Overview of Executive Dashboards

My friend Larry asked me for an overview of an executive dashboard system. Here it is.

What it is
How to Set it up
How to Use it

An executive dashboard is not a "thing" but a system. And developing the executive dashboard system requires an understanding the business that the dashboard will reflect.

A good executive dashboard provides a senior manager with a simple, visual display of the key indicators of the organization's success.

That simple display hides separable complexity, however. Each indicator is a summary of several lower-level indicators, and it is desirable to be able to drill down easily from the high level summary to the underlying details.

I generally recommend the dashboard be in four sections: past, present, future, and quality.

The "past" section contains financial indicators -- cash flow, sales, P&L, and the like.

The "present" section contains indicators of current activity, usually on a daily or weekly cycle. These will include things like the number of sales per retail outlet, web hits and page views at a web site, number of vehicles per hour, number of widgets off the assembly line, etc. If even a single store has unusually low sales, the top level indicator should go red to signal that something needs to be looked at.

The "future" section contains forward-looking indicators of future results, such as the sales pipeline, the response rate to marketing efforts, and even industry trends.

The "quality" section contains such crucial items as customer satisfaction, manufacturing defects, collection rates, and worker productivity.

Some Assembly Required

A proper dashboard requires a detailed understanding the business, and an equally detailed understanding of the business' strategy.

This can often be a challenge, but it is a challenge well worth meeting, because it requires senior managers express the organization's strategy in operational terms. That is obviously something that every senior manager should do anyway, but it frequently does not occur. Setting up the dashboard requires that be done early, visibly, and accurately.

For example, one organization was concerned about profitability of different jobs being processed by the job shop. The dashboard process, however, require management to be extremely specific about what they wanted and expected. For profitability to be tracked, new numbers had to be gathered on the shop floor. Previously, the desire for those numbers had been resisted by lower levels of the organization. Tracking labor hours and setup time by job was considered too much trouble.

Once it became clear, however, that upper management was taking these numbers very seriously, compliance improved.

Perhaps the most powerful effect of a good dashboard system is that the numbers being collected at the front line of the organization become useful to the front line workers in gauging their own success.