Using Spreadsheets for Performance Management: Why They Work and Why They Don’t - Part I

Note: This is a new series in which I'll be discussing the pros and cons of using spreadsheet tools for performance management.

Part 1: Background & History of the Spreadsheet

It’s hard to believe that spreadsheets weren’t always synonymous with Microsoft Excel. Before the 1980s, financial models were hand drawn and calculated on blackboards or cranked out on ledgers by armies of clerks using calculators.

VisiCalc, the first personal computer spreadsheet program, was developed in 1979. It was THE first “killer-app” for personal computers (and responsible for selling hundreds of thousands of Apple II machines).

Through the mid-1980s there was a mad rush of spreadsheet programs: SuperCalc, Microsoft MultiPlan, Lotus 1-2-3, Borland Quattro, Resolver, and many others. As it seems wont to be, Microsoft ended up the last contender standing.

True, a few stragglers remain on the market and there are strong open-source alternatives, but for most of us “spreadsheet” means “Excel.”

Not that there is anything wrong with that. Excel is an extraordinarily powerful program. If you are reading this blog, chances are that you have at least moderate Excel skills and are aware of some of its power.

Looking back over the last decade working with clients to improve performance and implement performance management systems, it’s very clear that the most frequently used tool in this space is Excel. By a huge margin. People use Excel to build dashboards, scorecards, reports, charts, graphs, briefing documents, and just about anything else you can imagine one might need in a performance management or measurement situation.

In this series of posts, I’ll discuss the pros and cons of using Excel for performance management as I see it. I’ll discuss some best practices and traps to avoid. Hopefully I'll end up providing a good overview of when it’s appropriate to use spreadsheets and when they just aren’t up to the task when it comes to managing organizational performance.