When designing a dashboard, it is considered good practice to first choose a type of dashboard. Dashboards are generally grouped into three categories based audiences’ access to data, their ability to analyze and their business knowledge:
- Operational dashboard is used to monitor activities in specific business area in real-time. The intended audience is junior management.
- Tactical/Analytical dashboard is used to provide a comprehensive view of the data and to identify trends. The intended audience is analysts and/or middle management.
- Strategic dashboard is used to monitor Key Performance Indicators (KPIs) against target/benchmark values. The intended audience is senior management.
At first glance, this seems like a good approach to help focus attention and prevent information overload.
But, the problem with such categorization is the disconnect it promotes between various levels of organization by limiting certain views to certain audiences. It also puts some burden of gauging a stakeholders’ access to data, ability to analyze and business knowledge on the analyst.
Here I propose an alternative to this stakeholder centered approach. A strategy centered approach.
In large organizations, implementers of the strategy are often many levels removed from leaders who design the strategy. The purpose of a strategic dashboard is to minimize this disconnect.
Before we delve into the what and how of strategic dashboards, lets define the key-concept inspiring this discussion: Strategy.
What is Strategy?
The field of study dedicated to Strategic Management recognizes the multiple elements that make up our understanding of the word. For example, Henry Mintzberg proposes the following 5Ps for Strategy:
- Strategy as Plan (a conception preceding action)
- Strategy as Ploy (a specific action outsmart a competitor)
- Strategy as Pattern (a consistency in behavior, intended or not)
- Strategy as Position (a chosen domain for the organization in the external environment)
- Strategy as Perspective (a mindset that dictates an organization’s behavior)
In Good Strategy, Bad Strategy, Richard Rumelt defines strategy as “a coherent set of analyses, concepts, policies, arguments and actions that respond to a high-stakes challenge.” This definition captures the essence of the 5Ps by addressing the intrinsic as well as extrinsic aspects of strategy.
Out of Mintzberg’s 5Ps, plan and ploy are what most people think of when they hear “strategy”. Yet, somehow the adjective “strategic” has come to imply executive or high-level decision-making. This misunderstanding has even pervaded the world of dashboards.
How can we design a strategic dashboard without a clear definition of the concept? Yes, it is a question of semantics. And in my opinion, an important one. Steven Pinker, captures the importance of semantics beautifully:
“Semantics is about the relation of words to thoughts, but it also about the relation of words to other human concerns. Semantics is about the relation of words to reality—the way that speakers commit themselves to a shared understanding of the truth, and the way their thoughts are anchored to things and situations in the world.”Steven Pinker, The Stuff of Thought: Language as a Window Into Human Nature
Good Strategic Dashboard
In Good Strategy, Bad Strategy, Rumelt suggests:
“Strategy is at least as much about what an organization does not do as it is about what it does”
Applying this to dashboard design, a good strategic dashboard must be focused and reflect coherence in action, policy and resources to track true progress. Multiple goals, varied initiatives and numerous metrics may give an impression of movement but movement doesn’t necessary mean progress.
“The second natural advantage of many good strategies comes from insight into new sources of strength and weakness. Looking at things from a different or fresh perspective can reveal new realms of advantage and opportunity as well as weakness and threat.”Richard P. Rumelt, Good Strategy Bad Strategy
So, a good strategic dashboard must help uncover insight by utilizing new sources of data. The ultimate power of dashboard tools like Power BI and Tableau lies in combining data from multiple sources in otherwise siloed systems. This allows you to slice, dice and aggregate data in new ways and come up with innovative measures. It can also help reduce the cost of acquiring data by leveraging existing data sources, instead of starting data collection from scratch.
Structure of a Good Strategic Dashboard
In his book, Rumelt calls the basic structure of a good strategy: the kernel
“The kernel of a strategy contains three elements:
A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical
A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis
A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with one another to work together in accomplishing the guiding policy.”Richard P. Rumelt, Good Strategy Bad Strategy
A dashboard built upon a complementary building block will not only be strategic in itself but can also be a great tool to manage a strategy.
In the BI world this is analogous to a business question. When displayed at the top of the dashboard, it orients the audience to the problem at hand. Making diagnosis a requirement for the dashboard, forces stakeholders to spend time with the problem before jumping to solutions. This is where the data thinker on your team must facilitate conversation and help poke the issue at hand from all possible sides.
A wrong question, like a wrong diagnosis, can set actions in the wrong direction. Searching for the right question, while time consuming, allows a deep comprehension of the the situation.
Rumelt defines this as the overarching approach an organization adopts to address the challenge identified in the diagnosis. It reveals and organizes interactions among the many possible actions.
In terms of dashboard design, this component is analogous to macro metrics that help evaluate the overall performance of the strategy – measures of success. So a good strategic dashboard must include metrics for big-picture outcomes like patient survival, cost of care, market share, rate of product development, time to market etc.
The core of a good strategy lies in action. Similarly, a good strategic dashboard must be actionable. This is accomplished by visualizing micro metrics. These metrics of micro outcomes are often measures of variation in a process. For example, measuring variability in patient cycle time, customer acquisition cost, product costs etc.
Micro metrics help establish a connection between an employee’s application of skill to accomplish an action and the guiding policy.
To be effective, the actions must be coherent. They must coordinate and build upon one another. In addition to being actionable, a good strategic dashboard must then be coherent. It must highlight the underlying relationship across all metrics and the business question.
Bad Strategic Dashboard
Rumelt lists fluff, failure to face challenge, mistaking goals for strategy, and bad strategic objectives as hallmarks of a bad strategy.
Likewise, a bad strategic dashboard might have one or more of the following:
- irrelevant metrics
- too many metrics
- excessive design elements
- missing benchmarks/target values
- missing relationship between metrics
Audience Centered vs Strategy Centered
Software updates and new feature releases are becoming more and more frequent in the world of BI tools. There is a lot of functionality available to build interaction, segmentation and drill downs into a dashboard. It can effectively allow the viewer to customize it to their current need or curiosity. Thus, preventing the information overload without limiting access.
To be clear, I am not suggesting one dashboard to rule them all. I am advocating for dashboards that complement an organizations’ strategy map (more on that later).
Insight can come from any level of the organization. The best ones are usually unearthed by bringing multiple perspectives to the same information. A person six levels removed from the senior leadership may hold the most crucial piece of information. That information is lost if it never finds it way to the strategy makers. A good strategic dashboard opens up those lines of communication and promotes novel insights.