly CAN mislead… but there is no dashboard that can replace a knowledgable mangager who know their beans!

Posted over 9 years ago | permalink

reminder to self..proof read your comments…. blush

Posted over 9 years ago | permalink
Chandrasekhara Ganti
Chandrasekhara Ganti
Operations Research Analyst / Applied Statistician

All, first time member to this KPI Library. For a while I was interested in the KPI dashboards concepts. I find that Phil’s and others comments do primarily confirm the limitations of these new tools ..take them with a grain salt. Know that they can’t run the company for you. Auto Analog and Dan’s experience with Dashboads drives home that point. Thanks

Posted over 9 years ago | permalink

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