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Perfectly in balance

Arthur M. (Art) Schneiderman pioneered what later became the concept of the balanced scorecard while a vice president of quality and ...

By Julian Birkinshaw , Stuart Crainer and Michael Mol 01 March 2007

Arthur M. (Art) Schneiderman pioneered what later became the concept of the balanced scorecard while a vice president of quality and productivity at Analog Devices. We talked with Schneiderman, now an independent consultant, to find out more about the early evolution of a management innovation.

Perfectly in balance

How did you come to a “scorecard” point of view?

I was an aerospace research scientist for 15 years and decided that I wanted to change careers. So I quit my job, attended B-school, and worked in a strategy consulting firm. Ultimately, I became aware of Total Quality Management (TQM) on a trip to Japan. And that’s when I became so interested in it that I decided I really wanted to focus attention on TQM rather than strategy consulting.

Were you also interested in innovation at this point?

Yes. I wanted to make sure that I worked in companies that had a record of innovation and were particularly responsive to innovation at the management level, because TQM is a kind of innovation. As I searched for American companies that would meet the test of being both innovative and receptive to TQM principles, I increasingly focused on Analog Devices, and I wrote to Ray Stata.

Why that company?

Ray was and is one of the rare CEOs who is really curious and interested about management innovation. I remember when I first went to see him, it turned out that it was quite timely because he had just gotten off the phone with one of Analog’s major customers who was irate because a key shipment was late. And so I talked about TQM and it made for a great dialogue. It seemed to me right away that Ray and Analog were blessed with an innovative culture.

Did you say “culture”?

After years of working with innovation, there is no question in my mind that the number one ingredient is to have an innovative environment. You can’t innovate in an environment that is not open to innovation, and that means from the very top, from the CEO all the way down through the organisation. And it was clear that Ray was interested: he recognized that TQM was an important thing, that it had an impact on any and every industry, but that it would acutely affect the semi-conductor industry, of which he was a part. There’s no question that I immediately liked and respected Ray Stata and so that ended up being the chemistry of my going to Analog. It was the right environment for me and it was the right time for him.

Was everyone inside Analog as committed to TQM and innovation?

No. And, in time, Ray was succeeded by someone who has more of a traditional approach to management, the kind of executive who makes doable promises to Wall Street and then tries to deliver on them. The lesson here is that the leader of a company is essential to innovation; yet, after a company has become innovating – and if the industry does not demand that you innovate further – someone of a different temperament can lead the company, with a much more status quo demeanour.

When you worked on being innovative, what kind of time horizon was in your mind?

One of the first assignments that Ray gave me at Analog was to develop five-year strategic plans. Traditionally, once every five years, they would develop a strategic plan. Curiously, they would not revisit that plan until the five years were up. So I started to think of innovation with at least this kind of time horizon.

But five years ...does that work in today’s marketplace?

Obviously in today’s world that’s not a viable approach, and it did change even while I was at Analog more toward a continuous strategic planning model. That’s what’s needed now. If the market demands constant innovation (and just about every market does), you have to focus on innovation constantly. What’s most relevant to note here is that innovation is not something that is always defined by numerics. Even at Analog, I came up with something that was called the Corporate Performance Audit, an annual audit Special report Perfectly in balance Arthur M. (Art) Schneiderman pioneered what later became the concept of the balanced scorecard while a vice president of quality and productivity at Analog Devices. We talked with Schneiderman, now an independent consultant, to find out more about the early evolution of a management innovation. that used what I called a “half-life method”. The plan we devised used an annual context and focused on seven or eight non-financial things that we needed to manage in order to get to where we wanted to be in five years, numerically and otherwise. In fact, one of my tasks at Analog was to manage the agenda for the monthly business meetings. There was always a battle with other senior managers whether we should discuss, first, the non-financial parameters of the business or the hard numbers. Many companies fight that same battle today.

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