Red Is the New Green!
Red dashboard indicators aren’t all bad.
Have you had an experience with a dash- board that continuously reports in the
green? Month after month, the result is the
same: all good here. You must be operating at
a Six Sigma performance level! Do you really
believe that there are no process problems in
need of attention? Are your customers giving
you the same read on your performance?
You feel good about all of the green until
you are blindsided by an issue that never
surfaced on your dashboard. Then it’s “all
hands” to find it and fix it, a task made more
difficult due to the lack of transparency. How
often does this happen to you and your team?
Give me a measurement in the red any
day. When I see red, I know I have a metric
that is targeting and illuminating problems
within the organization. It creates the opportunity for management to take action. If the
measurement is constructed as a leading
indicator, then taking the prescribed actions
can prevent a pending problem from reaching
critical mass. Warning: my opinion greatly
discounts the generally accepted theory that
we in management all live for the firefight.
Don’t get me wrong. I like to see a red
metric go green. After a few reporting periods
in the green, I know it is time to refocus attention and go after the next prioritized problem
for the business. Naturally, the redirect can
only occur when there are assurances that the
proper controls are in place to hold the gains.
Once the process improvements have established a regular cadence of acceptable performance, it’s time to find the next problem
area and redirect the measurement tools to
provide the appropriate level of scrutiny.
As you might have guessed by now, I am
against an initial all-encompassing dashboard project. It is a better practice to build
out from a foundation that is more manageable and smaller in scope. Look to start
with the business processes where you are
most vulnerable. Think about your current
pain points, and challenge your developers
You should not
risk your business
from an ineffective
to provide transparency to the surrounding
mission-critical transactions. Where possible, design data dimensions with the future
Recalibration is another very important
aspect of a high-quality measurement
system but one that escapes our consideration most of the time. Think of the manufacturing floor and the calipers used to take
critical dimensional measurements of a part
used in the production flow. The instruments
utilized for accuracy undergo recalibration
at regularly scheduled intervals. The concept
is no different for process measurements.
Process measures need to be recalibrated as
well. Consider that data collection requirements will shift as the business changes
around the process.
I have the same anxiety over a dashboard
in the red that does not show a steady progression to green as I do for the always-green
display. Reporting period after reporting
period, you take the pulse and the patient
is dead. As problems go, this can be more
serious and systemic than the former, always-green scenario. Generally speaking, the
always-red scenario indicates an overall failure
in the original design that prevents proper
interpretation and reaction to the problem.
An effective metric design will give the
interpreter an understanding of all the
factors contributing to the measurement.
A well-crafted metric will identify the exact
input to the process measure that controls a
desired outcome for the user. There should
not be any guesswork involved.
Operational definitions are a fundamental
design component that will improve your
organization’s understanding of the measurement system and reduce its reaction time.
Proper definitions take all the ambiguity out
of the metric. The construct is fairly simple.
Each measurement has three elements: a
criterion, a test, and a decision. The criterion
establishes the standard you compare against
or the benchmark. The test describes, in
detail, the procedure for taking a measurement. The decision tells the interpreter how to
compare the measurement against the standard or benchmark. A well-crafted operational
definition will be simple and exact and leave
little room for interpretation. Well-defined
measurements provide clarity and understanding and will help you improve reporting
throughout the organization.
Finally, you would not drive your car if
the dashboard was inoperative. Similarly,
you should not risk your business on misinformation from an ineffective dashboard.
Measurement strategy takes time and
consideration to produce results. Make the
effort to identify an effective measurement
approach that will uncover issues and allow
you to take actions on the red indicators for
the opportunities they present. You won’t
regret it. W
David Ferguson is
president of the Oracle
Applications Users Group
(OAUG). He is a business
process manager with
more than 25 years of
experience working with enterprise technologies
SEP TEMBER/OC TOBER 2010