 Hi, everybody, we're back. I'm Dave Vellante, and this is the Cube Silicon Angles flagship production of IBM IOD. This is our second year at IOD. We go out to the events like Information on Demand. We extract the signal from the noise and bring you the best guests that are at these events. Mark Lack is here. He is with Mueller, which is a company that specializes in balanced scorecard. And for those of you not familiar with the methodology, we'll take you through that. But Mark, welcome to the Cube. Oh, thank you very much. So start with Mueller and what you do there. I am the manager of strategy analytics and business intelligence. I've grown from starting from planning and to strategy execution to my new role that takes care of all of that from planning to strategy. Talk about Mueller. OK. Mueller Incorporated, we manufacture and retail steel building and metal building product solutions. We're located in the southwest part of the United States, based out of Ballinger, Texas. Small West Texas town of about 4,000 people, about three hours west of Austin. We have 35 locations all over the southwest and we're unique in our space because we retail what we manufacture. So what are the major trends in your business? I mean, you've probably gone through quite a few transformations over the last couple of decades. We'll talk about that a little bit. You know, over time, we started out as a business that sold secondary products that were guaranteed to sink in water. Was really the only type of warranty you could give. And over time, the efficiencies within the steel markets created a shortage in the secondary steel that was used for cattle shade and for cisterns. So over that time, we had to find a new growth area. And that was selling prime products in the metal building space. So if you think of a metal building, such as a warehouse or a mini storage or even a backyard building, even all the way up to a metal roof, these are products that are much more highly involved than just selling secondary steel. So we've had a lot of turbulence in the steel market from pricing. And of course, with the economy of late, the construction market is not always what you would hope it would be. But everything's going strong. And geographical shifts in competition. So did the big box trend really was that a tailwind for you guys? Or the big box stores? You know, maybe to some degree, we'd like to see ourselves as, you know, for people that are looking for home improvement, they may go to a big box to a home improvement store. For people that are looking specifically for a metal building solution or a storage solution, that they're going to come directly to us. We do cater directly to the end user of the product. So we use a contractor to install some of the larger jobs, but we really focus on the end use customer, which makes us unique in the space that we do business in. OK, why don't we describe the balance scorecard of Ms. Bin? We're talking off camera, but Kaplan and Norton developed a balance scorecard, you know, decades ago, right? Yeah, early 90s. OK, early 90s. And it caught fire. But so describe the balance scorecard a little bit. Well, it was interesting. I was in graduate school, and one of my thesis sees that I had worked on was using the balance scorecard in a corporate environment. And so we'd studied it. And when I went to go work for Mueller, I'd suggested at the time of this turbulent change that we'd been going through, we had some executive changes. And we were changing some of our products. We were upgrading some of our computer systems. And so we had a lot of change going on in the organization. So I approached Brian Davenport, our CEO, and said that the balance scorecard might be a good way to help manage through this turbulent change. And so what it did, it allowed us to communicate to the rest of the organization our strategic comparatives as we move forward. So as we get into taking our mission, our vision, our values, we're able to translate those into operational terms so that the rest of the organization would have something that they could be measured upon in terms of their input to executing our company strategy. And so in about 2003, 2004, we implemented the balance scorecard and we've been using it ever since. So one of the great things about the balance scorecard is it does what you just suggested. It communicates throughout the organization, it aligns everybody throughout the organization. But one of the risks of the balance scorecard is if you get the strategy wrong, you're going to be really good at implementing a bad strategy. So how did you, did you factor that in upfront and you obviously have confidence, you guys have domain expertise, but was that even a consideration early on? You know, we talked about that. And we could have had the perfect strategy and not been able to execute it or we could have a mediocre strategy and be excellent at executing it. And I'll take a mediocre strategy that we can excellently execute any day of the week. The challenge you have is you're right, getting it right. And when you talk about corporate change, the dynamics that happen there, you want to be very careful that you don't try to turn the ship too quickly. What the balance scorecard allowed us to do was identify those key drivers and those key items that we needed to do to satisfy the end user market. And by focusing the organization on those aspects, it helped us to work in concert together so that we didn't have goals from one part of the organization that were competing against another part. We were all in it for the end use customer. But more importantly, we had clarity of communication so that everybody in the organization knew exactly what was expected, where we were headed and how it was supposed to be done. So you're right, there is a challenge there and do you have it right? We're still in business and we've been successful in our space. We're one of the leading, so I... You got it right. Well, the other great thing about the balance scorecard is it's highly flexible by design, right? I mean, you can make changes as your strategy changes or as the market dictates change. So I think history generally will prove that even if you're implementing a strategy that's maybe not 100% perfect, you're better off getting going and executing than you are wringing your hands trying to figure out what to do next. That's exactly right. Okay, so now it helps to have tools to manage the things like the balance scorecard. Some people use spreadsheets, right? You probably have experience yourself using spreadsheets. Little bit too much. So, and we were talking off camera, I remember Cognos in the 90s, they were really driving balance scorecard hard. You go to Cognos website, it would balance scorecard across the face and Cognos competitors sort of jumped in, but they got the early lead in that race and then they went out like a Saint Bolt and then really held that lead well into the IBM acquisition. So I wonder if you could talk about that aspect of the tooling, how important was that, the old saying of fool with a tool. So you have to be careful about that, but talk about what role that played, maybe compare and contrast it with some of your other experiences using spreadsheets or manual sort of tasks. Sure, you know, when we got into the balance scorecard and we realized very quickly that we needed to automate it. We needed to find a way to communicate the expectations beyond just some pictures or some Excel worksheets. So we had a process for planning and we had a process for the balance scorecard and then we also had a process for reporting. What we found were the tools that Cognos provided IBM, well it was Cognos at the time, now it's IBM Cognos. What they allowed us to do was bring those three processes together into a single platform. So when we did the balance scorecard, the metrics piece was very, very important. And so the first thing we published were a list of metrics to see what our successes were against our strategy. These are your key performance indicators, the KPIs, everybody talks about KPIs. And one of the things that Cognos had done, and I remember having a conversation with Bob Kaplan about this, was that they understood the balance scorecard and when they were programming it, they programmed it to support this process. Now it can go beyond that, it's not limited to the balance scorecard. But from that process, it really got what we were trying to do by separating the objectives and the perspectives by allowing us to report these metrics across the enterprise. So we were looking for that to automate it. Excel just became very difficult and cumbersome to use. So the metrics was the first piece that we implemented. What we realized very quickly was if you get a group of guys in a meeting and you show a red, yellow, green scorecard map, what'll happen is when you start focusing on the reds, the question is, well, what happened? So now if you don't have the information systems to support the detail down to that level, you're not able to effectively manage the corrections within those particular items. So we found out very quickly we needed to add a level of analytics and reporting support to give the people the detail they needed to make meaningful change. So that's where that process coincided with the balance scorecard piece. In addition to that, we had a planning software, a datum, which was an enterprise planning and is now TM1 that helped to integrate. So as you put these three processes together, you've got the planning piece, you've got the metric scorecarding piece to digest successes and failures and then you have the reporting piece to give the detail to the organization so they can make meaningful change. And what IBM Cognos provided was that platform that allowed us to bring these processes together. How did you deal with, so I liked what you were describing there, essentially you're saying, if you don't have the systems to be able to drill down and understand and actually see what the outcome is, then you really can't affect the change because you can talk about, you know what's wrong, but you can't fix it kind of thing. But at the same time, how did you deal with the organizational aspects of empowering people to actually make the change? I wonder if you could talk about that a little bit. You know, people as creatures of habit, I remember one of the books that we had handed out, I can't tell you the name of the author, but it was Who Moved My Cheese. And so we realized that there was change going on in the organization from the retirement of a chief officer to the expansion of the organization, to the expansion of the footprint of how the number of locations we were going to have and the processes we need to execute. So at that time, there was a lot of change about in the organization. So when Brian Davenport, our CEO, got up in front of the group and he said, look, we're gonna change, change is inevitable, you know, and if we don't change, we're gonna die. We have to continually reinvent ourselves in order to stay ahead of the competition to provide value to our customers. So he really set the tone that change is important to maintain the organization, but also for future growth. And we really got that. Now as you implement these systems, when we first did the balance scorecard, everybody thought it was great. They're like, oh, this is a fantastic way to organize what we need to do. I can see the line of sight of what I should do in the organization. And then after a period of time, we said, okay, well now we're gonna tie it to compensation. And then we got whoa. Whoa, whoa, I'm not sure about that data point. Well, I can't impact that. That's not, you know, this is my... So all of a sudden you got quite a bit of pushback and really the way we handled that organizationly was, is look, this is the strategy of the organization. It's important for us to execute, but not one metric is more important than the others. If you take one item out of context, you're losing the synergies between the objectives and the scorecard. So we had to look at the entire scorecard as a whole as an indicator. This is just a communicated indicator of the direction that we're headed. So that was our main focus. And we've been very successful. So part of the language of our organization now is we've gone from our mission, vision, and values as we call our business purpose statement. And we've translated that into operational terms. And being able to do that, when we execute today, we're executing our vision and our mission. So there's no separation between the jobs we're performing and the mission of the organization. Did you know the metrics going into this process or did the analytics inform the metrics? You know, it was funny. When you get into any sort of metrics and objectives, you can have people come in and say, well, I've always measured this. So this has to be a metric on the scorecard. And so we did that at first. And then you see these things that are disjointed because this process over here may or may not impact anything else, but this guy in this department or group thinks it's important. So what we did is- It was cathartic. We went through, it was a very painful process, but we broke down the process as the organization. You've got the objective perspectives of learning and growth, operational efficiencies, customer value, and then financial realities. And so we said, what do we need to do to be successful? So we identified those foundation objectives. We didn't have any measures or metrics there. Now we did have financial metrics that tell us how well we're doing. So we've always got those, but we're really built from the ground up, those objectives, and then those metrics that really supported what we were trying to accomplish. And by doing so, I wouldn't say we broke anything, but what it allowed us to do was think freely into what do we need to be doing? This is what we're doing today. Going forward, what do we need to be doing and being successful at within an organization? So that became the way that we identified the objectives. And we said, if we can't measure it at this time, don't worry, let's get the objectives right. Then we'll find the data, and then we'll find the metrics that are going to support the success in implementing our strategy. The other nice thing about the balanced scorecard is you can actually quantify subjective measurements with using a scoring methodology. And again, the whole philosophy is continuous improvement. You keep getting better and better and better. So I wonder if you could give us some examples of the non-financial metrics, these things like customer quality and other factors that you might have considered. Sure, some of the things that we've been looking at recently have been training hours. How much money are we spending? Not money, but how many hours are we putting people through training? Because that's going to be a foundation for operational efficiencies as we go forward. From a quality sector, we look at our scrap or the number of credits we have to give back on particular product types. So those all lead to financial results, but they really give us an example of what our processes are doing. And these can lead into customer surveys and customer value factors. When they tell us that we would recommend you, that is just as important as making a sale, because we know in the future that's going to lead to additional revenue. So we look at these non-financial value factors and metrics in order for us to identify what's the future going to hold. Almost a predictive analytics, if you will, which is the hot term of today, but it's predictive metrics of what the future is going to hold. How has, the last question actually, second or last question, because we gotta run, but how has this age of big data changed the whole balance scorecard industry? You know, I had a conversation about this not long ago. And you know, the balance scorecard you hear about, you hear scorecards, you know, I think that it has been translated into a lot of different methods and ways of analyzing the business, but I really think that big data is going to push a resurgence within the balance scorecard. And let me tell you why. You have this in, we're creating more and more data every day. We have to identify what that data is telling us. So it's the future value that we're getting from today's data is what's going to predict the future. And so that's where I see something like the balance scorecard, being able to digest all of this big data to really give us the insights we need to perform better in the future. So that's my opinion on how that's impacting today. How about, last word, advice to fellow practitioners that maybe want to get started? What kinds of things would you maybe have done differently? How should they get started? Maybe talk about that a little bit. You know, you can't see my battle scars because I have my shirt on, you know, from everything I went through. When we did the balance scorecard, we went day in and day out for quite a while and we would present it. We think this was great. And then we'd tear it apart and we'd go over. But the important thing is to stay at it. You know, we had executive support. We recognized that this was really the path that we wanted to go down. We needed to go down to be successful in the future. So we stuck to it. Executive support, I cannot tell you how important that is to get the buy-in from the hires up because when you go with a new process or a new system and you say, hey, okay, we're gonna start doing this, you know, if you have the CEO behind you, then it's going to get done. If you don't have the executives behind you, it'll be an uphill battle. So even those who are in an uphill battle, sell it to your organization, sell it to the higher ups, prove the value and it can be done. And that will make your process and implementation go a lot easier. Mark Lack of Mueller, thanks very much for coming on theCUBE, balance scorecard. If you're not familiar with it, check it out. There's a lot of information out there and the way it was fantastic methodology and a lot of companies have succeeded as a direct result of implementing that methodology. So thanks again for coming on theCUBE and sharing your knowledge with us. Thank you, I enjoyed it. All right, keep it right here, everybody. We'll be back. This is theCUBE live from Las Vegas. This is IBM's IOD information on DeVan 2013. Right back.