Thursday, July 2. 2009
I recently glanced at two websites published by the USA Federal government that display information about its “major” information technology investments and other data. The Office of Management and Budget produces the IT Dashboard website. The General Services Administration hosts the Data.gov website that was created by the Federal CIO Council, as a USA Federal government interagency initiative.
These are good examples of governments, at any level, providing transparency and visibility – buzzwords associated with rise in accountability happening with all organizations.
If you can take the time to play around with some of the graphs in these websites, there are all sorts of computer software visualization features. The staffs who created these websites are likely having lots of fun (plus some headaches collecting late data) with leveraging software tools to display data.
My one concern involves understanding where the usefulness of this reported information is relative to my personal test that I described in my “What? So what? Then what?” blog. These websites do a nice job answering the first question. And this effort is very noble, so I do not want to create rain on this parade. My excitement will grow higher when a reader of this reported information can more quickly make sense of it.
That is, my excitement will grow when the second and third questions from my earlier blog can also be answered. For example, what IT projects are running behind? Which ones are in trouble? Which ones truly align with citizen interests from polling and surveys? Which of these IT investments are arguably pork barrel ones?
Wouldn’t you prefer that answers to questions like these and better ones literally “jump out of the screen” at you? This implies that these websites can gradually move up the stages of maturity ladder from just displaying business intelligence to providing Performance Management and improvement for true organizational transformation and higher yield of what is spent on IT to what is fairly received by citizens and stakeholders. Some of these types of business analytics tools are offered by my employer, SAS. My bet goes with these website creators. They are revealing innovation and zeal that inspires me that and I hope they won’t stop at the stage they are at now.
Am I too optimistic? What do you think?
Wednesday, June 24. 2009
I apologize for possibly creating false expectations from this blog title that a financial return on investment (ROI) can be calculated for initiatives and actions to improve an organization’s environmental performance management. Sometimes the complex exercise of justifying actions based on their ROI is simply over-ridden by realizing that the actions are simply correct to do.
The Wall St. Journal article, "Sustainable Success" provides a series of points that makes taking actions prudent for all organizations. In the authors’ introduction they state, “But here’s a lesson many executives have yet to learn: A commitment to improving social and environmental conditions in the developing countries where a company operates is the key to maximizing the profits and growth of those operations.” I would add this applies to developed nations as well.
My belief is this. Commercial, not-for-profit and public sector organizations must now deal with the same compelling issues that consumers are acknowledging – a permanent high price of oil on the financial side with climate change and poverty on the social side.
Social and environmental responsibility are no longer an option. Organizations have reached the tipping point from complacent recognition of the sustainability (or green) movement to taking actions. Oil, carbon-dioxide emissions, global warming and poverty impact any organization’s social and environmental performance as well as its financial health.
This understanding has lead to the term "triple bottom-line" reporting: profit, people and planet. If you cannot measure, you cannot manage it. And once an organization has the appropriate measures, it can then analyze the information. The information technology for measuring and managing environmental performance now exists. For example, my employer SAS has a sustainability management offering. Our generations must fix the problems we created for our future generations.
Thursday, June 18. 2009
John Colbert of BPM Partners has written a revealing summary of his firm’s 2009 annual BPM Pulse Survey about Performance Management posted on the B-eye Network. The first survey was in 2004, and the survey’s trends can be analyzed.
A highlight for me is John’s observation, “More companies than ever are implementing performance management initiatives.” An important point here is that there are many types of performance initiatives, arguably dozens including profitability optimization and strategic planning. Executives select which initiative to pursue like choosing your food in a cafeteria line. The selections for any organization will depend on what is most desired. However, a key to getting synergy is to both integrate the initiatives' methodologies and imbed analytics of all flavors in each --- especially predictive analytics.
I never doubted that the rate of implementation of initiatives would accelerate. The ROI on them is obvious despite the difficulty to measure their ROI. With more learning experiences understood, the administrative effort and cost of implementing them is going down. Also, the prudent organizations realize there can be a negative ROI with the less obvious choice of not implementing these initiatives and therefore perpetuating decision making and strategy execution with the flawed or weak information they are currently using. Software technology supports and enables each methodology. Software is no longer the impediment it was a few years ago; they are proven. For example, my employer SAS offers a comprehensive suite. The impediment is the executive team having the will to adopt the Performance Management methodologies.
John also states, “… performance management is an ever evolving project that is never really ‘complete.’ ” This is my belief too. I have stated that there is no organization on the planet Earth that has completed the full vision of the Performance Management framework. But the smart and healthy ones have travelled far. It is like running a marathon without a finish line. But it is better to be running in the lead.
Monday, June 15. 2009
Jeffrey Zients is currently going through nomination hearings with the U.S. Senate for the newly created position of the US government’s chief performance officer. He will have a full plate attacking known issues related to government fiscal and productivity performance. Indirectly related, the good news is Mr. Zients may become a role model for other public sector organizations. If given enough authority, he just may be able to demonstrate with real world applications how enterprise performance management methodologies and systems can be integrated to improve performance – not just manage it.
In an article titled Management nominee backs performance, accountability measures posted in GovExec.com, Zients mentions priorities such as developing a usable set of performance metrics and applying them to improve effectiveness and accountability. I do believe that you get what you measure, at least as a start. Measures answer the first of three successive questions for positive change: “What?” Next comes “So what?” and “Then what?” I hope Zients helps government organizations to not just stop with taking better measures, only the first question.
InformationWeek.com posted a related article about Zients titled, Nominee for OMB Post Seeks Better IT Management. This article references Zients’ observation about the lack of engagement between IT managers and their organization’s leaders. There does seem to be two languages: IT-speak and business-speak. If Zients can have an impact, he can make information technology contribute more robustly to management. Improving is not just monitoring dials of a dashboard and producing reports. It is much more about moving those dials and providing analysis for those reports.
Thursday, June 11. 2009
The professional disciplines of law and medicine are codified with decades, arguably centuries, of a body of accumulated and layered knowledge. The discipline of management is not codified and structured to facilitate learning. Most managers learn from their prior managers. Ever work for a lousy manager?
One can get an MBA to learn about the discipline of management. I received one from one of the USA’s most prestigious university graduate programs. Its curriculum taught me about management, but I can candidly say it did not teach me how to manage. There is a difference. Management involves strategy, analysis, and decisions from choices. How to manage involves people. The types of people can be work colleagues, partners, customers and suppliers.
Admittedly there are courses in an MBA curriculum on organizational development and change management. Although I am an industrial engineer from my undergraduate education with its impersonal quantitative emphasis, the behavioral courses fascinated me. I felt a little like Startrek’s Dr. Spock, the Vulcan who thought logically but was aware that emotion somehow plays a role in making change happen.
What can one do to overcome what an MBA degree does not provide?
Maybe I should have paid more attention to the MBA behavioral course of thirty five years ago. Why? Because I find that understanding how to influence, persuade, and educate people is arguably more critical to transform an organization than understanding the principles and concepts of Performance Management methodologies, such as strategy maps, measurement scorecards, dashboards, customer value management, and activity based costing. Business analytics software, such as offered by my employer SAS, can model Performance Management solutions. But it involves people and assumptions.
During the last five years of my business career I am realizing how much I underestimate the importance of behavior modification of people and especially overcoming their natural resistance to change. I do not believe this involves begging, badgering, and bullying people but rather educating them. My style is to enable senior executives to educate (training comes later) their subordinate and colleagues by reading one or more solidly written articles; and then bring them all together like a book club meeting. At this point ninety percent of the work for the executives is done! That meeting can cover what the each of the group learned, what issues and concerns exist to overcome, and actionable next steps.
Transformation is about people changing practices and systems – not the other way around.
Thursday, June 4. 2009
In a May 31, 2009 article in the business section of the New York Times about techniques to evaluate the effectiveness of different types of advertisements, a marketing analyst said, “It’s putting to an industry that never had numbers before. … Before, nobody could really tell you that.” The analyst was referring to a quantitative method that measured in near real time the relative impact of consumer responses to 27 different variations of a single web advertisement with different tagline words, offers, discounts and even shapes. The analysis also looked at where and when the ads were placed and which type of consumer responded. The advertisers were surprised by the conclusions of what worked best. Adjustments to the ads were immediately revised.
Why is applying business analytics to understand cause-and-effect relationships in business so new? Come on. It is 2009. Analytical methods have existed for decades. The scientific community, such as pharmaceutical drug developers, has always relied on quantitative analysis.
One explanation for the delay is that top level executives are not adequately familiar with the power that business analytics, such as those offered by my employer SAS, can have in improving effectiveness and yield. Is the executive’s learning a slow and gradual process, or is there a moment of punctuated change where executives finally “get it” – an eye-opening revelation?
I think it is the latter. My suggestion to middle managers who have become passionate advocates of applying business analytics is to start educating your leadership team. Help them lead. Leadership is there primary role and responsibility. Executives lead by both communicating their vision to employees and inspiring employees. My advice to middle managers to influence your executives is to be frank and open. Do not fear that executives will reject your ideas. Create pilots and test experiments that demonstrate the power of business analytics.
A call to action to apply business analytics is needed now more than ever. The global economic downturn is creating pain but also opportunities. Take advantage of this opportunity. Executives are seeking answers, and business analytics can provide them.
Friday, May 29. 2009
Is the Performance Management framework the beginning or the end?
My older brother and I recently attended an evening reception in Chicago honoring R. Buckminster Fuller, one of last century’s true visionaries. Bucky, which was his nickname, was the designer of the geodesic dome and author of the book, Operating Manual for the Spaceship Earth. My brother was a university student mentored by Fuller. Fuller foresaw the concept of environmental sustainability well before its now accepted importance.
One of the simple but profound statements Fuller once said is, “There is nothing in a caterpillar that will tell you it will be a butterfly.” This stimulated me to think about how some managers without sufficient vision view all of the integrated methodologies of the Performance Management portfolio, such as strategy maps, scorecards, dashboards, customer relationship management, activity based costing, driver based budgeting, lean management, and analytics to name a few.
Myopic managers view these as just reporting and planning tools. These managers view these methodologies as the caterpillar. In contrast, visionary managers view them as the butterfly. The butterfly is organizational transformation. That is, the ultimate benefit of integrating these methodologies is the decision making and prioritizing of innovations and actions that realize value creation. It is not enough to just construct all of these modeling techniques.
True leaders go to the next step and cascade the performance measures, with challenging but achievable targets, that are all linked to projects, initiatives and process improvements. They do this in a way that operations are continuously, economically and efficiently aligned with the ever dynamic re-directions of constantly adjusted strategies – and the resources required and used to execute the executive team’s strategy are optimal.
Excess resources produce waste, and insufficient resources cause service level erosion or postponement of meeting critical time fences that can close and miss opportunities. Both conditions destroy stakeholder value.
When implementing and integrating the Performance Management framework, look for the butterfly.
Thursday, May 21. 2009
Business analytics allows organizations to make decisions and take actions they could not do (or do well) without the analytics capabilities.
INCREASED EMPLOYEE RETENTION
Which of our employees will be the next most likely to resign and take a job with another company? By examining the traits and characteristics of employees who have voluntarily left (e.g., age, time period between salary raises, percent wage raise, years with the organization, etc.), business analytics can layer these patterns on the existing work force. The result is a rank order listing of employees most likely to leave and the reasons why. This allows managements’ selective intervention.
INCREASED CUSTOMER PROFITABILITY
Which customer will generate the most profit from our least effort? By understanding various types of customers with segmentation analysis based on data about them (and others like them), business analytics can answer how much can optimally be spent retaining, growing, winning back and acquiring the attractive micro-segment types of customers that are desired.
INCREASED PRODUCT SHELF OPPORTUNITY
Which product in a retail store chain can generate the most profit without carrying excess inventory but also not having periods of stock outs? By integrating sales forecasts with actual near real time point-of-sale checkout register data, business analytics can optimize distribution cost economics with dynamic pricing to optimize product availability with accelerated sales throughput to maximize profit margins.
These are three examples of the contribution that business analytics can provide – solutions such as offered by my employer SAS. This blog’s title is “fill in the blanks.” One can think of hundreds of other examples where the goal is to maximize or optimize something. With business analytics, the best and correct decisions can be made and organizational performance can be tightly controlled and continuously improved. Without business analytics, an organization operates on gut feel and intuition; and optimization cannot even be in that organization’s vocabulary.
Sunday, May 17. 2009
Thoroughbred racehorses and performance management project leaders have similarities depending on which type they are. (This metaphor is also applicable to professional careers.) There are three types of racehorses: starters, stalkers and deep closers. How are performance management methodologies project managers similar?
Starter racehorses directly break to lead from the starting gate. They do not normally win races because their early energy burst takes a toll. Similarly, some project managers, for example of a balanced scorecard project, try to move too fast for the organization. The obstacles that slow the adoption rate for performance management methodologies are not technical – they are social. This type of project manager, often ambitious young ones, does not patiently earn buy-in from their organization. Consequently they are likely to come up short of a fully successful implementation of the fully integrated performance management framework.
Stalker racehorses run a few lengths behind the starters until near the end of the race before turning up their speed to the finish line. They often win. Similarly, project managers who pace themselves are often successful. They carefully watch what lies ahead of them and how others are reacting to changing conditions. Which horse is changing lanes? Which manager is changing allegiances?
Deep closer racehorses run near the back. After about half way through the race they begin to advance forward weaving through the horses ahead with momentum to pass the somewhat surprised leaders just before the finish line. The 2009 long-shot Kentucky Derby winner, Mine That Bird, runs as a deep closer and just missed winning the Preakness, the second jewel of the horseracing’s famous Triple Crown.
I personally like the deep closer project manager (and career person too). They do take a risk by lying low and being somewhat out of sight, but they understand the finish line is at the end of the race – not in the middle of it. This type of project managers know the virtue of patience. While ahead of them during the race there is much “jockeying” for position, their goal is ultimate success – the fulfillment of helping their organization complete the full vision of the performance management framework that I passionately write about.
Each of these three types can win. I do not know which type of racehorse wins relatively more than the others. Personally I like deep closers. They are exciting to watch, and when they win you sense they had the perspective of how races and organizations work.
Tuesday, May 12. 2009
One of the problems that impedes organizations from successfully implementing the Performance Management framework is the pace at which executives attempt to implement its various methodologies, such as strategy maps, a balanced scorecard, dashboards, customer profitability reporting with activity based costing, predictive analytics, and others. The problem is executives try to implement them with only two speeds – too fast or too slow.
When executives try to move too fast, such as attempting in three months to define and cascade a scorecard of key performance indicators (KPIs) from the executive team down to the front line employees, the implementation is doomed to failure. The reason is organizations require a managed rate of learning and buy-in acceptance. The major impediments to implementing Performance Management methodologies are not technical, such as data availability or quality; they are social. For example, KPIs should be gradually and carefully defined and cascaded downward to KPIs of middle managers that influence their higher level managers' KPIs. Conflict and tension in organizations is natural, and it takes time to rationalize what to measure and how driver KPIs correlate – or not – with other influenced measures.
When executives do not try to move quickly enough, they introduce risk that the organization will conclude that the Performance Management methodology is not worth it. If the executives embark on implementing a methodology, but the project team drags it out without anyone seeing tangible results, then the organization doubts the benefits will exceed the administrative effort to report the information. For example, many activity based costing systems are frequently way over-designed in detail and well beyond diminishing returns in extra accuracy for the extra administrative effort to collect and calculate the more granular information. They collapse under their own weight to be maintained. The adverse effects of too slowly implementing and more importantly integrating the portfolio of the Performance Management methodologies is the organization will not see the synergies of the interdependencies of the integrated methodologies.
The key is determining the Goldilocks pace to implement and integrate the methodologies. Just as in the Goldilocks fable, with the porridge being not too hot or too cold and the beds not too soft or not too hard, find the optimal speed to implement. The real jewel in the crown of the Performance Management framework is the synergy of the methodologies working in integration and imbedding each of them with analytics such as those provided by my employer, SAS.
There are more than two speeds to implementing the Performance Management methodologies. The optimal speed exists and can be controlled.
Saturday, May 9. 2009
I recently attended the Premier Business Leadership Series conference in London hosted by employer SAS. The British know how to provide hospitality. The first nights’ reception was a private function held in the famous British Museum. Hundreds of executives mingled in the great halls of Egyptian and Greek relics including the hall of the Rosetta Stone. What struck me was the growing confidence that the end of the economic downturn is in sight.
I twice facilitated sessions restricted to twenty leaders of companies and government agencies. My first question to them was to compare and contrast how organizations have reacted to the economic downturn during this last year against how they believe these same organizations will take different actions this next year.
Here is what they said.
Continue reading "Performance Management London Style"
Thursday, April 30. 2009
In a magazine article about astronomy and cosmology I was struck by the similarities between performance management practitioners and multi-wavelength astronomers.
Of course, you may be asking what is a multi-wavelength astronomer. These are researchers who analyze mountains of data about stars and star formation in our universe. One specialty is X-ray astronomy, but for galaxies where there are young stars being formed from gravity collapse of gases, the resulting radiation emitted is more detectable as infrared, visible, and ultraviolet light across the broad wavelength spectrum. X-ray emission is relatively weak. Hence researchers depend on multi-wavelength data for more complete data to place those measurements into context for learning answers they are interested in.
The article’s point was that multi-wavelength astronomy combines the best available data in every part of the spectrum of the same object. This is similar to task of performance management practitioners. An organization cannot improve its performance by focusing on only one variable, such as only cost, time, quality, service-level and so on. These factors are interdependent. So, it is a much more complex problem.
As examples, the cost analyst may examine product and standard service-line costs and profit margins. The customer relationship management analyst may examine customer satisfaction and loyalty data. The six sigma quality team may examine quality. The lean management team may study process cycle-times, throughput rates. The operations analyst may examine schedules and resource capacity levels. However, all of things are connected!
The performance management practitioner examines how all of these factors fit together – better, faster and cheaper. But there is more. All of these factors must align with constantly changing strategic objectives defined by the executive team. Business analytics software, such as offered by employer SAS, provides the instrumentation for analysts and managers. This software is similar to what telescopes provide for astronomers – the power to see and to know.
Each of those analysts mentioned are trained in their field on how to think. In contrast, the performance management discipline, like the multi-wavelength astronomers, trains people where to think. Being good everywhere, the “excellence” message that motivational speakers often promote, is important but too simplistic. It makes you feel good to hear about being “excellent” but it rarely lasts. Why? Because there typically insufficient sustaining actions. Focus is required. That is what performance management brings. With performance management the objective is better, faster, cheaper and also smarter and healthier.
Thursday, April 23. 2009
Last week I was a presenter at a seminar in Stockholm, Sweden. My co-presenters were Linus Malmberg, CEO of the consulting firm Cordial Business Advisors, and two marketing executives from one of Sweden’s largest banks, SEB. I can assure you that the Swedes do a lot more than give Swedish massages and make Swedish meatballs! When it comes to applying performance management methodologies, some of their organizations really get it!
For example, the SEB marketing executives described their very advanced business analytics designed to retain and grow existing customers that they have determined to be of economic value. They also devote minimal effort with customers they have determined cannot be profit-lifted to contribute to their shareholders’ wealth creation. This same information is used to target which types of new customers to acquire and which to not waste their precious marketing budget on. Their goal is to make the right offer to the right customer or prospect at the right time through the right channel.
Has SEB optimized their financial return on customers? To optimize anything implies achieving an ideal condition. However, SEB is on the correct path. Marketing management is just one of the components of the performance management framework, and SEB would clearly admit they have opportunities to improve their performance measures, strategy execution, risk management and other component methodologies. My employer SAS offers related solutions.
This journey towards achieving the full vision of performance management was eloquently described by Mr. Malmberg. His message was that even after all the component methodologies are integrated, an additional step is to increase the organization’s agility. He humorously pointed out that “shift happens.” Therefore, the quicker an organization can detect deviations from expected outcomes and then more navigate with the best available choice, they will sustain success.
Tuesday, April 14. 2009
April 12th is a celebrated day in one country. Do you know where and why? Read on.
This past week in Moscow I presented seminars and met with customers of my co-workers in Russia. It was my fourth visit to Moscow, but this time my eyes were a bit more open to look at what works well in Russia rather than my typical misperception of what didn’t work there, particularly its management of its national economy.
First, let’s talk about Russia. If you think you’ve learned a lot about Russia from movies of the Kremlin and Red Square next to it, or through its Olympic figure skaters and hockey players, that’s just the tip of the iceberg. I had the pleasure of seeing the Bolshoi Ballet perform in the famous Bolshoi Theatre. They were fabulous, and not only their technique but also with their facial and body expression – true feelings exhibited with no mask. And what about the music of composers like Tchaikovsky (his Violin Concerto in D, #35, is my favorite of all classical music), Rachmaninov and Rimsky-Korsakov? And what about writers like Pushkin and Dostoevsky? Russia has incredible performing arts and literature, and a national audience and readers who cherish them. And the work of their Classical painters, like Levitan and Shishkin, are so remarkable that, had Russia been less shut off from the world, today these painters could be household names like Rembrandt.
So what is significant about April 12? On April 12, 1961, the USSR launched cosmonaut Yuri Gagarin on Vostok 1: the first human in outer space and the first to orbit the Earth. Every Russian knows this date as Cosmonaut’s Day.
What’s my point? Russians have strengths, and their maligned Soviet central planning is now not looking so bad as we better understand the causes of the economic meltdown produced by capitalism. What do I mean by this?
Continue reading "Can Performance Management Combine the Best of Soviet Planning and Capitalism?"
Friday, April 3. 2009
This week I presented seminars in Amsterdam and took some time to visit the Van Gogh Museum. It is a magnificent art museum exhibiting the largest collection of Van Gogh’s work in the world. I observed a parallel between Van Gogh and performance management.
As background, art historians know that Van Gogh did not begin painting art until his mid-20s after failing at other jobs due to his mental instability. His good fortune was his younger brother Theo financially supported him with his new career as an artist. Van Gogh's initial years produced only sketches, and not one of his pictures was sold until many years later. However Theo collected many of them; and we are all fortunate Theo did.
Van Gogh was a voracious reader, and he was particularly fascinated with cycles of time and nature, such as daily sunrises and the annual seasons. (I suspect he would be intrigued by our current economic cycle we are now in.) This explains his multiple paintings with variations of the same scene, like wheat fields. It also explains, of course, one of his most noted paintings, A Starry Night, considered a masterpiece in the art world.
So, what is Van Gogh’s connection to performance management?
Continue reading "Would Vincent Van Gogh cut off his ear for Performance Management?"
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