These two buzzwords cause confusion among business professionals as they are used synonymously. From the first look one might have an impression that “dashboard” and “scorecard” are interchangeable, but there are some important distinctions that I’d like to analyze in this article.
I’m presenting the results of the comparative analysis in the form of a table. I compare “dashboard” and “scorecard.” As long as the most used form of the “scorecard” today is a Balanced Scorecard, in my analysis I’ll focus on this very framework.
The differences between a Dashboard and a Balanced Scorecard
|Is used for…||performance measurement / monitoring||performance management|
|As a measurement tool is…||metric||KPI (Metric + Target). Read also: The difference between metric and KPI.|
|Measure is linked to business objectives…||doesn’t link||links|
|It measures…||performance||progress (the current value versus the target value)|
|It is updated…||in real-time||periodically (monthly)|
|It focuses on…||operational (short-term) goals||strategic (long-term) goals|
|Its purpose is to…||give a high-level idea of what is happening in the company||plan and execute a strategy, identify why something is happening and what can be do about that|
|Its helps…||visualize the performance to understand the current state||align KPI, objectives, and actions to see the connection between them|
|In automobile it is…||automobile dashboard (shows how your car is operating)||GPS (shows when and how you will arrive?)|
Contrast the process of design
The Balanced Scorecard design process is up to down (with some exceptions). It starts with global business objectives and then moves down to KPIs level. The dashboard is more oriented on an operational level; as a result the process starts with the identification of relevant metrics and monitoring of their values. If something happens, an executive needs to analyze the cause and effect connection between various parts of the business system to find out what is needed to be done to fix the problem.
|Dashboard Process||Balanced Scorecard Process|
|1. Identify the goals of the dashboard and metrics.||1. Identify and map business objectives on the strategy map with a case-and-effect connection|
|2. Design a visual interface with charts and diagrams.||2. Define KPIs with targets and benchmarks, align KPIs with business objectives.|
|3. Monitor performance regularly.||3. Define action plan according to the strategic objectives.|
Contrast the process of usage
The dashboard and the balanced scorecard are tactical and strategic tools respectively. Their usage processes are different as well.
|Dashboard Process||Balanced Scorecard Process|
|1. Business system generates events. Performance of the process is calculated and presented in the form of measures.||1. Responsible employee follows business objectives from the strategy map.|
|2. Operational dashboard visualizes measurements in the form of a chart, a diagram or a gauge.||2. Employee executes the action plan that is aligned to the specific business objective and it is measured with selected KPIs.|
|3. If the performance of the process is not on the normal level, a dashboard generates notification to the responsible manager.||3. KPI is reported to the Balanced Scorecard, its value is compared with target values and thresholds (stop-lights):
|4. Responsible manager researches and follows cause and effect links to identify and fix the problem in a timely manner.||4. Responsible manager tracks the progress according to a developed plan and suggests updates when necessary.|
Common features of a dashboard and a balanced scorecard
- Who uses a dashboard and a scorecard? It is hard to distinguish who uses the dashboard and who uses the Balanced Scorecard. Some companies reported that their Balanced Scorecard is available only for executives, other prefer to share it with all of their employees. A Dashboard is supposed to be available for supervisor roles only, but some companies think that this valuable information can help line-level employees in their daily job as well. Generally speaking both tools are historically business measurements and management tools of executives and top managers.
- Dig into cause and effect. What happens when a supervisor receives a warning signal generated by a dashboard? After having a first look at what is going on a supervisor is supposed to understand the cause and effect relation between business objectives, actions and measures. That’s sounds very close to what the Balanced Scorecard framework suggests doing with business objectives on the strategy map.
- Measure and KPI. Although many sources tend to differentiate measures (no target) and KPIs (with target), in practice most companies follow the idea of the KPI in the dashboard as well by assigning some synthetic benchmark.
How to identify when a dashboard and when a scorecard is needed?
As it was shown in the table above, a business dashboard is similar to the dashboard of an automobile that shows the current speed and the fuel level. Following this analogy, the Balanced Scorecard might be a GPS that provides a business with information about the current position and the time one needs to get to the destination. In most cases when one drives from city A to city B he or she uses a GPS only, but if something happens to the car the first place where you look at is your control dashboard.
Let’s take a customer support department as an example.
- An executive needs to have an operational measure that will show the time that it takes to close a support ticket.
This is an operational measure, it allows a manager to know if the support center is working properly today, but this operational indicator doesn’t show if the customer support department is helping the company to execute its strategy. With a dashboard we don’t know anything about the strategy.
In this case the Balanced Scorecard with an appropriate business objective mapped on the strategy map would help.
- For this example let’s take a business objective “Improve Customer Satisfaction.” The possible KPI might be “Return problems rate,” which is one of the drivers of customer satisfaction; it will show how good employees of the customer support department are in solving customers’ problems.
This KPI will show if the actions of the customer support department help to execute the strategy of the company.
What has a higher priority: KPI from a scorecard or a measure from a dashboard?
Let’s return to the example described above where we were talking about the customer support department. We had there:
- Operational measure “Time to close a support ticket”;
- Strategically KPI “Return problems rate” aligned with strategic objective “Improve Customer Satisfaction.”
What measure is supposed to have a priority here? Operational measure or the KPI aligned with a strategic objective? From the very first looks it seems that both play equal roles. But let’s have a look at the two cases below.
- This week support tickets were closed on average within 1-2 hours;
- “Return problems rate” for this period is 25-30%.
- This week support tickets were closed on average within 4-5 hours;
- “Return problems rate” for this period is 8%.
According to “Case A” it is obvious that employees of the customer support department are “gaming” the measure. They are answering support tickets quickly to keep the measure in the green zone, but they failed to solve the customer’s problems properly.
What about “Case B”? That is an example of a measurement problem. The KPI is not a business process; it is just a model of a business process. Just one KPI “Return problem rate” doesn’t tell us the full story about the customer’s satisfaction. We need a solution that will prevent the appearance of Case A and Case B. There are two possible solutions:
- Find one more success driver of the customer satisfaction (for example “Average ticket response time”) or
- Use a dashboard with an operational measure on it.
The problem is that finding and quantifying success drivers is a challenging task. We could use a simpler alternative – a measure on an operational dashboard.
Answering the priority question I would say that the Balanced Scorecard KPI has a priority as it “see” the big picture. But as it was said, the KPI is just a model of the business that cannot take into account all possible aspects. That’s why it is worth accompanying the strategic KPI with operational measures to have an idea about what is going on in the business right now.
Developing a hybrid of dashboard and scorecard
It is clear that companies need to have both:
- Short-term tactical vision that gives a dashboard and
- Long-term strategic vision that provides a scorecard.
The solution might be a hybrid tool. It might be some kind of a dashboard where specific metrics are aligned with strategic objectives and/or a balanced scorecard that has more operation level measures and visualization means. In the previous article I suggested using a strategy map of the Balanced Scorecard as this is a hybrid tool that will allow a company to focus on measures that are important from the strategic point of view as well.
I’d like to demonstrate this idea with the automobile analogy. The GPS is your Balanced Scorecard. Imagine that your car can access via Bluetooth or similar interface information about the fuel level. That’s how the hybrid of a dashboard and a balanced scorecard might look in this case. You will still need a dashboard for a diagnostic of possible problems, but the usage of this dashboard will be limited as all the information you need is available in your GPS, e.g. strategy map of the Balanced Scorecard.
What do you think about a dashboard/balanced scorecard hybrid? Please, share your thoughts in the comments below.