The leading feature of Skandia's Navigator is its flexibility. The companies that comprise the Skandia Corporation, maybe even departments in these companies, are not required to adopt a set form or number of measures. They are not even required to report on the same indicators from year to year, because the Navigator is primarily seen as a navigation tool and not one that provides detailed implementation guidelines. Despite its pioneering work and leadership in measuring IC, Skandia still believes in the value of learning through taking an experimental approach. Nevertheless, the Navigator is adopted widely across Skandia and has been incorporated in the MIS system of Skandia under the Dolphin system.
Skandia applies the BSC idea to the Navigator by applying measures to monitor critical business success factors under each of five focuses: financial, human, process, customer, and renewal. Under the Navigator model, the measuring entity—whether the organization or individual business units or departments—asks the question, "What are the critical factors that enable us to achieve success under each of the focus areas?" Then a number of indicators designed to reflect both present and future performance under these factors are chosen (see also about money investment).
Edvinsson explains that the measuring entity may also have a different starting point by asking, "What are the key success factors for the measuring entity in general?" The entity then asks, "What are the indicators that are needed to monitor present and future performance for the chosen success factors?" Once these are determined, as many measures as necessary are chosen to monitor them. Finally, these measures are examined and placed under the five focuses depending on what they purport to measure.
For example, SkandiaLink asked senior managers to identify five separate key success factors for the company in 1997. These included establishing long-term relationships with satisfied customers, establishing long-term relationships with distributors (particularly banks), implementing efficient administrative routines, creating an IT system that supports operations, and employing satisfied and competent employees. Each of these "success factors" generated a set of indicators, and a total of 24 were selected for tracking. For the satisfied customer factor, for example, this generated the following indicators:
• Satisfied customer index
• Customer barometer
• New sales
• Market share
• Lapse rate
• Average response time at the call center
• Discontinued calls at the call center
• Average handling time for completed cases
• Number of new products
These indicators are then grouped under the various focuses. As key success factors change, the overall set of indicators for a certain period (strategic phase) that the Navigator model monitors also changes. Not only does the Navigator allow this high level of flexibility in the choice of indicators from time to time, but it also encourages individual employees to express their goals and monitor their own and their team's performance.
In one example, the Navigator model was used by Skandia's corporate IT to monitor its vision of making IT the company's competitive edge. To that end, the IT department used the following measures: Under the financial focus, the department measured return on capital employed, operating results, and value added/employee. The customer focus looked at the contracts that the department handled for Skandia-affiliated companies. The indicators included number of contracts, savings/contract, surrender ratio, and points of sale. The human focus tracked number of full-time employees, number of managers, number of female managers, and training expense/ employee. Under the process focus the department measured the number of contracts per employee, administrative expense/gross premiums written, and IT/administrative expense.
In Skandia's IC Supplement, published in 1994,46 each of Skandia's companies reported and monitored a different set of indicators reflecting the strategies and key success factors of each. The number of indicators under each focus and the factors that each company attempted to monitor were different, with the exception of recurring generic indicators like customer and employee satisfaction. But even with generic measures, the same measures were not used consistently. For example, two out of five companies looked at employee turnover, as an indicator of employee satisfaction under the human focus, while the other companies focused on the number of full-time employees in addition to or instead of training hours. As a result, the number of indicators generated for the whole organization was enormous.
Compared to the BSC model, where the measures are more or less prescribed, the Navigator's underlying philosophy allows for multiple variations. The underlying philosophy is to provide the highest level of flexibility within a defined framework. Skandia wants the Navigator to be a tool for plotting a course rather than a detailed guideline. The details can be filled in later as management steers the business toward meeting its strategic goals. Being flexible and idiosyncratic to the needs of the measuring unit, the Navigator ensures that the whole organization talks IC, while at the same time allowing each measuring unit to develop its own dialect (see also about business philosophy).
Despite inconsistencies and the huge number of indicators generated, Skandia automated the Navigator, through the Dolphin system, and incorporated it into its management information system (MIS). With time the Dolphin system will probably lead to streamlining the various "navigators," and give rise to a more consistent set of indicators through sharing and communication. It seems that Skandia is serious about communication despite the inconsistency of the measures used; to an extent that it reported these measures to external stakeholders. In 1993, Skandia appointed an IC (as opposed to financial) controller to "systemically develop intellectual capital information and accounting systems, which can then be integrated with traditional financial accounting". Though IC reporting requires more consistent measures, or a well-defined model, Skandia appears determined to balance between its desire to provide transparency on how their organization is being run while continuing to experiment with the Navigator.