Category Archives: Services

Metrics, Measurement and Scorecards

What you measure is what you get. The organization’s measurement system strongly affects the behavior of managers and employees. The most fundamental reason to measure an activity is to improve it. Financial measures alone, like return-on-investment and earnings-per-share, can give misleading signals for continuous improvement and innovation – activities today’s competitive environment demands. Getting the metrics right is one of those “easy NOT to do” things. It’s not difficult, but does require some focused energy. The best news is that done well and embedded in the organization, it will pay major dividends.

Multiple Metrics are Needed to provide a Balanced Scorecard (BSC)

No single measure can provide a clear performance target or focus attention on the critical areas of the business. A balanced presentation of both financial and operational measures is needed. Made famous by Kaplan and Norton, and further improved by Schiemann & Lingle, The Balanced Scorecard links performance measures:

  1. Customers/Markets: Are we meeting customer or marketplace expectations?
  2. Financial: How do we look to shareholders?
  3. People: Are we deploying our human resources effectively, including employees, partners and suppliers?
  4. Operations: How efficiently are we running the enterprise?
  5. Adaptability: Are we responsive and innovative in our approach to changing requirements both internally and externally?
  6. Environment: Are we dealing with community, environmental and regulatory forces that define our playing field?

Context has the capability, working with management, to determine appropriate leading measures in the six key strategic areas, and to embed the balanced scorecard metrics into the organization and organization processes. Bringing metrics for these areas together in a single management report is crucial. It guards against sub-optimization. By forcing senior managers to consider all the important operational measures together, the balanced scorecard lets them see whether improvement in one area may have been achieved at the expense of another.

Measure Hard Results and the Soft Stuff Will Follow

What are key elements for implementation of a good Balanced Scorecard? Communication of strategic goals that are linked to individual objectives is critical. It allows organizations to link strategic goals with business unit targets, individual performance objectives and rewards and recognition. In addition, it allows companies to develop proper targets that verify and support your strategy. Secondly, BSC metrics must be integrated into the strategic planning and budgeting process. This step allows organizations to harmonize short- term financial performance with long-term strategic goals and growth opportunities. Finally, a solid set of BSC metrics must include a mechanism for continuous feedback – for strategic learning and for the occasion to adjust as new threats and opportunities arise.


Leading vs. Lagging Indicators

One clear advantage of BSC metrics is they allow us to effectively see the whole picture. We are all used to “lagging” indicators – i.e. the results we can measure after they’ve occurred – profit, market share, etc. They have a place, but are not useful for proactively making adjustments in season. “Leading” indicators, on the other hand, are ones you can measure in real time and are directly related to achieving the key business objectives. They require some thoughtful processing to identify as there is not a handy list that are “known to be right” for your business.

Know What to Expect – Focus on Implementation

Companies adopting and implementing a BSC model must determine what to measure in the 6 key strategic areas of customer markets, financial, people, operations, adaptability and environment. Then, they must embed the BSC metrics into the organization and its processes; link strategic measures to compensation, tie strategic measures to the performance management system, and track and manage strategic performance measures.

Although this sounds easy, it is not. Simplicity is often deceptive. This involves some hard questions, but a Balanced Scorecard of metrics is more than a measurement system; it is a cornerstone of strategic management. 

The old adage, “Measure twice, cut once” reminds us how critical it is to measure effectively to both avoid making costly mistakes, and make the most out of our goals. Context is ready to help your company deploy metrics that will best assure positive performance. For more information, contact Context Partner, Mike Borel at


William A. Schiemann & John H. Lingle; Robert S. Kaplan & David P. Norton; William L. Simon; Tony Hope & Jeremy Hope; Peter F. Drucker

Can Being Big Get You Closer?

When Trends Collide

Tesco recently discussed plans to rationalize its supply base and source more fresh produce directly; to become “a more vertically integrated business.” Recent developments in direct sourcing, such as this announcement by Tesco or by Wal-Mart opening a direct buying office in Yakima, WA (2009), provide notice on how large retailers are dramatically reshaping fresh produce supply chains.

Through direct sourcing, retailers locate direct buying offices near major production areas to establish their own relationships with growers and put infrastructure in place to work with them directly; in effect bypassing shippers. Motives are both directly and indirectly economic: reduce distribution cost and establish proprietary systems to ensure food safety risk and traceability are being managed.


Verticalization is not new. In the U.S., many large retailers have already worked past produce brokers and percent of produce flow through terminal markets has been halved over the past 40 years. While shippers were an important champion of those historical trends, they now are in the cross-hairs of direct souring rationalization.

Meanwhile, local sourcing is becoming a permanent fixture within the year round supply of fresh produce. Initially predicated on fuel cost savings, the trend towards consumers buying local grown produce has morphed into satisfying their wants for supporting community, protecting the environment and advocating food systems. Sales of local produce are growing fast.


Retailers are being forced to reconsider their traditional approach to optimize cost through fewer and larger suppliers in favor of driving top line growth.  Local grown is demonstrating that satisfying preferences of fresher, better tasting produce lifts sales and retains customers.


Tough Decisions and Support Systems Needed

For large retailers, direct sourcing necessitates adding field staff, information systems and possibly even facilities to manage and maintain direct grower relationships. Similarly, for retailers to source local grown produce, buying systems need to be supplemented. In the future, innovative information and distribution systems are needed including supplier hub websites, traceability programs and product consolidation. In addition, supplier training will be required to help growers achieve industry or retailer specific technical standards or develop customer -specific packaging.

Direct and local sourcing trends diverge when considering the source; the farms producing the produce. Through direct sourcing, the tendency is for retailers to gravitate to a select number of large growers. Local sourcing legitimizes smaller suppliers outside of major growing areas, allowing them to sell beyond the farmers market to large national and regional retailers. At least early on, systems to support both sourcing initiatives will need to differ.

Retailers need to weigh the benefits of rationalizing the supply chain through direct sourcing and driving sales through promoting local grown with one very large common denominator: RISK. Direct large grower relationships place retailers in a more exposed position to production uncertainties. Direct sourcing is a proven cost savings approach when supply is ample. When supply becomes tight, exposure to higher cost increases. Local small grower relationships also bear supply uncertainty because of the seasonality and higher variability of local production areas.  Also, areas outside of major production regions typically have fewer food safety safeguards in place.

Getting the right systems in place to deliver on the benefits of these two major sourcing trends and effectively manage their risks will determine which retailers are successful in the fresh produce supply chain of the future.

Thinking about Fresh Produce? Contact Mark Nelson at or

Fertile Ground for Shifting Value

Much has been written and discussed describing shifts in economic value from crop protection products to new biotechnology products. Two widely cited examples have involved shifts in value from herbicides to herbicide tolerant soybean seeds (i.e., glyphosate tolerant soybeans) and from corn rootworm insecticides to insect resistant corn (i.e., corn with a Bt gene conferring CRW resistance).

These biotechnology products, along with several others, have significantly influenced the structures of the crop protection and seed industries. Prior to the introduction and widespread use of these traits, both industries were considered to be relatively separate. More recently, they have been seen as evolving fairly rapidly into one common industry. In an ongoing process that has involved a number of acquisitions, rapid technological advances, an increase in the number of partnerships and collaborations and new go-to-market strategies, the industries are clearly transitioning into a new industry, dubbed by some as the “Plant Science” industry.

New biotechnology products and technologies have been instrumental in motivating and facilitating this transition and it appears likely that they will continue, and the trend is likely to expand its scope of influence and reach. One area in particular where this may occur is soil fertility where the science of biotechnology is starting to be used to enhance soil nutrient utilization efficiency. Currently, fertilizer of some type is applied to nearly every crop.


Source: Assessment of Fertilizer Use by Crop at the Global Level 2006/07 – 2007/08. Heffer, P., International Fertilizer Industry Association (IFA). 2009.

There are two primary motivators for the expansion of biotechnology into the realm of soil nutrient utilization efficiency. One is financial. As an example, in the United States, a 2009 report from a study commissioned by the Fertilizer Institute of America indicated that the industry produced fertilizers with a direct value of $15.1 billion per year. The other is environmental. Particularly for SCStory5Image2nitrogen and phosphorus, concerns ranging from greenhouse gas contributions and their effect on global warming (nitrogen) to scarce/limited resource concerns (phosphorus) to water pollution and quality (nitrogen, phosphorous) are challenging the industry to identify and develop new and better ways of delivering soil fertility products.

From a biotechnology point of view, most new technology efforts have focused on nitrogen, the world’s highest volume and value soil applied fertilizer. More generally, biotechnology is also behind research under way to develop seed and/or soil applied microorganisms designed to enhance nitrogen utilization as in a number of crops including corn and soybeans.

SCStory5Image3Although not as prominently reported and apparently somewhat less technically advanced, plant biotechnology work is also under way to identify methods of enhancing the efficiency of phosphorus use by plants (e.g., rice, wheat, forage grasses). Seed applied products promising enhanced phosphorus utilization, have recently been introduced commercially and continue to be the target of ongoing research efforts.

Thus far, the business of providing soil fertility has generally been considered the domain of firms existing outside the world of biotechnology. Building on past experience, if biotechnology R&D efforts currently under way are reasonably successful, this may change in a significant way in the coming years. The previously described financial opportunity represented by fertilizer sales and the potential environmental and other benefits (e.g., enhanced ease of use, reduced storage requirements) available through biotechnology combine to offer what appears to be an extremely attractive commercial target.

Furthermore, combining potential technology advances under way within the fertilizer industry (e.g., enhanced efficient fertilizers or EEFs, pairing of crop genetics with new fertilizer delivery systems) with advances in biotechnology and precision application technology offers the prospect of valuable opportunities to quite dramatically improve soil nutrient use efficiency across a number of crops and geographies.

Given this scenario, business success will certainly depend on technology development and access. As importantly, it will also depend a great deal on how effectively and quickly current fertilizer and biotechnology industry participants are able to anticipate, accept and adapt to the soil fertility enhancements that biotechnology and other technologies may be on the verge of delivering for the benefit of global agricultural community.

Thomas B. Klevorn, Ph.D., The Context Network Sr. Associate,