What can a worm do to help your company's bottom line?

Keep reading and I'll tell you.

Emergence of the Worm Theory

Many companies struggle to determine how well they're performing and how well they wish they could perform in the future. Before the 1990's, the most tried and true method of measuring overall performance was to refer to the tangible indicators listed in typical financial reports. If you wanted to know how a company was doing and predict how well it would do in the future, the place you'd turn was to its financial statements.

It was from this situation that the worm theory emerged.

You see, the problem with using financial statements - the bird's eye view - to determine company success was that it ignored key intangibles - the worm's eye view. For example, management of a company with a financial statement showing profits would scratch its collective head and wonder why it was losing market share. The reason, more often than not, was attributable to failure in the intangibles not measured by the financial statement. Maybe the company wasn't being innovative enough; maybe it wasn't doing a good enough job gaining new customers and servicing old ones; maybe it wasn't providing the right kind of training.

Of course, the converse situation could apply. So you wouldn't be able to see from the financial statement that a company of mediocre profits could be well on its way to bigger and better things. For example, in 1910, a manufacturing company that switched from buggy to automobile production would be poised for enormous success. But this promise might not be reflected in the company's 1910 financial statements.

The lesson: By the early 1990s, businesses were beginning to recognize that measuring only the tangible was not indicative of true company performance and potential.

The Balanced Scorecard

In 1992, Robert Kaplan and David Norton set out a new system to measure the intangibles associated with a company's success and indeed its very survival. The so-called "Balanced Score Card Initiative" is a strategic system that management can use to measure performance. The system involves the use of strategic indicators that provide a comprehensive view of how well a company is doing in all phases of operation.

The balanced scorecard includes soft, quantifiable operational measures that measure company performance from the customer's perspective. Internal measurements or metrics determine the areas in which the company must excel to remain competitive. A final set of measurements enables management to pinpoint areas of improvement and learn how and where to add value to its products, services, operations and departments such as safety and/or quality.

In short, the Balanced Scorecard helps management focus on the truly important indictors of success rather than simply on short term financial gain.

Conclusion

Next week, I'll set out a six-step process that management can use to implement the Balanced Scorecard process.

THANK YOU, DR. KAUK

146

Do you know what that figure represents?

Answer: The number of SafetyXChange members who responded to Dr. Richard Kauk's gracious offer to provide information about his company's innovative and successful safety program included in last week's Wednesday newsletter. Dr. Kauk spent all of Saturday and Sunday responding to each and every request. "It was and is heartwarming to know that many professionals care so much about their programs and people," Dr. Kauk reports.

To Dr. Kauk, on behalf of all the members of SafetyXChange, thank you for going beyond the call of duty to help your fellow safety professionals.

Now for the bad news:

0

Do you know what that figure represents?

Answer: The number of SafetyXChange members who responded to our request for information about their own safety successes.

I know we're all very busy. I also know, and am very proud of the fact that SafetyXChange is a community whose members contribute voluntarily. We wouldn't have it any other way.

However, I would once more like to challenge those of you who enjoy and benefit from the contributions of other SafetyXChange members to pick up your pens and make your own contributions. We're not asking for a long or polished story. Just share your thoughts and insights with your fellow members and we'll work with you on the editing.

Thanks, everybody. And remember: When you talk, SafetyXChange becomes a vibrant community and we all win.

Glenn Demby
Editor-in-Chief
SafetyXChange
glennd@bongarde.com

THIS DATE IN HISTORY

April 4, 1947

By Glenn Demby

Happy 60th Birthday to the ICAO

Back in 1947, the skies were less than friendly to fly. The Second World War had brought tremendous advances in aviation. At War's end, the warplanes were grounded, replaced by civil aircraft of all types. The skies were jammed with aircraft of many nations, all literally going in their own directions and at their own altitudes. It was a dangerous situation.

Thus, it was on this date in 1947 that the members of the United Nations established a new agency to establish order and regulation in the skies. The International Civil Aviation Organization (ICAO) was given the authority to create standards and airline code systems and to recommend safe practices.

The ICAO was the culmination of decades of diplomacy that began in 1910 when European nations held the first international conference on civil aviation. It was a flop. But the effort to bring international regulation to civil aviation resumed after World War I. In 1919, the first ever aviation treaty was signed in Paris. Among other things, it established the International Commission for Air Navigation, the forerunner of the ICAO.

In 1944, during World War II, 52 states attended an international aviation conference in Chicago and adopted a Convention providing for the creation of a new international body to regulate civil aviation when the War ended. This organization turned out to be the ICAO.

The ICAO started with 52 member states. Today, it has 190. Headquartered in Montreal, the ICAO has jurisdiction over more than a dozen matters, including personnel licensing, airworthiness of aircraft, meteorological navigation, aircraft accident and incident investigation, air traffic, environmental protection - aircraft noise, aircraft registration and search and rescue.

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