Performance Management Perspectives

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2011-03-17T18:28:00.002-04:00

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Building Sustainability Into Your EPM Program

2011-02-21T14:29:00.001-05:00

Click here to view our latest article on making your Performance Management Program Sustainable, plus several new articles published daily:

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10 Fresh New Posts on Performance Management

2011-02-09T13:01:00.001-05:00

10 New Posts on Performance Management available now at PerformanceManagementPerspectives.wordpress.com

PM Perspectives just got better...

2011-01-21T13:48:00.003-05:00

Just a quick note to let our readers know that we have recently moved our blog to PerformanceManagementPerspectives.wordpress.com . This site offers us more flexibility in making timely posts, and also makes it easier for you to subscribe to our weekly updates. We have also added a link to relevant twitter posts that we think you'll find valuable. Hope to see ya'll on WordPress. Enjoy!!!

-b

Author: Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience and has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

Once again, AAPL shows us how its done...

2011-01-18T19:12:00.002-05:00

I'll keep this post short, as I know most of you are probably tired of hearing more news about Apple and the speculation surrounding its future leadership issues (i.e. the future of Mr. Jobs).

As both a small personal shareholder and a recent Apple convert (full disclosure), I took a few minutes today to listen in on the AAPL's quarterly earnings call. While some of it was sheer curiosity about the leadership issues and speculation, I was more curious as to how they would narrate their performance over the past quarter, and their ability to stick to the results message amidst the obvious distractions.

My opinion- home run! Sure, its easy to succeed on a call like that when some of your products and markets are growing at 50-100% year on year. But this call had a lot of potential to get derailed, not only by the leadership risks and concerns, but also by an analyst community who is so good at casting doubt and throwing darts wherever they can. Even the friendliest of wall street analysts can put a damper on good news.

Sometimes, we get so caught up in the management of the day to day business that we fail to see the importance of the stakeholder communications aspect of our activities and role. Yet it is THAT phase of performance management where the value of our efforts actually gets produced, and failing to tell the "performance story" can be just as damaging as failing to achieve the results. Today, that story was told to perfection.

Don't neglect the stakeholder communication aspect of your EPM processes, as it is probably the most valuable of all activities and has the potential to make or break your efforts!

The link to the audio of the call is no longer available (the archive should be up within a week or so). I'll try and post it when it goes back up.

-b

Is Your Scorecard Getting Stale?

2011-01-15T14:35:00.005-05:00

Around this time of year, it is not uncommon to see clients challenging and refining the metrics that they will use to evaluate performance as the year progresses. Actually, it is quite a timely and productive exercise to go through, as many of us have just come out of our year-end planning cycles where a number of our goals and objectives may have been modified from previous planning cycles. And while one might argue that metrics should be an outgrowth of the planning cycle itself, we all know how often those processes get short circuited. So doing a quick inventory of our business metrics is always a healthy practice to get into.

In talking with one of my clients last week, we got into a fairly lengthy discussion about the value of having measures that don't change very often. In his view, certain measures at his company were in fact "getting stale" and were hard to do anything meaningful with from a motivational or incentive standpoint because they really lacked any interesting "movement" from a reporting standpoint. Was he doing harm by keeping them on his scorecard? Was it time to bring some more "interesting" or "challenging" metrics to the table?

Anytime I get a question like this, I try and go back to asking how well their metrics line up with "where value is created" within their business...a sometimes obvious and trite, but often very valuable question. Going through a challenge like this can reveal a lot about where changes might be necessary. A few things to consider along these lines:

- Most of the time, the measure itself is not what has gotten "stale", but rather the target against which you judge success. I had a client recently tell me that his target for a particular metric was to "improve" or "get better" year on year. Quite frankly, I believe this is a clear recipe for lackluster improvement. Most sports teams that have achieved greatness (consistently) usually started with some pretty bold and specific turnaround or improvement aspirations. Resetting the bar with a healthy dose of ambition can really bring life back into what might appear to be a stale set of business metrics.

- Sometimes, its not the measure or the target that is the problem, but rather how the measure is positioned. Simple metrics such as safety incidents, outage statistics, etc... can look stale especially since success is evaluated based on the "absence" of something happening. Simply changing the way the metric is positioned, however, can have a huge impact on visibility and motivational value. Repositioning these metrics into things like "days since last incident", "near misses", "time between failures" can turn a sleepy metric into something that grabs more attention.

- Some measures, however are meant to fade into the background over time. From time to time, we add metrics to the scorecard because of a problem that needs fixing. A good example of this is in corporate services functions where things like "help desk response times", "recruiting cycle times", etc. have become the centerpieces of their metric reporting. In fact, most of these areas have gone so "cycle time happy" that, while I'm not sure anything is getting done, I am certain its getting done FAST! Sure, these metrics were born because at some point in the past, I'm sure cycle times in the associated areas were really, really bad!!! But at some point, you need to acknowledge when a gap has been closed and put a metric into what I'll call "maintenance mode". It might not have to "go away" altogether, but perhaps it should fade into the background a bit so that a new source of value can gain visibility and be exploited. A good example of this is how many call centers have decreased the importance of things like speed of answer and abandon rates, and have put more emphasis on the role reps can play in shifting customer behaviors and service channels utilized.

- and yes, there are times, where the metrics we use are simply crappy metrics, and while they may have made sense at the beginning, they either no longer motivate the right behaviors, or worse, incentivize the wrong ones. Don't be afraid to trash some metrics periodically so that you don't end up creating layers of dead weight in your scorecard and Performance Management activities.

So if you are one of those managers in the throws of self reflection, happy hunting. Just make sure you go through the process a little more deliberately and methodically so that you don't end up throwing the proverbial "baby out with the bathwater" (which incidentally is a metaphor that I hope is not based any real history!!!).

Seriously, the key is to ALWAYS TO MAKE SURE THE METRICS YOU USE MATCH UP WITH HOW YOUR FUNCTION, BUSINESS UNIT, OR COMPANY INTENDS TO BUILD VALUE FROM ITS EFFORTS during the current planning and reporting cycle.

-b

2010 EPM Year in Review

2010-12-30T17:29:00.003-05:00

2010 - EPM (Enterprise Performance Management) Year in Review

As is my tradition in the final days of the year, and in anticipation of the one to come, I provide below some of the more significant trends we've observed through our Performance Management related work with clients and colleagues in 2010, and some thoughts on what we see as the major forces, issues and trends that are likely to shape the year ahead.

Certainly no one will argue that the most dominant force, regardless of industry, continues to be the economy. No single factor has impacted the C-Suite and Performance Management Executives more than the economy in terms of its stifling impact on corporate growth and the state of paralysis it has created in our ability to plan for and manage the inevitable yet unpredictable growth that lies ahead.

By definition, EPM (Enterprise Performance Management), or CPM (Corporate Performance Management) as it is sometimes referred, is all about linking strategy and KPI’s, to the management and improvement initiatives that occur in the daily operation of the business. We accomplish this through effective measurement of performance, analysis of identified gaps, deployment of course corrections, and changes to business processes and operating protocols. This activity is challenging even in times of stable growth and "normal" operating conditions. But in times of unpredictability and chaos, which is what most of us find ourselves in today, it most certainly adds a level of complexity (and stress) that would challenge the best of us.

The wise among us would say that these are the exact times to refocus ourselves on the things we CAN control versus those we can’t, and perhaps, more importantly, to understand the difference between the two. Recognizing and acknowledging that difference requires understanding the business well enough to make such a call.

However, as Performance Managers, what we often find is that if we understand the business and its drivers well enough, we can actually identify ways of controlling what appears initially to be uncontrollable. Such is the case with good Performance Management Systems. They help us understand the business at the level of depth and granularity necessary in proactively managing change amidst the levels of risk and uncertainty we all find ourselves in today.

In my view, it was that transition in practice and philosophy that characterized the EPM discipline in 2010. Most of the improvements I've witnessed over the past twelve months were about how to make EPM within our organizations more flexible, dynamic, and better able to improve the manageable and change the changeable, while often managing and influencing what appeared to be unpredictable. To this end, we've seen changes in everything from the scope and focus of our EPM organizations to the manner in which we track, measure, and manage our performance. We've seen changes in how we define value, and when and how we declare victory. We've also become more keenly aware of the weaknesses and shortfalls of our EPM programs--from our ability to capture and track the right data, to the systems we use to report and analyze “mission-critical” information.

As in past years, there was no shortage of success stories. And, of course, none of us experienced these successes without our fair share of failures and setbacks.

Below are what I believe to be the most significant factors characterizing EPM successes and failures in 2010. These are:

Clarity around the role of EPM as a discipline within the business
Better “line of sight” linkage between strategy, KPI’s and business improvements
More focus on “value capture” and bottom line results
A shift toward (more holistic) “profitability management”
Consolidation (for the better) among technology vendors
Standardization in the data environment (within companies/ across industry)
Investments in EPM skill building and cultural transformation

Some of the above are strategic in nature, while others are more tactical and operationally focused. But I believe they all have relevance on how EPM will move forward into 2011 and beyond. I offer these, and the expanded discussion of each below, for your reflection, and as a beacon for how we can all navigate the challenges that lie ahead in the coming years.

More clarity around the discipline of EPM/CPM

In 2010, many of us were able to build more clarity around the role, charter, and delivery systems for EPM within our organizations. While this might not have been as "clean" a process, or ended up as structured as we might have liked, most of our organizations now see our role as more established, and with a clearer sense of purpose than they were in years prior.

In previous years, the relationship between Corporate IT and groups responsible for Enterprise Performance Management has always contained some friction, mostly around the management of the data required for effective performance reporting (i.e. data warehouses, and the more recent Business Intelligence (BI) solutions). Many companies have also struggled with the interface between EPM and other corporate governance/ support functions (Corporate Performance, Operations Analysis, Strategic Planning, and even areas like Auditing, Risk Management and Capital Planning) where roles and boundaries are sometimes hazy at best. In the past, these conflicts in role clarity often forced EP Managers to either relegate their role to basic metric tracking, or risk continuing amidst the confusing roles and frequent “turf battles” that had come to define our relationship with these stakeholders in past years.

Howard Dresner (the individual who first coined the term Business Intelligence (BI)) actually defines EPM as "BI with a Purpose." For me, that is a good summary of what began to take place in 2010 within many of our EPM organizations. In 2010, EPM began to find its identity amidst what was clearly a state of role confusion. Rather than battling over whether the company needed a Performance Management solution or a BI solution, one simply became a way of leveraging the other (i.e., while both disciplines utilize operational data, EPM is a discipline and set of processes for driving the effective management of performance, while good BI enables a data environment that makes all that possible). The same case can be made for each of the other disciplines mentioned above. They all use performance data to differing degrees and for different purposes. 2010 identified and clarified many of these distinctions, bringing a great deal of that into focus. And for EPM managers, that was a welcome change, providing a clear mission and charter for it to rally around.

2011 will hopefully build upon that clarity. But EPM managers need to continue their vigilance, adding new dimensions of value to what they’ve created for the business, while carefully nurturing their stakeholder relationships so that the role clarity achieved thus far evolves into lasting internal partnerships. The more EPM can deliver a clear and distinct "value add" from its efforts, and make clear the impact it has on P&L, the more visible and vital (and less redundant) the company's investment in EPM will be perceived.

Better "line of sight" linkages (between strategy, KPIs, and business improvement initiatives)

2010 saw a marked improvement in the ability of EP Managers to show visible "line of sight" linkages between the activity of metric tracking and their impact on operational business improvement initiatives. For many, this journey has been painful, and some have found the boundaries previously referenced even harder to discern, as their EPM groups were sometimes forced (out of necessity) into directly driving the very operational changes that, in the end, are actually operational accountabilities!

But on balance, 2010 saw mostly positive developments in how companies manage the “downward” linkages between KPI’s, business metrics, and the operational improvements underway in their organizations. That often required a clear process for identifying gaps in key measurements, and quickly deploying business improvements (using a variety of improvement methods (e.g., LEAN, TQM, Kaizen, Six Sigma). EPM groups that have been able to demonstrate these kinds of linkages, and show examples of how they can work, have achieved something big, and should be proud of it. Soon, they will be able to step back into more facilitative roles, allowing the operating groups to take back the baton and continue propagating these changes within their respective Business Units.

The same however, cannot be said for the "upward" linkage between KPIs and Corporate Strategy. More often than not, the very successes we have had operationally have only highlighted areas where business strategies themselves have either not been defined or lack sufficient clarity. Over 70 percent of the organizations with whom we have worked in 2010 have expressed major concerns in this arena.

Just as EPM groups have successfully facilitated a "line of sight" linkage between measurement and operating improvements, many will need to apply the same facilitative role to marrying their company's strategy with the underlying measures and KPIs of the business. In some cases, where Company and Business Unit strategies do, in fact, exist, this will simply mean identifying the key gaps and weaknesses so that business strategy is clear, compelling and integrated into the KPI’s that are routinely tracked. In other cases, it will mean introducing some basic strategic thinking and frameworks (e.g., Porter models, options theory, etc.) to executive teams (particularly those who spend most of their time in the operational space) in order to kick-start or revisit the strategic planning process, and actually develop what may be the Company’s “first REAL strategy. And for some, it may only mean serving as a catalyst to force a better integration between existing strategy and the company's KPI framework. But in all cases, this is likely to be a major challenge, as it will require a much stronger partnership between EPM and the highest level executives and strategic planning support groups (Planning, Finance, Risk Management, etc.) within the organization. Building that “upward linkage” linkage will be essential to completing the type of full "line of sight" visibility required of a successful and sustainable EPM environment.

More focus on "value capture" and "bottom line results"

Starting in 2009, and into 2010, we saw a much more deliberate focus on what some would call "finishing the race". All too often, we have seen measures tracked and reported for the purpose of compliance or satisfying the optics of performance measurement. But for "best practice" EPM organizations, success is not only defined by the presence of a scorecard or dashboard, but also by being able to generate hard and sustainable results in terms of savings, service level improvements, or other (more substantive) sources of business value. We've seen numerous companies who have made the progression from not tracking downstream value at all, to being able to assign clear, single-point accountability for the full lifecycle of a particular KPI or critical business metric. This means not only owning the measure and the reporting of it, but also the accountability for meeting targets, closing critical gaps and being responsible for delivering downstream improvements and incremental value to the bottom line. Often, this requires a robust framework for identifying and managing these accountabilities, and an overall philosophy of "commitment management" that is embraced culturally by the company. There are many tools that have emerged in this arena, from the creation of "value registers" to formal "commitment tracking" protocols for executive and operating management.

2011 will hopefully see a continuation of this trend, bringing true clarity to how EPM organizations should be measuring themselves as service providers. Back to the first observation, there is no better answer to clarifying the identity and value delivered by an EPM function than being able to generate and consistently deliver on a robust pipeline of value improvements to the business.

Shift toward (more holistic) “profitability management”

While the focus on "value capture" has had significant impact on the identity of EPM and to the bottom line directly, many EPM executives have realized that success needs to go beyond conventional sources of value. For most, that definition of value over the past few years has translated directly to cost savings and productivity gains—essentially addressing the question "what and how much have you saved for me lately?" But if nothing else, the economic recoveries that followed past downturns have showed us the flaws and negative consequences associated with this kind of singular focus on cost savings. (a.k.a.—the "death by a thousand cuts" solution) Plain and simple, it works for a while, but quickly becomes a debilitating force when the business inevitably returns to periods of rapid and dynamic growth.

Striking an appropriate balance between conventional cost savings, and other (perhaps less obvious) sources of business value will become a critical success factor for companies in the years ahead. Some companies have begun this transition by actually changing how value is actually defined within the business. For these organizations, value is seen through the much wider lens of what actually drives profitability, and from what sources. Conventional thinking asks where we can add value by cutting the direct cost of goods sold, driving increases in operational outputs and labor productivity. More innovative and holistic thinking, on the other hand, delves well beyond direct operating costs and begins to tap into the savings embedded in corporate overheads (IT, HR, Supply chain, etc.), value that is locked up in our supplier and business partner relationships, and even value that may reside in customer behavior and day-to-day interaction with the company (i.e., those areas that were historically regarded as uncontrollable or may have been considered “off limits”).

We believe this expanded focus on profitability (versus simple operating costs and productivity) will have significant impact on what we measure in 2011, as well as how we define and claim value on the back end of our process. EPM can and should play a major role in LEADING this transformation, using its data and measurement frameworks to reveal new profitability drivers to the organization, and, in turn, growing the active pipeline of value improvements ( a new corporate asset) for the business.

Technology focus/ vendor consolidation

A few years ago, the landscape of supporting technologies was characterized by a plethora of vendors, each touting its own unique (and often proprietary) version of a performance management “system”. In fact, the domains within which they all operated were blurry even for those companies and the external (independent) research organizations who tracked their capabilities on a regular basis. Were these BI vendors? Dashboard providers? Visualization tools? Reporting engines? All of the above? There was a time in the not-too-distant past when the number of quasi-credible players for a company looking for performance management software would have stretched well into the hundreds.

Today, the landscape looks very different. Not only are the “credible” PM technologies fewer in number, the clarity of the domains within which they play has increased significantly for all involved (Who are the real EPM vendors versus those who are simply pieces of the puzzle?) In early 2010, Gartner published its Magic Quadrant analysis which did a good job at illustrating the consolidation that began a few years ago when each of the major IT solution providers acquired various BI and other performance management/ reporting related niche players in what turned out to be the start of a major industry consolidation.

With the exception of the very small one-off solution providers, the credible list of EPM technologies (which I define as robust (features and capabilities), easily integrated (open versus closed systems), and scalable) can now be counted on one hand. That’s good news for those who have waited until 2011 to pull the trigger on their EPM technology purchase/ upgrade, as the job of vendor selection has gotten much easier, and the cost of deployment much smaller.

In 2011, we expect a significant increase in the set of capabilities and innovations each of these players bring to the table, with the biggest of these being integration (within and between other applications such as risk management, asset management, capital planning, portfolio management, and HR), automation (less manual data manipulation and conditioning, better leveraging of BI tools), and the portability/ flexibility of reporting mediums (e.g. mobile versus desktop reporting).

Standardization of the data environment itself

Key to some of the above changes will be improvements in how data at all levels are collected, synthesized, and reported. Some would say this all started years ago with increases in regulatory oversight and the application of clear reporting standards (everything from basic GAAP to SOx in the financial realm, to industry-specific reporting such as FERC and NERC in the Utilities sector), many of which have made reporting transparency a way of life. But for others closer to the world of financial reporting, those forces will likely pale in comparison to what is coming in the era of International Financial Reporting Standards (IFRS), where moving to a global standard for transparency and reporting will prove far more complex and daunting.

2011 should see the acceleration of these factors on the EPM radar screen. Changes will no doubt emerge in terms of how data must be collected and reported, so “tuning into” these changes now will allow you to get ahead of the curve and be in a position to influence this transition within your organization (rather than reacting from the sidelines on what emerges from within IT and Accounting, two of the most impacted functions within your organization). As with most such changes, the implementation is never straightforward, so staying ahead of the curve may even create opportunities to drive positive change in the overall data environment within which you operate and rely on. Use it to your advantage.

EPM skill building/ cultural improvements

As performance managers, we always talk about the importance of skill building and driving culture change. But with the exception of those companies who are heavy invested in one of today's major quality/ business improvement platforms (Lean, Six Sigma, et al), investment in a true performance driven culture has fallen woefully short of what is necessary in a successful EPM environment. In fact, many companies who have made significant investments in the above referenced platforms have actually lost ground in recent years as these initiatives became viewed as “passing fads” that merely generated lots of “lip service”. The bottom line is that there exists a broad spectrum of experiences in this space, from those who have invested heavily to those who have invested little to nothing.

What continued to concern us in 2010 was the number of organizations who had invested heavily in the EPM discipline (by building a support structure, acquiring dashboard technology, etc.), yet appeared to be moving backwards, largely because they had not made the corresponding investment in EPM awareness and leadership skills that are required at even the most basic stakeholder levels. Many of these organizations had limited their investments to tactical skill building like diagnostic and analysis techniques (typical of operational driven cultures) rather than the broader suite of skills demonstrated by leading EPM organizations.

Performance Management is a major investment in business infrastructure and governance, and to implement it without an aggressive, yet targeted approach to EPM skills at all levels of management (Performance Leadership, Reporting, Analysis, Commitment Management, Managing Change, --to name a few) will guarantee some major failures along the way.

The good news is that this is an area many have determined to be a priority, and many of those who have underinvested in the past intend on making up significant ground in the coming years. But by the same token, most companies have not adequately defined where these investments should be made and what specific skills should be focused on, and hence lack a credible “learning” program that can really accelerate its EPM success. The starting point for all of this is doing a solid inventory of EPM learning within your organization (defining the required skills and competencies, and understanding where you stand on each), and then building a comprehensive plan to introduce and reinforce these new behaviors into your business. As organizations, we know how to bring new skills into the business, having introduced effective learning programs in everything from technical skills to safety, diversity, and basic operating management skills and behaviors. Integrating EPM skills into these programs, consciously and deliberately, should be a major focus of EPM in the coming year.

-----------------------

So with that, we will put another volume of "EPM-year in review" on the shelf, hoping that it will be useful to you as you refine your strategies, plans, and tactics for the new year.

With any luck, 2011 will mark the long anticipated turnaround in the global economy, as well as the deployment of new EPM practices, tools and approaches that will help us navigate the new growth and ambition that will come with it. But let's not lose sight of what enabled us to navigate through the challenges of 2010 amidst the unprecedented levels of uncertainty that surrounded all of us. Risk and unpredictability will always be present, whether visible to us, or merely lurking in the background. Being able to manage within that environment will continue to differentiate the best among us in the years ahead.

My sincerest best wishes for all of you over the Holiday season, and for a happy, prosperous and successful 2011!

-b

The Primary Fuel of Dissatisfaction...

2010-07-11T15:42:00.000-04:00

Following up on an earlier post, the question of what really "fuels" dissatisfaction has been a hard one to answer because it is both multidimensional (I.e. There is no single source of discontent) and unique to the individual customer. That notwithstanding, I do believe that the answer does revolve around one single category of emotions: that being FEAR and UNCERTAINTY.

Come on, really? Many customers are customers of simple products. Not all purchases are big purchases like houses, cars, or other things that will stick you with really long term regrets. Most daily purchases- you gas transaction, payment of a utility or cell bill, a hotel reservation, and the like, are obviously too simple to drive the emotions of fear and uncertainty, right?

To the contrary, I believe fear and uncertainty emanates from many sources, not the least of which is being "surprised" in a way that has negative consequences. How many of you have gone through the angst associated with the uncertainty of data charges from your cell phone company? Or wondering if you identity will be compromised from an online purchase? Or if you electric bill for this month will bust your budget? Or if your credit card will exceed it's limit and embarrass you among a group of close friends or family? Even something as simple as the uncertainty of missing an airport connection, can often create hours of angst rendering any exceptional service you receive before, during or after a flight pointless. Why? Because for most of us, worrying about something important will end up distracting anything within close proximity to it. Outside of a small handful of us who can compartmentalize emotions, most things outside of what's urgent and important for us takes a backseat until what's important gets resolved.

Some companies seem to get this, although I wonder how much much of what we see in this area is deliberate rather than simply random or haphazard success. Nevertheless, you more than likely have seen some examples of how uncertainty can be effectively minimized, if not overtly managed. Some simple examples include:

- airlines who announce connecting gates while still in the air
- unlimited calling and data plans
-leveled payment plans from electric and gas utilities
- notification of hold times and queue lengths

The proliferation of SMS alerts for everything from bank balances and data usage to first class airline upgrades and flight delays all help customers avoid surprises. Still, I wonder if some companies are just doing these things for technology sake rather than from a genuine understanding of customer mindset and motivating forces. In fact, most of this can be done without any technology intervention.

I am reminded of when united airlines used to (maybe they still do) allow customers to tune their in seat audio to the atc frequency so that they could monitor the flight. One of the reasons I liked that was you could hear about turbulence being reported by other pilots in advance of the bumps, as well as all the requests by your pilot for faster routing, smoother altitudes, as well as any unexpected delays. In fact, even now, when I am on an airplane that is going through turbulence more than a few minutes, I start wondering if the pilot is actually working as hard as the united pilots did to find the smoother air. Of course they probably are, but at least with united I knew. And that made the uncertainty go away.

Here's another more recent example, and perhaps my favorite so far. The other day I ran into an electric utility that alerted (actually they reminded) customers to the fact that the summer months were approaching and bills would be spiking...thus opening up an opportunity to convert customers to both a leveled payment plan (same amount every month) and direct debit option, thus minimizing or eliminating the elements of uncertainty and surprise from the customer interaction. More importantly for the utility, it had the dual benefit of saving enormous amounts of money by minimizing transaction costs, eliminating a huge volume of inbound calls to the call center related to hi bill issues (high bill complaints are the highest duration and highest cost type of call for utility companies, in which 50+ percent of the time, the call actually results with the customer concluding the bill was similar in magnitude to the same time last year.. Can you think of many cases in which being proven wrong leads to a positive and happy state of mind?

I think the implications of adopting this "avoid the surprise" philosophy could be very large in terms of taking customer satisfaction to a new level. But it does require some fundamental changes in everything from how we view customer behavior, to how we design our offerings, and most importantly, how we define, measure and manage our success in this domain.

- Posted using BlogPress from my iPad

CSAT- the BIGGER picture...

2010-07-08T18:45:00.000-04:00

First of all, my apologies for not having written in a long long time. Funny how the things that we enjoy the most take a back seat to the urgent priorities of the day (or in this case months) that are sometimes far less fun or rewarding. The good news is that there have been lots of interesting client experiences over the past several months, and hence lots of good fodder to expound on in the weeks and months ahead...assuming I can manage to carve out the hour or so a week it takes to get them down on paper.

Top of mind for me right now, is what companies are doing (or more importantly NOT doing) to drive good customer service. I think this stems from both a failure to understand what really makes a customer tick, and the associated failure to measure it, and ultimately manage it. As a backdrop, I'd ask us to all think about the work "tick". For most, the words "what makes a customer tick?) translates into the things that really "drive" or "motivate"them to buy something, or just feel good about your product or service. But today I want to focus on a more literal interpretation of the word "tick". I'm thinking something like the ticking of a timer- like a clock winding down to 0...at which point things go "boom"...which in today's economy more quickly translates into a lost relationship, a lost sale, or a lost client. In my judgement, today's customer is much more focused on extracting maximum value from the services they have ALREADY bought or paid for, much more so than (or at least long before) they will entertain buying something else from you.

So with that as the backdrop, I think we'd all be a lot better served by taking another, perhaps closer, look at the drivers of DISSATISFACTION as our primary way of driving customer value. Putting the drivers of dissatisfaction ahead of focusing on all the bells, whistles, and other sources of delighting the customer, will get you farther because if you can't avoid the dissatisfaction, then all of the rest is a moot point. Of course, most of you understand that, right?...and have already put in place measures to prevent a customer from getting to the point of dissatisfaction. All of you probably measure things like how fast we answer calls, how many are abandoned, how many issues are resolved in the first contact, etc., and through doing those things you minimize the likelihood of a customer being dissatisfied, or at least staying dissatisfied, right? Not so fast.

Another perspective is that by the time a customer calls, the clock is ALREADY ticking, and whatever is done DURING the customer call is often occurring AFTER the clock has wound down to almost zero. For many of you, the picture may in fact look like this: the customer gets through without being dropped, bounces out of the automated call system in quick order, talks to a rep (who "resolves the call"), ending with the customer ostensibly satisfied because they didn't call back or give a bad score on the automated survey, right? Of course there is another interpretation...which is the customer was already quite ticked when they called in, at which point they immediately concluded (based on the first 3 choices form the IVR) that he wouldn't get anywhere with that route, bounced out of the IVR, ran into an unhelpful rep, and politely left the call without taking a survey, and left more upset than when he started. Call me cynical, but if that was a ticking time bomb to start with, chances are it went boom within minutes of the call ending, and did so with all of the measures and indicators pointing to the opposite, and the company thinking they have a happy customer whose ultimate dissatisfaction has been averted.

I submit that companies who score well on the traditional metrics of CSAT are giving themselves a false sense of security and are probably missing the core elements of customer perspectives...those that largely revolve around lingering sources of discomfort that are hard to express, not to mention measure or quantify. If we can get our arms around this, we have a much higher likelihood of eliminating perhaps our single biggest blindspot in generating customer value and ultimately leapfrogging the competition.

The next few posts will focus on some of these up front drivers are, as well as the kinds of things we need to be measuring in this space. Fortunately, this is an area where many of you are not behind the pack, because there is nobody really leading the pack. In the past several months, I've worked with some of the self proclaimed "best" companies (those who perform well on the conventional indicators) and have interacted as a customer (as many of you have) with the "big names" in customer service with less than adequate results and a time bomb in my gut that is still ticking long after the "polite" ending of the call to the company.

I think we would all be better served by making the following key priorities in our drive to maximize customer sat.

1. Redefine the drivers of customer satisfaction, and dissatisfaction (the things that start the countdown on the time bomb)

2. Seriously rethink what we measure and track, and the baseline against which we evaluate success (my hunch is we will throw out a lot of what we measure today)

3. Correct the upfront flaws in the design of our offerings and processes so that dissatisfaction in minimized and we all have a more solid base on which to build on in the years ahead

-b

- Posted using BlogPress from my iPad

Hunting for "Best Practices"

2009-06-24T13:50:00.006-04:00

A lot is written about benchmarking as a vehicle for identifying best practices. Clearly the two are related, but sometimes too much weight is given to the connection.

The temptation is to look to high performing companies, make a laundry list of what they are doing, and then go try to emulate that. The presumption being that most of what they are doing qualifies as "best practice". In reality, what is often taking place at leading companies is a mix of three things:

1. Basic or core operating practices ("blocking and tackling") that are simply executed at a level better than most

2. An effective "operating model" within which these practices reside

3. True "best practices", of the innovative and breakthrough variety

The first two categories are clearly important, and in some cases more important than the latter, because without those foundational aspects, all the best practices in the world will yield little incremental value. But assuming those are in place, true "best practices" are clearly the next place to look for innovation. The challenge is knowing what to look for.

When you invest in activities geared toward identifying these types of best practices (conferences, benchmarking studies, consulting projects, etc), its important to have a set of standards on which to base your return on that investment. For a best practice to pass the "innovation" test, it must deliver some level of insight that goes beyond just doing the same things better. I offer the following as a checklist for assessing whether a specific practice passes this type of sniff test:

1.Is it definable?
Best practices are not general philosophies (e.g.- "better management of risk"), but rather specific changes to process, technology, organization, policy, or operating protocol. And it refers to a specific "change" from current state, typically involving something you will either add (start doing) or subtract (stop doing) . Sometimes its a new process or technology all together. But defining it requires being specific.

2. Is it unique?
Is this a practice you are likely to find most everywhere you go, just implemented at different levels of effectiveness? There is nothing wrong with focusing on better execution/ implementation or core business practices as a driver of performance, but you are better off calling it what it it- an implementation breakdown- rather than disguising the issue as failure to have a particular practice or policy that the organization knows is already in place in some way, shape or form. Otherwise, you'll be met with "this is just more of the same".

2. Is it breakthrough?
Does the change in practice or policy create a step level change in result of a business process. Generally I look for a 10 times payback in a relatively short horizon, and at least a 50% change in current performance level to the affected business process. But these standards can vary from company to company. But we are not talking 1 or 2 %- but something of material significance. A small standard business case worksheet can help your employees do their own internal "sniff test" before consuming your time in analyzing the myriad of small ticket changes.

3. Leading edge or "bleeding edge"?
Often, it is our temptation to look at the coolest technology or system and proclaim it to be a best practice. Most of these are untested at best, and looking for "test dummies" to try themselves out on. Find companies that have implemented it, look at the business cases they used to justify it, and then look at how much of that actually materialized.

4. Is it actionable?
My test for "actionable" is usually that it can be adopted (fully implemented) inside of a 1-3 year timeframe. Otherwise, you're adding new R&D into the pipeline. R&D is fine, but don't let theoretical or speculative projects clutter up your best practices pipeline. Focus on things that you can quickly assign ownership to, and things you can get on with rather quickly.

5. Can I attach value?
Most importantly, can you attach dollars and a specific budget location to the achievement of implementation? And will someone "sign up" for that commitment? e.g. If I implement xyz, how many bodies go away, or how much money will i save, and when? If you cant answer those questions, we're probably not talking about a credible "best practice".

Look- there is nothing wrong with focusing on doing the basics better. Or having a better operating philosophy or business model. You need those elements to run the business. But when we talk about BEST practices, we are generally talking about doing something unique and different. And without that component to business improvement, its unlikely that you will get to or remain at a leading edge level of performance.

So make sure you have true best practices in your pipeline, and use these tests to make sure they pass the proverbial "sniff test".

-b

The Value of EPM During Market Downturns

2009-06-16T09:35:00.007-04:00

Nearly every CFO I've spoken with since last September acknowledges taking a very different posture with respect to spending and investing. Most have radically slashed O&M budgets and have cut deeply into their CapEx plans to accommodate today's anemic growth levels. All companies, however, would admit to taking a more conservative posture with respect to any spending that looks even the least bit discretionary.

So where does (or should) EPM investment fall in this mix? Does it belong in the same category as infrastructure investments that are of obvious high benefit but long term in nature? Should it be viewed as "nice to have", to be done in periods of excess profits and reinvestment? Or is it something more critical to the companies ability to generate value, or more importantly, manage risk in the environment we find ourselves sitting in

For those pondering the same questions, here are a few of my perspectives on why EPM should not only stay on the priority list, but perhaps rise to the very top in terms of executive time and mindspace.

1. Value Realization from EXISTING projects-
For years, all of our companies have had improvement initiative after improvement initiative, program after program, project after project. We've all seen the value cases, and we've all become used to seeing many of these projects receive accolades for being completed on time and under budget, only to generate a fraction of the promised value/ savings promised. Putting the right EPM process in place will immediately force project sponsors to tie improvement initiatives to clear impacts on your KPI's. Once that is done, and you can see the landscape of what is really generating value, you are now in a position to defer (or kill) projects that are not accretive to immediate returns, and start "ringing the cash register" on the the ones that do. Sure, this will have generate long and sustained impact on the culture and a new way of thinking across the enterprise. But it is something that is not too difficult to do with the right process and tools, and something that can and will have immediate and significant impact.

2. Compliance with today's risk/ performance controls-
Starting with SOxley and today's new transparency mandates, and looking forward at IFRS requirements, CFO's and other Company Officers will be on the proverbial "hot seat" for the forseeable future. Unfortunately, the seat only gets "hotter" with further declines and more market uncertainty, just at a time when the cost of adding new controls becomes unbearable. Finding new and less costly ways to achieve compliance is paramount in resolving this inherent conflict.

3. Lowering Administrative Costs-
The cost of management and budget reporting is increasing at a record pace, which is believed by many to be unsustainable. Furthermore, the manual manner through which much of this is coordinated, has decreased the reliability of the information produced. While "cloud" computing has a sexy new connotation today, most CFO'sand CIO's would agree that without a clear architecture, the current web of worksheets, source systems and partial BI layers is unsustainable. EPM focus will begin to clear up this picture by quickly establishing the right architecture (and foundation) on which this will ultimately sit.

Those are three of potentially many arguements for moving faster and moving NOW on EPM as a strategic thrust of the business in 2009. But even more compelling reinforcement for this assertion comes from some recently published benchmarks. According to a recent study from Hackett, world class EPM companies are consistently generating 2.4 times the equity returns of peer companies, a potential lifeboat for a company facing tougher and tougher economic times. These same companies have 20-30 less volitility in profits, and more significant operating returns overall.

But here's the kicker for why you want to do this now rather than later. The very same companies that are achieving the above gains, are also (according to Hackett) doing so at roughly 1/2 the cost for performance reporting and performance management business functions. And they are radically reducing budget complexity and improving information access to end users rather than traditional reporting middle-men. And another nice benefit- a 40% higher reliability in forcasting. Best of all is that when this is in place, the company becomes better able to model and forecast more dynamically, a practice where speed and flexibility are life saving in down/ unpredictible markets.

EPM investments are sometimes significant depending on the end state you want to achieve and your relative starting point. And while the EPM journey of best practice companies can take between 4 and 7 years to achieve full scale competence, results can begin materializing in months. In fact, many would say the first 6-12 months are most vital in creating awareness and a catalyst for real cultural change, with sizable gains occuring all along the way.

Bottom line: EPM can and will add immediate value, mitigate current risks, and save on adminiatrative and budgeting cost in coming years. Starting the EPM journey during a dark time like this may not be the most intuitive answer you want to hear. But starting a journey at night is sometimes the best answer.

-b

EPM . . . Same Wine, New Bottle? Not By A Long Shot

2009-03-21T13:46:00.003-04:00

Lately, it seems that Enterprise Performance Management (EPM as it is now referred) is getting a lot of press in the global network of business professionals and is quickly becoming a heavily used “buzz phrase” in IT and Operating circles. But let’s face it – neither Performance Management nor its new sexier relative EPM, really represents anything fundamentally new or earth shattering. Or does it?

For starters, let’s acknowledge that in any management discipline, the number of “official definitions” often exceeds the number of practitioners that dominate the implementation space for the associated services. One might conclude that I am merely a lone voice among many with some strong views on what EPM really means. But those of you who know me, know that won’t stop me from wading in with my not-so-humble view of the world...certainly not in a discipline where I’ve spent the better part of 20 years.

With that caveat in mind, let me say that what EPM means to the discipline of Performance Measurement is similar in magnitude to what Information Technology meant to the evolution of Data Processing, and what Enterprise Risk Management meant to the age old function of corporate “insurance buying.” However, it is likely that at the outset of each of these journeys, the practitioners thought that the distinction was much more subtle than it ended up being. In fact, in both of these areas, the end state has evolved well past what anyone would have envisioned only a few years ago.

With that as a backdrop, let’s do a little bit of retrospection and “crystal balling” on the evolution of EPM, from its origins in performance measurement, to the pervasive impact that it can have on business results. For many of us, the Performance Management journey began with some basic steps to raise awareness of what was important to measure, and took strides to measure it. Some still struggle with these very basics. Others have taken this to a broader level of transparency and accountability, integrating these values into all company processes. Others have pushed the envelope and taken EPM to what we call a “pervasive” level in the business, characterized by a universal cultural receptivity to the values of accountability, transparency and “line of sight” integration with day to day business processes.

In the end though, there are three fundamental factors that influence a company’s ability to move along this continuum, and it is these factors that should dominate the agendas of companies desiring EPM excellence:

1. Uniformity and Consistency of Approach
The problem at most companies is NOT the lack of KPI’s, or the failure to provide reports, or the lack of a balanced scorecard or even a corporate dashboard. I have yet to work for a client that didn’t have each of these core attributes in place at some level of the business. The problem is that these pieces of the puzzle remain scattered across various levels and layers of the business. With the exception of a corporate dashboard or balanced scorecard which likely exists at the Enterprise level (at least covering the top output measures), the application of the process is often heavily inconsistent between business units, and especially at lower levels of the business where the results of measurement are much more actionable. The good news here is that most of the important “parts” of the process already exist. But without the integration of the components into a cohesive architecture, you are unlikely to get any of the possible enterprise synergies demonstrated by more advanced EPM companies. EXPECT TO SPEND 15-20% OF YOUR EFFORT HERE!

2. Cultural Competence
For many, the words “culture” and “competence” in the same breath show up like “oil and water.” But it is important to highlight the need for both. Clearly, leaders in EPM space have a “data driven” culture – a fact-based process for measuring, validating, analyzing, improving and controlling key parts of business. But having a process is one thing, and being able to execute is another. I like to say that leaders go through a process of development for any major new skill or behavior – starting with awareness, and progressing through openness, acceptance, competence, and mastery. Any organization right of Stage 3 EPM will point to its Leadership as their reason for success. And it’s not just what they say and what they declare, but often the ability of leadership (which often extends 2-3 layers down to the top 100-300 managers) to demonstrate the behaviors required of a performance driven operating model. EXPECT TO SPEND THE VAST MAJORITY OF YOUR EFFORT HERE – 50-60%.

3. Emphasize the CAPTURE of Value
Ok – before you say it or think it, I acknowledge this sounds pretty basic. Who DOESN’T do this – right? Well before you go too far down that path, how often does your organization ask its project managers and sponsors to account for the VALUE produced by their investments? I’m not talking about if the project was done on time or on budget, but rather if the investment produced the outcome that was projected during its cost/benefit analysis and justification stage. Surprisingly, less than 10% of our clients do this to the level of their own satisfaction. This is by far the greatest value of an EPM process and should be the #1 measure of your future EPM success as a company. In my eyes, it is what distinguishes EPM from our traditional roots of performance measurement and tracking. Linking measures to what we do on a day to day basis, and then retrospectively assessing our day actions against those measures is the essence of the “closed loop” EPM process that we espouse so often. EXPECT TO SPEND 30-40% OF YOUR EFFORT HERE.

Maybe these factors seem simple or trite on the surface. Or maybe they represent challenges that have been elusive in the past. But no matter how elusive, trite or otherwise mundane they appear to be, they represent the biggest roadblocks in the type of EPM journey I laid out at the outset of this post.

You may also find it odd that nowhere on the above list appears the words technology, and conventional terms like dashboard and scorecard only appear in passing. In a way, that should amplify the point (particularly to those in the IT client and vendor community) that EPM is NOT about the technology, much like Risk Management is not about buying insurance and IT is no longer about just Data Processing. EPM has become a central part of MANAGING STRATEGY inside of a closed-loop framework of objectives, measures, investments and implementation.

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held international management consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services. UMS Group has consulted with hundreds of companies across numerous industries and geographies. Visit UMS Group at http://www.umsgroup.com or contact us directly at 973-335-3555.

2008 Reflections…And thoughts on the year ahead…

2008-12-30T19:13:00.002-05:00

By: Bob Champagne,
VP- Performance Optimization Solutions at UMS Group

As we wind down the final days of 2008, I thought I’d take the opportunity to summarize some of my observations from what I believe to be one of the most pivotal years in the evolution of Performance Management as a discipline.

Despite all of the macro-economic turmoil (volatility of commodity costs, loss of customer growth, credit market collapses, loss of equity values, et al), there were in fact some bright spots in how we “manage” our companies, and our ability to drive gains in efficiency, effectiveness, and overall value delivered to customers. While this may not be of much short term consolation to those in the C-Suite who have had to watch profits and shareholder value diminish because of largely non forecasted and uncontrollable market forces, there will soon be a time where the value of “performance” related gains become more noticeable and significant.
History has shown that while all companies experience pain during heavy market corrections, those who survive are often those who are able to “weather the storm”. They are most often those who have found a way to expand and contract their business “on a dime”, who know what efficiency buttons they can push and which ones they can’t, and who can manage the margin effectively between business survival and business failure.

More importantly, these are not lessons we learn in a time of crisis, but rather the result of embedded processes, skills, and culture that have been established over time. That is why I believe that the improvements we have made in our performance management processes are so significant. Many of these gains may not even show up on our 2008 and 2009 P&L’s due to the overwhelming impact of other uncontrollable forces on today’s business results. But rest assured, that when the dust does settle, it will be these very processes, skills, and competencies that will have allowed those that have survived to do so unscathed.

So, with that as my humble (and somewhat depressing) attempt at a “backdrop”, here’s my take on where these gains in Performance Management were most notable, and why I believe this year was so pivotal for the discipline:

1. Increased Visibility/ Accountability for Enterprise Performance- Just a few short years ago, it was hard to find someone in the organization with true responsibility and accountability for driving “Enterprise Performance”. Of course, all of our companies have had budget analysts, financial planners, business intelligence managers, etc. with responsibility for providing management reports and information. And most of us have also had HR, OD, and Change Management functions with responsibility for facilitating changes in business process or culture. But few of our companies have had executive level accountability for driving PM processes, skills and culture throughout the enterprise. This changed significantly in 2008.

While still mostly in the minority, we are now seeing senior management (often Officer level individuals) with responsibility for driving Enterprise Performance, much like we saw emerge over the years with IT, Internal Auditing, Safety, Asset Management, and most recently Enterprise Risk. Don’t get me wrong- I am not for proliferation and expansion of our management layers, but something very real does happen when executive level leadership and visibility is brought to bear on a key business priority.

Of those I consider to be true “best practice” organizations in the discipline of Enterprise Performance Management (EPM), 100% claim executive sponsorship, leadership and demonstrated commitment in the C-Suite as the most significant factor in their success. The fact that we are now seeing this level of visibility emerge in the industry, not only as a role, but as part of senior management/ executive career paths, is one of the most notable changes we’ve seen in 2008.

2. EPM as an Integrated Business Process- Even with the right leadership visibility, EPM can still hit major roadblocks if the focus strays from being a core business process, to being a single function or task in the chain. Until recently, anything resembling a Performance Management department at our companies usually had accountability for a single activity like producing monthly management reports or implementing components of a business intelligence solution. Even today, I could point you to companies where, despite the elaborate title of “Enterprise Performance Management”, and the token executive or senior manager who runs it, it remains nothing more than a glorified benchmarking or industrial tourism function.

But this is changing for the better. We are now seeing companies who see EPM as not one business function, but rather a set of functions that together make up an integrated process. I won’t go into detail here on each component (will save for future posts), but suffice it to say that there are four critical components to the process- Indication, Analysis, Insight, Action (what we’ve termed (IA^2). Things like reporting, benchmarking, data gathering, best practices research each make up a critical part of the process, but by themselves generate little value.

The fact that we are now seeing companies (albeit, again, the minority) take accountability for more broadly defining this process is encouraging. Again I point back to functions like Risk Management (that used to connote the activity of insurance buying”) that today is responsible for managing a full suite of risks, many of which were unknown to the business only a few years ago. Process versus activity/ business function: a simple, yet big distinction that is starting to differentiate winners in EPM space.

3. Technology as an Enabler- A Novel Concept?
Certainly a novel concept, but one that few actually embrace. I must admit that watching the consolidation occur between the SAP’s, Oracle’s, and IBM’s of the world, and their recently acquired business intelligence and reporting/ performance management products/companies (the Hyperion’s, Cognos’, Business Objects’, Pilot Software, and the like) was nothing short of painful to witness over the course of the year. At the beginning of 2008, I had the unfortunate opportunity during a software selection process for a client, to witness a presentation by one of the IT monoliths (who will remain nameless to protect the innocent) in which they were asked to demonstrate their Performance Management application. Not only was the integration between the various products unclear, but it was actually hard for the vendor to discern which of its products actually served the EPM application needs. It was the epitome of integrating their company “on the fly”, with a result that left all of our collective “heads spinning” (and the emperor (vendor) with no clothes (almost literally)!).

Well, all joking aside, the year unfolded quite differently than most of us expected. I am not sure whether it was the IT shops getting their integration act together, clients better articulating what they needed (and more importantly what the didn’t need), companies becoming more operationally versus IT centric, or a combination of all three. But we are definitely leaving 2008 with a lot more clarity than when we entered it.

We entered 2008 with over 20 EPM applications, and each of the large IT shops with at least one of these applications that they were (unsuccessfully) struggling to integrate into their suite, for the main purpose of growing their footprint within their key client organizations. We are leaving 2008 with 2-3 clear frontrunners, and the major IT vendors much more willing to fill the niche client need and less focused on owning the “whole enchilada”- a major step forward in a relatively short amount of time.

4. Forward versus Backward Looking:
What’s more important- leading or lagging indicators? This question has probably caused more debate than any other question among key EPM stakeholders and executives in 2008. And although it is an interesting question, the answer of which may appear to be somewhat “Holy Grail-ish” to the EPM managers out there, much of the debate was pretty wasteful and unnecessary.
Well, of course BOTH are necessary, we all say. The world is not black or whit.- We all know that, right?. Yet the conversations seemed to want to sway all the way to “why do we care about what’s happened in the past?” end of the spectrum. Amazing how our tendency is to abandon the old, and adopt the new, without asking the obvious questions. What is the right balance between leading or lagging? When should I use each? Is there a difference in what information each of those types of indicators provide? 2008 began to reveal some insight into this, largely because of the coincidence of the market uncertainty that was dropped on all of our laps.

Clearly, we cannot abandon the lagging indicators. They are necessary for gauging what worked and what didn’t within each of our strategies. They tell us (albeit retrospectively) when we veer off course. And lagging indicators often help us learn about what caused these deviations. But even those indicators that may appear to the naked eye to be “leading” (ergo, the alarm in an airplane cockpit) ,are really only the manifestation of some lagging event. So for starters, I think we can all rest easy that lagging indicators and report cards, while they may not pass the “new new thing” test, certainly will remain the core of our management reporting and scorecards.

But 2008 also told us that leading indicators were both necessary and vital. And more importantly, 2008 told us WHY that was. The role of leading indicators is to help us predict things that we have some ability to control or better react to. For example, a decline in number of building permits may indicate a future drop off in electricity demand long before it is visible in consumption results. These indicators can help us make changes more quickly, and often more deliberately, than we would otherwise be able to, be those staffing changes, modifications to production planning, changes in commodity contract strategy, etc.

In short, lagging indicators help us monitor our progress, gauge our success, and provide cues into necessary course corrections. Leading indicators, on the other hand, are warning signs- over the horizon indicators if you will, that help you see what isn’t immediately apparent on the surface. 2 different measures, 2 different purposes, and often best to keep them separated in 2 conversations.

All of those distinctions notwithstanding, 2008 has shown us a sharp increase in companies that are focused on adding leading indicators into their mix of performance measures, and yielded some good ideas as to what some of them might look like.

5. Changes in how we communicate:
The final observation I have about 2008 as it relates to performance management, is how we communicate ABOUT performance. OK, this may seem a bit trite, as almost every management book I know talks about the importance of communication in managing the business. What they don’t talk about is what TYPE of communication we are talking about.

Over the years, all of have experienced what I will term wasteful and often unnecessary communication with our colleagues, employees, and upper management. So much so that some of us remember the “standing” meetings where the entire meeting was conducted standing up so as to encourage brevity.

2008 revealed a number of success stories where companies were able to use performance data and analysis to “cut through the noise”, as one of my clients put it. “When conversations are oriented around performance data, they tend to be less wasteful, to the point, and more actionable”.

In fact, the words “Performance Management” in some communities relates to the “performance appraisal” process specifically, and is considered an HR process, revolving around how those conversations are conducted, managed, documented, etc. So it is only fitting that the more holistic process of EPM reinforces that by bringing data, analysis and expanded insights to the table to make those conversations more productive and less wasteful.

But 2008 also showed us companies that have successfully expanded performance conversations to exist in cross functional settings. For example, using performance data to spark debate and dialog BETWEEN groups of stakeholders, where each one drives a major part of a business outcome. While sometimes more difficult to manage and facilitate, the dynamic generated by these forums is proving to be quite healthy.

We are also seeing companies become more successful in how they broadcast performance results. And NO, this does not mean more technology. Not that technology is bad, but it does sometimes slow down the speed with which more creative and higher impact solutions can be generated. More of my clients are displaying their top KPI results on simple posters around their lobbies, hallways, and workspaces- displaying a unified set of performance results that have replaced the unwieldy display of excel charts and data dumps that previously laced the corridors. Some have gotten real creative, going for the high traffic areas- kitchens, water coolers, and my favorite, commode-ications (the process of hanging performance results on the backs of bathroom stalls- a guaranteed read!).

Others have brought their operational results to the inside covers of their annual reports, complementing their financial ratios with evidence of their successes, failures, and objectives for the coming year- information the shareholders are starting to find more valuable as financial information becomes more and more routine and sometimes non differentiable to the eyes of an average shareholder.

So once again, as Performance Managers, we leave the year better than we found it, perhaps more so in 2008 than in previous years. And that is a testament to our hard work and commitment to keeping the discipline moving forward in a high value adding manner.

Still, we have challenges in 2009. Some of them will be larger than our challenges to date, if for no other reason than the traps that many of them will lead us toward. So where should our focus be in the year ahead?

- We must automate our data streams and simplify the data gathering processes without becoming slaves to the availability of technology and speed (or lack thereof) with which it can be implemented.

- We must push our managers and employees to get more aggressive with their target setting without losing the gains we have made in management buy in and commitment.

- We must proactively address gaps in our business culture and create an environment of individual accountability without losing the collaboration we gained through our stronger communication and cross functional teaming

- We must continue to focus our measurement on the indicators that matter, without losing the comprehensiveness and completeness of our measurement framework

- We must continue to deliver real value to the business in our roles as Performance Managers and Executives, while avoiding the temptation to increase EPM costs and infrastructure beyond its capacity to sustainably deliver strong ROI

With that, we draw an official end to 2008. I wish each of you all the best as you pursue your 2009 objectives, and address many of the above business challenges. And I look forward helping you meet these challenges though sharing the experiences and best practices that we continue to amass through our work in EPM around the globe.

As always you can find our most up to date thinking on our website (http://www.umsgroup.com/enterpriseperformancemanagement/ ) and on my personal blog at http://pmdaily.blogspot.com , or contact me directly at 973-335-3555 or through the LinkedIn Network at http://www.linkedin.com/in/bobchampagne

Happy Holidays!

Bob Champagne

How Many Measures Are Enough?

2008-12-30T17:26:00.005-05:00

As is typical in any installation of an enterprise- wide Performance Management framework, managers and employees often balk at the volume of measures and data that represented by the selected KPI’s for the business.

Such was the case for me in a recent project that spanned 6 major business areas, from Energy Supply to Delivery, and also included all of the company’s administrative, customer, and infrastructure support areas. In total, the number of KPI’s selected were just over 100 and represented both “level 1” indicators (business unit goals and top level result areas) and “level2” indicators representing a suite of KPI’s that reflected the individual performance of each area (roughly 4-6 each). For the client, that appeared to be an overly heavy dose of data and information to absorb.

In part, the client is right, this is a lot of information, being that each metric will require numerous data elements to assemble, and further complicated by how many different ways the client will want to view the data (by business unit, component, region, etc.). So yes, this is a lot of data. But is it too much?

As with most questions like this, there are a few dimensions to the answer.

First is the question of sheer volume. As a matter of comparison, there are clients of mine that started with a single business unit that had over 1400 KPI’s, and others that started with only 5-10 at the entire company level. Yes, 1400 is too many (and to call them KEY Performance Indicators is clearly a stretch). And yes, 10 for the entire enterprise is too few. But by sheer numbers, 100 would fall on the lower end of the spectrum, yet broad enough to be representative of the business in general.
Second, is the architectural aspect of the measurement framework. We are not talking 100 metrics to be consumed in “one sitting”, but something designed to be managed by a collection of individual managers- in this case between 30 and 50 managers depending on the level of management. Any good balanced scorecard will have a “line of sight” or pyramid aspect to the architecture, typically flowing from the mission to the key result areas, to the supporting objectives, and finally to KPI’s and metrics. So the question of “too many” or “too few” really depends on what level we are talking about. At the key outcome level, 100 would be ridiculously high, and at the KPI level it would be just as ridiculously low.
Third is what I will call the soundness or “sniff test” element- the question of whether there is unnecessary duplicity, redundancy or inconsistency in the universe of measures selected. The test I apply here is what I call “complete and discrete”. For each area being measured, does the set of KPI’s adequately measure (80% or more) of what the function or process is there to produce? and are each of the measures somewhat mutually exclusive (i.e. not redundant)?
Finally, the test of relevancy does have to come into play. This one is tricky because you need to strike a balance between being relevant to everyone and relevant to a particular process owner. Often, you may elect to include a few measures that are in the proverbial “grey area” so as to not disenfranchise a key business unit leader or process manager. Sometimes, a judgment call

Using these three tests, we would normally conclude that the 100 measures selected would be reasonably appropriate given the size of the enterprise and breadth of business units at play.

Here’s an analogy to consider. Think about a football coach who meets with the team at halftime of the big game. The most significant outcome is whether they are winning or losing. On the surface that is what really counts. Keeping it simple, one might also be able to add in some evaluation of offence, defense and special team’s performance. 4 measures that in total pretty much tell the story. Simple enough right?

But is this enough to drive a real understanding of what is really going on in the game? Not really. As the team breaks out into their individual units, simply telling them that they had 150 yards of total offence reveals little if anything in terms of what needs to change. With just that information, the conversations would be very short and somewhat pointless in terms of managing performance.

That is why offense, for example is often broken down into metrics like number of first downs, time of possession, yards per carry, number of “touches” per key player, etc…So extrapolating out, there may be 2-3 dozen measures for an 11 man football team required to effectively manage a 60 minute contest.

My point to you is this: It’s ok to aspire to simplicity. We all want to keep the message simple and not confuse the troops. But let’s also remember that we are managing a business that does have some complexity to it. We are often talking several thousand employees and a business strategy that transcends many years. While 100 metrics may sound daunting to a company at first, it is really just scratching the surface in terms of the volume of drivers and levers at play in a comprehensive EPM framework.

The true test of whether the volume of measures is right is how it stacks up against the tests outlined above, and how well your overall framework holds together.

That notwithstanding, some good rules of thumb to follow for an enterprise with multiple business units:

- 2 to 3 broad business goals (usually things like revenue, growth, profit, etc.),

- 5 to 6 outcome areas (perspectives that need to be managed, like Financial, Customer, Operations, etc…)

- 2to 3 objectives within each outcome area (e.g. Customer satisfaction, Customer retention, etc.),

- and a collection (usually more than 1 and less than 5) measures (whatever is necessary) to adequately reflect performance of each objective in a meaningful way.

This is certainly not a hard and fast rule, but should give you some parameters to go by.

-b

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held management international consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services . UMS Group clients have consulted with hundreds of companies across numerous industries and geographies. Visit UMS at http://www.umsgroup.com/ or contact us directly at 908-656-1179.

The Argument Against "CASCADING"

2008-03-09T16:58:00.003-04:00

I'll admit up front that the title of this post may be a bit misleading. But it does point to an age old problem in implementing a Balanced Scorecard...specifically, how companies respond to a critical choice point encountered in designing the scorecard itself.

One of the most important choices companies encounter during the very early stages of scorecard design and architecture is the decision of whether or not to "cascade" KPI's and to what level of detail.

The temptation of many is to cascade to the n'th degree, and build what I call the "never ending tree structure"...one that allows companies to keep breaking down measures and indicators until they can't break them down any more. In fact, some software applications actually encourage this process by building this "tree structure" orientation into the administrative interface itself.

In a weird sort of way, this is a self perpetuating prophesy. Software designers and some users are by their very nature analytic thinkers. You know the type- the kind of people who over intellectualize every problem they encounter. The ones who prefer to model and analyze everything they encounter, right down to their spouses if they would let them. And believe it or not, society needs these people. CSI agents, NASA scientists, golf or baseball swing coaches- all of these are great career choices for the hyper analytic crowd. But if its great performance management and business excellence you crave- stand clear!

What you want is enough "breakdown" analysis to make your objectives relevant to the managers and employees that accountable for driving positive change, but little or no more than that. Usually that means 2-3 levels tops, with maybe a level or two of trending where necessary. But just because your system or IT solution will enable you to go down 10 levels ( "pointing and clicking" on every bar chart data element until the cows come home) doesn't mean you should build that into your enterprise performance management solution. And just because you may need that level of detail for a custom report for one of your corporate CSI-type analysts to do his job, doesn't mean it should be a central design principal in your performance management process and supporting application.

Here are a few tips when faced with the IT capability of "cascading to your hearts content":

The level to which you drill down should be no more than 2-3 levels from your highest level business objective- any more will begin to lose that critical "line of sight" I've discussed in previous posts.
The lowest level KPI or business metric you select should be both measurable and MANAGEABLE- For example, you can drill all the way down to the tire or lug nut on the truck in your delivery fleet, but that level is rarely anyone's key accountability and hence may not be as "manageable" as you may think. And if by chance it is, then make it part of another context, or another scorecard, related to that specific business function- not part of your enterprise scorecard.
Every KPI should be tied to one or more high impact initiatives designed to drive business improvement, with the total # of strategic initiatives across all KPI's less than 20-30. Beyond that, the organization will begin to lose critical focus
Keep your scorecard layout simple and easy to understand, avoiding complicated multidimensional analytic graphics or causality relationships- leave these for the custom panels or your analytic core
Make EVERY view in your scorecard something that your CEO and Board COULD understand if they saw it. That's not to say they would typically view those screens, but they should be able to make a mental connection to something they care about.

In short, don't let your software capability drive your EPM process, but rather let your EPM process drive your software. After all, its called EPM for a reason. Said another way, if God had intended the ultimate in hyper analytic solutions for your EPM process, it would probably be called something like Micro Analytic Performance Management- maybe a cool solution for the BI crowd, but not something that should be top of mind for your management team.

-b

Enterprise Performance Management- Getting Past the "Buzz"

2008-03-09T16:16:00.003-04:00

Since I started writing about Enterprise Performance Management (EPM) a little over 10 years ago, we sought to escape the "flash in the pan" buzz of the next big "management THING". Our readers and clients had appeared to embrace EPM for what it was- the cornerstone of what the enterprise should be built upon...the foundation of a business... much like that of the Balanced Scorecard, taken to its logical end state.

That is until I opened the latest BI rag (whose name I will not mention because, after all, I do like writing for them :) and saw two new articles that essentially spoke about EPM synonymously with the plethora of scorecard and dashboard APPLICATIONS espoused by the likes of SAP, Oracle, and even some "bolt-on" solutions of the BI "boutiques".

OK-let's straighten this out once and for all- EPM is NOT an application, it is a business PROCESS. Not only is it A business process, it is (or should be) THE central business process of the enterprise. Sure, they are connected, but here's the real acid test. If you are an implementer of these systems or tools, ask youself how much time you spent (or intend to spend) on the following activities as you implemented your so called EPM software:

Affirming your strategy, and translating it into something your front line employees can easily understand
Refining and your objectives and aligning your management team to them
Translating your key objectives into measureable and benchmarkable KPI's
Doing the requisite analysis (benchmaking, trending, analyzing, forecasting) targets for each of these KPI's
Linking your key initiatives to the KPI's they are designed to improve, and prioritizing (and de-prioritizing) them according to these linkages
Defining ownership and individual accountability for each KPI
Defining the reports and analysis needed by these individuals and workgroups to enable them to be successful
Linking appraisals and reward systems to the achievement of KPI's and business metrics
Defining and mapping the process required to MANAGE KPI achievement
Training management and supervisors in the EPM PROCESS
Shaping and reshaping culture by "walking the walk", and surrounding the EPM process with the required investments in change management (the people side of change)
Defining the best technology solution to enable all of the above
Selecting and designing the technology solution
Implementing said technology

If the time, energy and resources you spend on #13 and 14 is more that 1/3 the resources spent on #'s 1-12, you've got a very "unbalanced" EPM solution in the works. Getting the EPM system to the point of real value add requires that degree of "footwork" , and if your're not yet ready to make that investment, please don't waste your IT dollar.

While some linguistics experts may not agree with me technically, EPM is not a "thing", but a process- not a noun but an active VERB. It needs to be spoken about, and treated as one. Part of changing the culture is first recognizing when the above is not the case, and taking an active role in calling that out when you see it (or READ it!!!)

-b

The MEASURE of a REAL Business Partner

2008-03-03T10:19:00.002-05:00

I am often asked by my clients, what measures are most appropriate for functions that are outsourced...particularly in terms of Vendor or Business Partner measures, accountabilities, and ultimately their compensation.

Here's my take on it. This question is really NOT about measures at all per se, but far more about the NATURE of the business relationship itself.

Let's face it, there is no shortage of vendors claiming to be the "business partners" of their clients. The first part of answering the measurement and compensation question is figuring out which vendors are, and which vendors are not, true business partners. A good acid test for this is to ask whether the contract you have with the partner is based on a "task list" of deliverables, versus a set of real business outcomes. If it is the former, then you should face the reality that your contractor relationship is just that- a contractor/ commodity based/ perpetually "low bid" kind of relationship, and probably not worthy of a partner performance/ partner pricing conversation. Just measure the vendor on a $ per widget/ widget quality basis and be done with it. But don't expect them to do any more than produce good widgets.

On the other hand, if you genuinely do share business outcomes as the basis of your contract, then the measurement/ performance question gets much easier. Why? Because if your partner is genuinely accountable for YOUR business outcomes (and you for his, as I will discuss later), then it would only make logical sense that these measures would also end up on YOUR corporate scorecard. And that means you shouldn't have to spend time coming up with a NEW or creative set of measures, but rather a delegation, if you will, of measures that you already have.

A good example of this are the partnerships Utilities have with their Vegetation Management (tree trimming) function, which incidentally and surprisingly is often the utility's #1 O&M line item. These contracts range from the rather elementary level of $ per manhour, to the more sophisticated cost per tree or cost per span. But the ones in which a real "business partnership" exists are opting for measures like # of tree-driven interruptions, or related frequency and severity measures. For you utility foresters out there, this translates into indicators like Tree-CAIDI or Tree-SAIDI. Pretty cool huh? The real message here is that when you have a true business partnership, the measures you use to track their performance are the very same measures you use to track yours. A true win-win so to speak.

And the beauty of this is that it works both ways. A colleague of mine once told me that during each of his monthly client update meetings, his client would ask him- "how are YOU doing?" and "Is this contract making money/ profits for YOU?"- suggesting that having the vendor (my colleague/partner in this case) make money is as equally important to the client- a truly radical thought.

Another respected peer of mine told me that "the "master-slave" contractor relationship is "dead" because it will always produce "average" performance--that it is a model based primarily on distrust- essentially producing "just enough to get by" behavior. The partner model turns this on its head, and has the client saying to the partner "I want to make you as wildly successful as you make me" ".

So the long and short of it is that this is not a question of what you should measure or pay a contractor for, but rather a question of whether the contractor is really a business partner. versus a basic commodity type vendor. If the latter is the case, then you should be spending your time ensuring that the measure of success that you choose is something that should show up on BOTH of your scorecards, and be given equal attention.

A Consultant's Pursuit of Simplicity

2008-02-20T14:01:00.006-05:00

One of my biggest "pet peeves" lately is the degree to which the consulting industry, including many of my peers for whom I have the greatest respect intellectually, are tending to gravitate toward the complex solutions, over the simple and more powerful INSIGHTS that our clients demand. At the risk of offending some within my industry, it's a problem worthy of some straight forward discussion, and one in which even the best management advisors (including those who "advise from wiithin"- i.e. internal consultants and change managers) can stand to learn a great deal from.

Nowhere is this more prevalent that in the discipline of Performance Management. I'm referring here to all phases of PM including defining, measuring, benchmarking, analyzing, reporting, and improving organizational performance. Many of those in the consulting profession are, by trade, Engineers, Accountants, Economists, and Statisticians. And while all of these disciplines are essential to good business, it is often their very nature to opt for the more intellectually robust answers to even the most simple of business problems.

One of the areas most affected is (and what should be) the SIMPLE process of defining and reporting on Key Performance Indicators (KPI's) within the enterprise. I've had the opportunity most recently to develop these types of frameworks in the Utility Sector- an industry which is most heavily dominated by very analytically sophisticated engineering. In a recent review of Utility Industry PM scorecards and KPI's at over two dozen organizations, I saw numbers that ranged from a low of 12 KPI's inside of a very tight architecture, to a high of over 400. After all, they are called KEY performance indicators for a reason, right?

Of course, it is important to look at the problem in the right context. If, in fact, the organization reporting 400 KPI's had them all sitting inside of a tightly aligned "architecture", I could be convinced that they were in fact on the right path. But reality shows companies with the highest volume/ # of indicators often have the weakest structures within which these measures are managed; and as a result have little " line of sight" between what is important to the organization, and the metrics they manage to.

All of us have heard the adage of "analysis paralysis"; the process of getting so lost in the numbers that we lose sight of the forest by only seeing the trees. Sure, we have our 10 layered, drill down analyses and sophisticated multivariate regressions with super high predictive values, but does the guy in the bucket truck at the "work-face" really understand what it all means? We have the most sophisticated models but we've sacrificed the most important variable- the connection with the job that needs to get done on the front line.

To add insult to injury (and the core of my frustration), it is that the vast majority of business consultants often bring MORE complexity to a client who already has an overly complex way of managing their business. These clients don't need more analytical models or more layers of analysis in their performance management system, they need less! Ironically, it is the simplest of frameworks that deliver the most insight.

So what can us consultants and executive advisors do to drive this type of simplicity into our client offerings and deliverables. Here is a short list of things we can do, particularly in PM space, to stop us from going down the proverbial slippery slope:

1. Focus on the enterprise outcome at hand and link everything to that- purge your client's KPI list of all those random measures that would mean nothing to an executive of the business. In other words, make a distinction between KPI's and what might just be random data elements or input variables.

2. Focus on PM insights and conclusions. Don't overwhelm your client with overly complex analytic or economic models. Rather steer toward the answer with a handful (2-3) supporting justifications. Summarize the result of your analysis without bringing them through all of your analytic machinations.

3. Shoot for directional cues, not analytic precision. 90 % of the insights you generate for your client can likely be drawn from 20% of the effort you put you and your team through. For example where factors can be assessed using scales of hi-medium- and low, then opt for that rather than trying to develop more complex normalizers or coefficients to make the same point

4. Make your analysis approach simple enough that the client can follow your path, and replicate the analysis himself if he wants to. For example, design your models around 3-5 high impact variables versus 50 smaller ones.

5. Focus your PM framework on outcomes, not activities. If you look carefully at what your client calls key metrics or KPI's, you're likely to find that most of them are oriented around activities and project milestones, not result indicators or business outcomes. Keeping the two separate will allow you to assess causal impacts between initiatives and outcomes, rather than cluttering up your PM framework/ system with a mix of both.

6. And where you can, price your projects on value, not man-hours- The larger consulting firms will have the biggest problem with this since they are all focused on amassing huge amounts of billable hours, where complexity is your friend. Trust me, your client is waiting for someone to turn this model on its head. The faster you do that, the more competitive advantage you'll have.

So, in the spirit of simplicity, all of this can be summed up by adopting the age old adage of K.I.S.S (keep it simple stupid), and using that as your guiding principle. Of course, the most pedantic, intellectually sophisticated, and complex thinkers among us will most certainly have a different view on this. But that's the whole point isn't it?

-b

Get The Fundamentals Right- All The Rest Is "ICING"...

2006-10-28T16:57:00.000-04:00

Get the fundamentals right, all the rest is “icing"- by the time you're finished reading this, you'll realize what a hokey pun this really is!

They say that some of the best business is done in hotel bars. And isn’t that the truth. I can’t tell you the number of times a friendly chat over “a Guinness” has led to a provocative new insight, business model, partnership, or just a different way of looking at the world of business.

This week was no different.

Earlier this week, while in Preston England on business, I ran into a chap who was struggling to connect to a wireless router in the hotel lounge. Having shared a similar experience the day before- to the same level of dissatisfaction- I introduced myself and began commiserating. Within 10 minutes, our laptops were closed, and the conversation ensued.

After concluding we had been bitten by the technology bug, and that our connection likelihood was approaching nill, we turned the conversation to travel, family, politics (wouldn’t recommend this, but if it comes up, you’ve gotta play), and ultimately business.

As it turns out, the guy on the other side of the table was quite the entrepreneur. 10 years ago, he had invented a technology called “multi ice” that had a significantly better cooling action on fishing boats. Suffice it to say that in the fishing industry, just a few additional hours of cooling, coupled with a natural additive in the “ice mixture” had a dramatic impact (as high as 10%) on what the fishing industry calls “yield”- the difference between “the catch” and the amount of “waste” generated as a result of inadequate cooling and its rapid impact on cell degradation (a fancy way of saying BAD FISH). Any improvements in yield impact the profits of fishermen, distributors, and stores, and restaurants- nearly every part of the food supply chain. Moreover, his “new” ice was not something he sold as an alternative to taking ice onboard boats, but rather it was an “ice making” machine that converted saltwater into the ice solution, eliminating the need to take large quantities of ice on board in the first place.

The conversation pressed on into some very interesting areas…how he applied the technology to other meats (nearly any you can imagine), his approach to customer satisfaction, marketing, partnering, governance, capital acquisition, and his “no risk value proposition” to his customers. So what’s this all got to do with performance management?

EVERY PART of his business involved some sort of measurement and tracking. From R&D (determining the size and performance of his machines) to manufacturing, product testing to marketing, sales to cash- he had applied measurement to nearly every stage of his process. His entire explanation of his product and market came down to something that was frequently and deliberately measured and managed.

In explaining his product, he didn’t go straight into a typical marketing or sales pitch…but instead gave measure by measure proof that his product was the best, if not only, product that could produce these results. His opening slide was not the typical “here’s how great we are”, but rather an “infrared” picture of two fish of the same weight- one frozen in his solution/ icing process, the other frozen in a more conventional manner. The weight differences (up to fourteen days later) were dramatic, as were the differences in cell degradation which was also evident from the photos. No explanation needed…the pictures spoke volumes about the product’s effectiveness. It’s hard to imagine a customer saying anything but “you had me at hello”. The measures told the story, everything else was just peripheral packaging.

I said earlier that the measures permeated all aspect of the food supply chain, up until and including the cash generation part of his business and customer satisfaction. Taking his quality measurement to the next level, one could calculate his average improvement in yield. For example a small (relatively speaking) fishing boat that generates 1 ton of catch daily would save roughly $150 per day. Extrapolating, then the annual savings would be upwards of $20k, just under the cost of the equipment, generating a payback of just over 10 months- virtually unheard of in that industry. And those numbers don’t even include the cost and storage of ice, which is also offset by the on-demand nature of his ice production equipment.

But he took the data even further. Because of his confidence in the data, and the degree to which he was able to harness and leverage it, he began instituting a “guaranteed savings” program, in which the customer absorbed little to no risk. If the customer didn’t realize the improvements in yield in the early phases of implementation, the customer didn’t pay.

To date, the value of the data has proven out. He has yet to have a dissatisfied customer, nor has he paid one penny against his guarantees. And with those kind of attractive economics, he was able to arrange financing for many of his customers, in which, (because of the rapid payback, low cost of the equipment, and attractive interest rates) generated an initial positive cash flow right out of the gate.

And there was so much more,…too much to go into here. It’s not everyday that these conversations are so rich in mutual “takeaways”- this one was one of those real “jackpots”, with many of the ideas discussed having direct implications in both of our disciplines. In the performance management business, you see a lot of ideas and no shortage of fancy dashboards, analytic models, statistical tools and techniques. And I’ve met a lot of companies who have invested millions in the latest and greatest- six sigma, ISO, LEAN, …the list goes on. But without the fundamentals in place, most will fail. This meeting was ALL about the fundamentals, and a real reminder for me of where it all has to start.

Good business starts with good data and good measurement…not the other way around. Without good data, I seriously doubt my new friend would have been nearly as successful as he has been to date. And I suspect he will find new data and new ways to harness and leverage it into the future.
Right now, I am at the airport, and soon my new friend will be back on his way home too. By the time we both arrive at our destinations, I suspect we’ll both have a new portfolio of insights from new introductions that we make in the airport, on the plane, and in the car ride home. Just another insight-rich travel day.

So go ahead mate, next time you find yourself with a little downtime- go have yourself a Pint and some good company.

-b

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held management international consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services . UMS Group clients have consulted with hundreds of companies across numerous industries and geographies. Visit ePGI at http://www.umsgroup.com/ or contact us directly at 908-656-1179.

Don’t Go Overboard on KPI’s

2006-10-17T19:54:00.000-04:00

While much has been written in the past about performance management, most of it has dealt with things like the design of measures, development of targets, benchmarking, reporting methods, and IT solutions. Precious little has been written on the quantity of measures…essentially the question of “how many” measures an organization should have as you begin to cascade past the first few levels.

As most of you know from my past writings, I am a big fan in the “fewer is better” principle, the reason being that focus becomes distorted once you get past a certain number. Quite frankly, I don’t know psychologically why that is, nor do I really care. The less people need to remember, recall, and process, the more likely it is to stick. Ever wonder why things like social security numbers and phone numbers are broken up into three to four digit “clusters of numbers”? It’s been scientifically proven that people recall numbers less than seven digits at far greater levels than they do larger ones, and the recall is further enhanced by breaking it up into three and four digit “chunks”.

The number of measures shouldn’t be any different. In fact the word KEY in key performance indicators (KPI’s) suggests the need for that very level of focus. But for some reason, the design principle steering today’s KPI development seems to be favoring the “more is better” principle over more focused measurement design. In the last three weeks, I either spoke with or visited five companies that have an executive KPI “dashboard” in place. Four of the five organizations (and they were NOT alike in any way- different industries, geographies, and cultures - most had more than 15 KPI’s with one of those organizations nearing 40!

So here are some things to check for to ensure you have the right number and type of KPI’s

1. Don’t confuse “balance” with volume:

While organizations are encouraged to have a “bananced” set of KPI’s (e.g. a “balanced scorecard”), it does not mean that every business unit and functional workgroup in the organization’s structure needs to have the same degree of balance. Some functions exist for the sole purpose on moving one or two key indicators, and may legitimately have nothing to do with others. You’re better off with that group being responsible for 3-4 relevant indicators instead of a “balanced” suite of 25.

2. Don’t let the complexity of your metrics portfolio dilute the vision and compelling narrative of the business:

Some of the best companies out there have developed a short and compelling narrative or “elevator pitch” that encapsulates essence of the companies vision, mission, and strategic plan (our history, current vision, purpose, main points about strategy, and how we will measure success. What’s important here is the ability of the drive the “recall” of vision by the employees who are responsible for internalizing it and carrying it out. Better to have a few indicators they can relate to, internalize and influence than a multitude of indicators that go largely unnoticed.

3. Make the numbers mean something:

Often, that will mean avoiding the “index” or “roll up” type of indicators. The types of indicators often have meaning only to the person who built the underlying algorithm behind it. While it is ok to use these kind of indicators sparingly (perhaps at the high levels where they can be easily interpreted, I’d be inclined to get these indexes quickly translated into units that represent results. For example a CSI (customer sat index ) of 45 versus metrics like % of customers dissatisfied with service call, % rework, and first call resolution %. If you can create meaningful #’s, the need to measure a large number of “component” metrics typically goes down, freeing up attention to focus on the drivers and causal factors that will end up having much more impact on maximizing your PM dollar.

So there you have it, a simple list of three tips (not 5, 8 or 10, but 3)….hopefully simple enough to recall as you continue to improve your PM process.

-b

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held management international consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services . UMS Group clients have consulted with hundreds of companies across numerous industries and geographies. Visit ePGI at http://www.umsgroup.com/ or contact us directly at 908-656-1179.

"Another Brutal Whipping, Euro Style…"

2006-09-25T18:04:00.000-04:00

Did I just wake up from a bad dream, or did the US actually just lose ANOTHER Ryder Cup by ANOTHER unthinkable margin? I know what you’re saying- “He writes his first column in months ,and right out of the box we have to endure yet another set of golf analogies! Just hang with me, because there’s a jewel of a message in this one.

There’s been a lot of “armchair quarterbacking” (to really mix metaphors) around this year’s Ryder Cup matches, as there has been for the last 6 years since we actually won one of those darn things. The losses have been blamed on everything from the weather, to the home team crowd, to individual personalities involved. But now, the focus of every pundit (and rightly so) has shifted to the concept, however abstract it may be, of TEAM. One look at any of the Euro’s after they’ve won a point, and it becomes clear to anyone that they possess a team spirit that the US athletes can only hope for.

There is a dimension of teamwork that, although ethereal in nature, is noticeably missing from the American team. Each of the American team members have won numerous times, and earned enough qualifying points to actually make it to that elite group, often year on year for many years. They have a competitive drive that is unmatched anywhere in the world. These guys are the best in their profession….INDIVIDUALLY that is. But watch them in team competition, and many of them indisputably fall to pieces.

And this should be no surprise, right? We’ve all seen it in other sports where a well known “Prima Donna”, because of there over-inflated ego takes an entire team down with them. Sometimes, they do it within a game or match where, individually they have far superior individual stats. And it’s often followed by the explanation that they did their part, it was just the rest of the team….which ironically is code for “ there was NO TEAM” .

So what can this teach us about performance management? Well for starters, teamwork beats individual performance every time, and often many times over. Here in the US, that dimension is not always clear. Just look at our incentive plans, hiring strategies, meeting dynamics, managerial approaches, and executive compensation- just about every part of American culture revolves around a strong individual presence. I once heard this referred to in Australian as the “tall poppy syndrome”, something the US Ryder team had apparently contracted “in spades” over the past six years. And it can kill your Performance Management process, jus as easily as it stole the life out of those 12 disappointed Americans last Sunday.

Here’s a short list of things that can be done to ensure you don’t get crushed by the “tall poppy”:

Have collective goals that people can identify with
Ok, this one is the no brainer of the list, but it is amazing how few companies do this well. Try this next time you run across a team of individuals from the same department, business unit, whatever- ask them what the single most important goal is, and how they can contribute to its achievement. Guaranteed- half of them will give you some pie in the sky corporate objective that they have only a small prayer of individually influencing, or you’ll get a blank stare. To be part of a real team, you need 20/20 line of sight between your role and the team objective you’re trying to reach.

Understand team dynamics (on and off the course)
one of the things I noticed in the European team dynamics was the comfort they had with each other…lots of conversations, few of them appeared to have anything to do with golf. And you just got the sense they knew, liked, and genuinely cared for each other, as could be seen by those emotional exchanges between Darren Clark and his teammates. Get to know your mates, what drives them (personally and professionally), and then apply that to the task at hand.

Relish in team success, even amidst personal failure
I heard and interview with one of the European players, and I could hardly believe what I was hearing (of course I’m an American listening like an American!). He said, to paraphrase, “When I started playing poorly, I just realized it wasn’t my day, and turned my attention to doing anything I could for my partner- from encouraging him to sharing advice or just pumping him up by telling him how great he was at such and such a shot.” Thinking as an individual, that’s a damn hard thing to do when you’re emotionally down, but as a team thinker, it’s essential.

Balance individual compensation approaches with team incentives
If you’re like most companies, you base your incentives on individual versus team compensation. Nothing wrong with strong individual rewards, but only if it is balanced by the same strength in team rewards. But keep in mind the “line of sight principle”. A team reward can’t be for 3000 employees because the line of sight connection between their actions (both individual actions and cross member impacts of those actions) is weak or non existent. Research has shown that programs like “gain-sharing” work best when the workgroup is less than 100”. Remember, the Euro Ryder Cup team was 12.

Penalize the overgrown “poppy”
So what do you do with a “tall poppy” when you see one. Well, if you have a high performing team in place, then the answer is nothing, as the other team members will take care of that for you. But if you’re just getting started and trying to transform toward a team environment from a strong individual one, then the answer is REMOVE IT FAST. The “individual ego” is an easy place to fall back to because it is too “comfortable” for many of us. It is a powerful enemy in your team building efforts, takes root far more quickly and easily than teamwork does, and spreads like a cancer throughout your business.

…And here’s one that may even save you some money- next time the Ryder Cup comes around, you might want to place your bet on the guys on the other side of the pond!

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held management international consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services . UMS Group clients have consulted with hundreds of companies across numerous industries and geographies. Visit ePGI at http://www.umsgroup.com/ or contact us directly at 908-656-1179.

Back in the Saddle

2006-09-25T17:48:00.000-04:00

It's been a very long time- nearly six months- since my last post. Like many of you, I have had a number of life changing events occur over the past several months. Some bad, most of them good, but the end result is that I've gotten out of my weekly writing habit. For those of you who find my column useful in navigating your performance management challenges, I can only say I'm sorry, and commit to making it up to you in the coming weeks.

As of Monday, September 25th, I will resume posting my weekly column on Performance Management issues and perspectives. As my regular readers know, I try to use everyday experiences- from job to family to sports- and all in-between, to share poignant themes about the challenges performance managers face everyday. You may agree or disagree with my conclusions, but my hope is that they will make you think "outside of the box" about ways to improve this performance management arena that so many of us find ourselves in today.

You'll see a few changes in the readership, distribution, and content- as I am with a new consulting organization, and may from time to time need to work within certain restrictions. But my intent is to keep the themes and conclusions relevant to all of us whether we are in consulting, private industry, or the technology space in which I personally spent my last six years.

PM weekly will be posted on the same Blog site as before, as well as a number of different article distribution vehicles. The format will be similar, and I will be encouraging, and posting, reader feedback as well as bringing in guest authors from time to time.

I appreciate the loyalty of the readership, and look forward to seeing all of you online in the coming months.

-b

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held management international consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services . UMS Group clients have consulted with hundreds of companies across numerous industries and geographies. Visit ePGI at http://www.umsgroup.com/ or contact us directly at 908-656-1179.

Garbage In-Garbage Out...

2006-03-21T14:03:00.000-05:00

One of the age-old problems we encounter as performance managers is one of data reliability. While it should be, intuitively, the most important aspect of performance management, it is, relatively speaking, given much lower priority than its more “sexy” relatives.

ERP’s, data warehouses, analysis engines, web reports…the list goes on. Comparatively speaking, each and every one of these important PM dimensions gets its fair shake of mind space and investment capital. But as the old adage goes, “garbage in/ garbage out” (GIGO). We all know that data quality is a necessary pre-requisite for any of these tools to work as designed. So why is it that so little time and attention goes into cleaning up this side of the street?

Tell me you can’t identify with this picture. You’re sitting in a Senior Management presentation of last quarter’s sales results. Perhaps you’re even the presenter. You get to a critical part of the presentation, which shows a glaring break in a trend which has been steadily improving for months. It signals the obvious- something bad has happened and we need to address it now! Conversation turns to the sales-force, the lead qualification process, the marketing department, competition,… 45 minutes later- no real clarity, except for lots of “to do’s” and follow up commitments.

Fast-forward two weeks (and several man-hours of investment) later. The Sales VP is pummeling one of his sales managers to “step up” the performance, and wants new strategies. A new commission structure is discussed, which brings in the need to get HR and IT involved. A few days later, when working on implementing some of the new strategies, a new story begins to unfold. An IT analyst, deep in the bowls of the organization astutely recognizes THE big missing piece of the puzzle. You see, last month, the manager of the Eastern Region changed the way he wants to see “sales-closes” reported (the way deals are essentially recorded), from one that is based on “client authorizations” to one based on “having the contract in hand”- a very useful distinction, particularly when viewed from a cash flow and accounting perspective. The only problem is that it was applied locally, not corporate wide, resulting in the apparent data anomaly.

Sounds a bit too simple for a modern corporation, well into the technology age. But unfortunately, this kind of story is all too common. We all understand the principles of GIGO, yet it continues to chew up corporate resources unnecessarily.

Overcoming the GIGO problem should be our number one priority- before systems, before reports, before analysis, before debate, and before conclusions are drawn. Before anything else, data quality is THE #1 priority.

Here are a few tactics for getting a solid “data quality” foundation in place:

1. Understand the “cost of waste”-

We measure everything else, why not measure the cost of poor data quality? Take a few of your last GIGO experiences and quantify what the organization wastes on unnecessary analysis, debate, and dialog around seemingly valid conclusions gone awry. This doesn’t have to be complex. Do it on the back of an envelope if you have to. Include everything that goes into it, including all the levels of management and staff that get involved. Then communicate it to your entire PM team. Make it part of your team’s mantra. Data quality matters!

2. Become the DQ (Data Quality) CZAR in your company-

Most performance managers got where they are by exposing that “diamond in the rough”. We got where we are by using data to be an advocate for change. It’s hard to imagine getting executive attention and recognition for something as “boring” as getting the data “right”. But that is what needs to happen. The increased visibility of post-Enron audit departments, SOX initiatives, and other risk management strategies have already started this trend. Performance Managers must follow. You need to embrace DQ as something you and your department “stand for”.

3. Create Data Visibility-

In some respects, this has already begun, but we have to do more. Our IT environments have the potential of disseminating information to every management level and location within minutes of publishing it. But let’s go one step further. Let’s “open the book” earlier in the process so more of those who can spot data issues earlier can participate in the game. What I’m saying here is that people have different roles when it comes to performance management. Some are consumers, and some are providers. It’s just as important to create visibility for the input factors, as it is to publish those sexy performance charts. You’ll get the input of that 4th level IT analyst I discussed above, much earlier in the process.

4. Utilize External Benchmarks Where Possible-

Benchmarks are often used within organizations to set targets, justify new projects, defend management actions, and to discover new best practices. These are all good and noble reasons to benchmark. One of the most overlooked benefits of benchmarking, however, is the role it plays (or should play) in your DQ process. I can’t tell you how many meetings I’ve been in where the presence of an external benchmark highlighted a key problem in data collection. Sometimes, seeing your data compared against a seemingly erroneous metric, can show major breakdowns in the data in cases where they would have otherwise gone undetected. Using comparisons to highlight reporting anomalies can be a very valuable use of external benchmarks.

5. Establish a DQ process-

It would be nice if all data were collected in an automated manner, where definitions could be hard-coded, and “what to include” would never be in question. But in most companies, that is simply not the case. Our research has shown that over 50% of data used in our performance management process is still collected manually. But very few of these companies have a defined and auditable process for doing so. This does not have to be complicated, as there are some very useful tools emerging that help collect, validate, approve, and publish required data, just as there are for data reporting and score-carding. Having a process, and system to ensure that process is followed, are both critical elements in data collection, and hence make for very good investments.

6. Don’t forget the Culture -

As I said above, most data, for the time being, will be collected in a manual fashion without fancy IT infrastructure. People will still be at the heart of that process. Invest time in helping them see the importance of the information they are collecting, how that information will be used, and what process will be followed to do so. Many organizations spend tens of millions on a systems solution to what is largely a people/ cultural problem. Investing in training and coaching can be as high payback as those mega systems investments.

* * * * * * * * * * * * * * * * * * * * * * * *

So as you navigate through your internal data collection efforts, try and keep these tips in mind. Sometimes, it’s the simple “blocking and tackling” that can make the difference between winners and those in second place.

- b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Managing Those Elusive Overheads

2006-02-14T10:52:00.000-05:00

One of the biggest challenges faced by operations management is how to improve costs and service levels, especially when such a large portion of these costs are perceived to be “outside” of their control.

Despite recent attempts to control corporate overheads, it’s still very common for corporations to laden operating management with an “automatic” allocation for overhead costs such as Employee Benefits, IT, Legal, Facilities Management, Accounting…the list goes on. Our studies show that most of these costs are still allocated back to management as a direct “loader”, or percentage markup, on staff that is employed in the operating business units. Not only is this an unfair disadvantage to operating management who has little perceived influence on these costs, but it also results in a “masking” effect as these costs mysteriously get buried in the loading factor itself. Operating units struggle from year to year, trying to capture that next 1,2, 5 % of efficiency gains, while over 50% of their costs are, in effect, off limits.

But there are some organizations that clearly understand the challenges, and have begun to make nice strides in this area of corporate overheads. For some, it has involved ugly corporate battles, political in- fighting, and the “muscling in” of allocation changes. For others, the challenge has been a bit easier, by focusing on what really matters- visibility of overheads, and a direct path toward managing them.

Here’s a quick list of areas you can focus on to improve the way overheads are managed:

Transparency- The first, and most important driver for successfully managing overheads is making them visible to the enterprise. All to often, overheads from shared services functions are not visible to anyone outside of shared services organizations themselves. In fact, the word “overhead”, has an almost mystical connotation- something that just shows up like a cloud over your head.

One of my clients once said, “The most important thing leadership can do is to expose the ‘glass house’. Overheads need to get taken out of the “black box” and put into the “fish bowl.” Once you can see the costs clearly, both operating and corporate management can begin making rational assessments about to best control them.

Accountability- This is arguably one of the trickier overhead challenges, since managing overheads involves accountability at multiple levels. To simplify this challenge, most companies simply define accountability at the shared service level (VP IT, or VP Legal, for example) and leave it at that.

More successful organizations, on the other hand, split this accountability into its manageable components. For example, management of shared services functions can be accountable for policy, process, and the manner in which work gets performed. But there is a second layer that deals with “how much of a particular service” gets provided- and it’s that component that must be managed by operations, if we are to hold them accountable for real profit and loss (discussed below).

To do this right requires some hard work on the front end to appropriately define the “drivers” of overhead costs that are truly within line management’s control. A simple example is the area of Corporate IT, in which the IT department defines overall hardware standards and security protocols, while the variable costs associated with local support is based on actual usage and consumption of IT resources. That’s an overly simplified example, but still illustrative of how the process can work. Most overhead costs have a controllable driver to them. Defining those unique drivers, and distributing accountability for each will go a long way in showing how and where these costs can be managed.

“P&L” Mindset- There’s been a lot of debate around whether shared services functions can truly operate like real profit centers. The profit center “purists” will argue that internal services should behave just like “best in class” outsourcers, and if they can’t compete, they should get out the way. The more traditional view is that once a service is inside of the corporate wall, they become somewhat insulated from everyday price and service level competition. The reason being that “opening these services up to competition” would be too chaotic, and ignore the sunk cost associated with starting up, or winding down one of these functions.

A more hybrid solution that I like is to treat the first few years of a shared service function like a “business partnership” with defined parameters and conditions that must be met for the contract to continue. It takes a little bit of the edge, or outsourcing “threat”, off the table, and allows the operating unit and shared service function to collectively work on solving the problems at hand.

Still, shared services functions must look toward an “end state” where they begin to appear more and more like their competitors in the external marketplace and less like corporate entitlements. In the end, they must view their services as “universally contestable” with operating management as their #1 customer. For many organizations, particularly the larger ones, that’s a big change in culture.

Pricing- Save for the conservationists and “demand-siders”, most modern day economists will tell you that the “price tag” is the way to control the consumption of almost anything, from drugs to air travel. And it’s no different in the game of managing corporate overheads.

Once you’ve got the accountabilities squared away, and you’ve determined the “cost drivers” that are controllable by operating management, the price tag is the next big factor to focus on. One of the most important pieces of the service contract you have with operations management is the monthly invoice, assuming its real and complete. It needs to reflect the service provider’s true cost, not just the direct, or variable costs of serving operations. Otherwise, it’s a meaningless number. In the end, the pricing mechanism needs to be something that can be compared and benchmarked among leading suppliers of a particular service. For that to be possible, price needs to reflect the true cost of doing business.

Value Contribution- So far, we’ve only focused on the cost side of the equation. Now, let’s look at service levels.

For the more arcane areas of corporate overheads, where a pricing-for-service approach is more difficult, it is usually worth the time to understand the area’s value contribution to your business unit. Finding the one or two key value contributors is now the task at hand. For example, in US based companies, the Tax Department is generally staffed with high-end professionals, and often is the keeper of a substantial tax attorney budget. When treated from a pure cost perspective, a common rumbling among operating management becomes: Why am I paying so much for my tax return?

A better question would be: what value am I getting for my money? In this case, taking advantage of key US Tax code provisions can be expensive, but the cash flow impact (in terms of lower effective tax rates) can be a significant benefit to the operating unit. Clearly delineating and quantifying the value, combined with presenting an accurate picture of the cost to achieve that value (OH charges from the Tax department) can bring a whole new level of awareness to these types of overheads.

Of course, for this to work, you need to ensure that parity exists between the function benefiting from the value generated, and the function bearing the costs. So before you allocate costs, make sure you effectively match the budget responsibility with the function who ultimately reaps the benefits you define.

Service level agreements-This is the contract that manages the relationship between you and your internal service provider. It contains everything from pricing, to service level standards, to when and how outsourcing solutions can and would be employed. There must be a process in place to negotiate the standards, bind the parties, and review progress at regular intervals. While this can be a rather time consuming process (especially the first time out of the gate), it is essential in setting the stage for more commercial relationships between the parties.

Leadership- As with any significant initiative, competent and visible leadership is key. A good executive sponsor is key in getting through the inter-functional friction, and natural cultural challenges that will likely emerge during the process. Leadership must view controlling overheads as a significant priority, one that makes the enormity of the problem visible to both sides, and effectively set the “rules of engagement” for how to best address the challenges at hand. Without good leadership, the road toward efficiency and value of overheads becomes much more difficult to navigate

--------------------
So there you have it…my cut at the top ingredients in managing corporate overheads and shared service functions. The road is not an easy one, but if you build in the right mechanisms from the start, you will avoid some of the common pitfalls that your organization is bound to face in its pursuit of a more efficient overhead structure.

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

2005 PM Weekly Archives

2005-12-30T14:23:00.000-05:00

Over the past few weeks, some of you have inquired about whether we can publish an index of past articles in one consolidated document or file.

That's something we've been considering for some time. However, in case you are not aware of it, we do currently have a site serving as a consolidated index of all past articles. The index can be accessed at :

http://www.totalperformancemanagement.com/pmweekly-index.htm

From there, you can access any article simply by scrolling through the titles.

During 2006, our plan is to enable a variety of search features and topic links, as well as an annual hardcopy version. We hope you continue to enjoy the column, and as always welcome any feedback you may have throughout the year.

Happy New Year, and best wishes for '06!!!

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

“He’s Makin’ a List, and Checkin’ it Twice…”

2005-12-12T17:34:00.000-05:00

Oh how many times have we heard that little jingle in the last few weeks?

I’ve got to tell you, that little ‘diddy has come in soooo handy with my 8 and 10 year old sons over the years, I don’t know what I’d do without it. Something about Christmas time, that chubby old bean counter, and his insistence of good behavior, that tends to keep those little guys on the straight and narrow over the holidays. If only we could keep it going all year long.

Since we’re all in the holiday spirit, I thought I’d use this week’s column to reinforce Santa’s message of accountability, at least for us grown up performance managers out there. I should warn you, however, that I’ve kept this one a little “light” and “fun” since most of us tend to be distracted this time of year with more important things like family and loved ones. Nevertheless, it should drive home some key points we’ve been making all year.

For starters, it’s worth acknowledging that Santa has clearly mastered the art of generating good behavior. And as I’ve watched him year in and year out, he appears to only get better at it with time. I can only conclude that he is a great student of the PM discipline, constantly learning from others, and applying these best practices to his Northern Operation. Santa has clearly learned from the best, and so should we.

A few weeks ago, I referenced a speech by David Walker, the Comptroller General of the US, and head of the General Accounting Office – the GAO, which is incidentally being transitioned to be called the Government Accountability Office- a much more appropriate name for this important government function. His overriding message was that performance is maximized when:

1) there are clear incentives for doing the right things,
2) there is transparency of information so that employees know when they are doing the right things, and
3) there are clear accountabilities and consequences when people do the wrong thing.

While Saint Nick only shows his face once a year, he does exemplify these three key principles quite well. At Christmas time, kids prepare their lists- the incentives if you will, for what is likely to happen if Santa concludes they have done the right things most of the time. Santa also has an extensive network of helpers, including billions of parents who help translate these expectations and let those little ones know when they happen to veer off course (i.e. -transparency of performance information). Furthermore, there are those constant reminders us parents give in the way of “time outs” and punishments if our little guys don’t get back on track quickly. And while I’ve never experienced it first hand, there are those horror stories we’ve all heard about the stockings full of coal.

One of these days I’ll have to arrange a “best practice” site visit to the North Pole to see this stuff first hand. How does he keep track of all of those performance reports? “Checking it twice” has got to be a huge undertaking, but somehow it all gets done right since I haven’t heard of any North Pole Enron’s, WorldCom’s, or Tyco’s lately. And there is certainly no shortage of rewards for good performance- the plethora of toys and games that magically show up every Christmas Eve. Yup, this is definitely a business model worth exploring.

So as we prepare our organizations, systems, and processes for 2006, let’s take a page out of Santa’s playbook and focus on these three key elements of performance management. I’m sure if we do, 2006 will bring us a much stronger PM process, better and more consistent performance results, and the good fortune that often comes with it.

I wish all of you the best this holiday season, and remember to keep an eye on that chubby old guy from the North. He’s likely to teach us some more great lessons in the days to come.

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Managing Performance in an Outsourced Environment (Are our Corporate IT systems up to the challenge?)

2005-12-06T13:37:00.000-05:00

Let’s face it, competitive outsourcing is here to stay. We don’t have to agree with it politically, emotionally, or theoretically…it’s just a fact of life in today’s business environment…. which begs the question whether our performance management process and systems are up to the task.

For all that has been written about the practice of outsourcing (and there’s no shortage of writings in this space), precious little has been said about if and how our PM processes and systems will need to change in a heavily outsourced environment. Perhaps this is because many companies still see an outsourcing relationship as just another vendor to be managed- a key vendor or strategic partner perhaps, but a vendor relationship nonetheless. But is it really that simple? To answer this question, it’s worth looking at a couple of key aspects of performance management that has shaped this landscape in recent years.

On one hand, there is the reality of outsourcing, and the overwhelming complexity of dealing with an overextended network of information flows, many of which will ultimately exist outside of your corporate information portfolio. On the other hand, we’ve had the significant growth of ERP and other corporate wide reporting systems- a IT “wave” that is replacing our legacy mainframes with the latest and greatest in enterprise reporting technology. The operative word here is “enterprise”- and what that word really means to the future of performance management.

While the wave of ERP systems has driven some well needed perspective and improvements to our performance reporting environment, it has also created a level of “structure” that may be difficult to maintain in tomorrow’s business environment. The reality is that hundreds of millions of dollars has been spent in this transformation, an investment that could soon end up in our museum of IT history if we are not careful. Outsourcing poses the biggest risk in this arena, as it will quickly challenge the very structure that these latest and greatest corporate applications set out to achieve.

Let’s look at a typical outsourcing context.Take a function like facilities management…stuff like corporate security, catering, janitorial services, equipment maintenance and the like- a function that was once one of many departments that make up our internal organization. Only now, this function has become heavily outsourced because of the scale and unit cost efficiencies achieved by shifting these services to a best-in-breed provider (an obvious end state for all “non core” function like this).

On the surface, the outsourcing of a function like this appears to be a significant
“win-win”. That is until the company tries to roll the management of this function into the corporate IT fold. What was once a simple task of rolling up accounting and HR data from internal systems, is now a task that may involve up to 10 different vendors. If the complexity of capturing the costs from this many points of service doesn’t kill you, the process of understanding and normalizing for the differences in data reporting and accounting practices certainly will.

And that’s not the worst of it. The “zinger” in all of this is that you’ve just spent 80 million dollars as a company to develop your “integrated” reporting framework, which, at a minimum will have to be re-tooled to integrate with the myriad of relationships that are now reflected inside of one single outsourced process. That assumes of course, that all of these vendors and partners “play ball” your way- an unlikely reality, to say the least.

If you’re an IT director responsible for the implementation of one of these integrated reporting systems, this is the proverbial train wreck waiting to happen. But don’t jump off that bridge quite yet, because there is a silver lining. That is, if you are willing to challenge the conventional way information is managed.
The answer lies in embracing what some refer to as an “inside out” versus a “top down” information management framework.

So what do we mean by an “inside out” information framework? Let’s start from a different place. Imagine a world where an enterprise is really a large collection of many businesses, all of which can be viewed as independent competitive entities- entities that are assembled in a way that is strategically connected to the vision, mission, and objectives of the corporation.

That’s right…everything from the security guards on the first floor, to the investor relations department on the thirty-fifth. Instead of each of these businesses being given a budget, they are given a clear set of KPI’s, a list of competitors, and a performance contract with clear incentives and accountabilities. They (with some coaching if necessary) determine what information they need to manage their business and achieve their outcomes. They may be given some tools of the trade to manage this information, but the information is their’s to manage.

Conversely, at the portfolio level, leadership defines the outcomes that each of these businesses are to achieve. The portfolio level can be a very small team of individuals, each of whom are accountable for defining what they need, how much of it they need, and the competitive price they’re willing to pay. They have their own dashboards and KPI’s to manage, but they are a lot more focused on outcomes and less on the operational indicators (the “how’s of how the business is managed rather that “what’s” of what they must achieve in terms of outcomes). The operational side of the business (the how’s) is managed in a highly decentralized manner, often by the providers of these services themselves, who are in many cases external vendors and suppliers. Performance Management has become a highly decentralized portfolio management game- a world where the integration of the provider network becomes far more important than achieving that perfect “top to bottom” architecture and warehouse of corporate information.

There are lots of ways to describe a model like this. Some refer to this model as an “Asset Management” orientation where assets are managed separately from the services that construct, maintain, and service them. Others call it a management philosophy of “universal contestability”. Others call it a framework for simply rationalizing and outsourcing services. But whatever you choose to call it, it poses a dramatically different challenge us- one that if not met head on sets up our huge IT investments for failure.

So what specifically needs changing?

For starters, the information needs in the outsourcing context are markedly different, and need to be identified as such. Today, the information needed to guide the outcomes, and run these competitive businesses may not even exist in our legacy systems, and in turn are not likely to even end up in the ERPs themselves. To continue with the Facilities Management example, try comparing a performance report (assuming there is one) of a internal corporate security department with the likes of say Pinkerton (a competitive provider of security services nation wide). They are dramatically different in both design and content.

Next comes the challenge of managing one of these entities, when and if they become outsourced. How much of that information will be needed from the vendor? How much will come from your systems? How will you blend the two when necessary under the likely scenario the data sharing protocols are different?

This is the challenge of integration is far more important than the challenge of aggregation which is often the foundation for most of our corporate systems. We are fixated to some degree on terms like the “cascading scorecard” which by definition sets us up to manage each of these functions down to the work-face level rather than a logical network of relationships between the corporation and its nodal-style network of strategic suppliers and providers.

By applying a more decentralized/ portfolio managed construct to our information needs, we begin to more accurately paint the picture of how our organizations will function in the future, enabling our ERP’s to function effectively at the result or outcome level.

As you implement your PM reporting systems, think small and grow outward. Develop systems to meet the needs of each discrete business-individually at first. It doesn’t mean you can’t use the same software or measurement frameworks and ultimately replicate and link to other business processes and functions over time. It doesn’t mean that you can’t connect these businesses strategically.

In the performance management world, smaller is better, at least to start with. It’s easy to build on successes and link things together over time, as long as you keep the framework flexible and adaptable. Avoid the tendency to have the perfect system, one that looks great on paper but won’t come close to surviving the challenges posed to it over time. The complexity you eliminate will go a long way towards delivering superior information at a fraction of today’s cost.

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Securing Genuine Alignment

2005-11-02T14:00:00.000-05:00

Much has been written in the HR and Change Management community on the subject of alignment- and rightly so. A vexing issue to say the least, alignment (or lack thereof) is one of the most common reasons (excuses?) for not meeting performance targets. So it’s only fitting that we at PMW spend some time exploring the issue of alignment from a Performance Management perspective.

Why is it that alignment is so elusive? Is alignment something we can manage, or is it something intangible like culture that just develops over the years? Is creating alignment a people process or an operational process? All good questions, but questions that cannot be answered without looking more deeply at what alignment looks like as it is being developed, to the time that it is ultimately achieved.

Let’s start with what alignment is. Alignment, in its purest form, is a shared COMMITMENT to producing an outcome and the strategy through which that outcome will be achieved. It is a DECLARATION of ownership by EACH INDIVIDUAL team member, and a PROMISE to do their part in achieving that outcome. Most importantly, alignment is a CHOICE that a member of a team brings himself to after understanding and EMBODYING the desired outcome and strategy. People can, and often do, disagree with parts of a solution, but can still remain aligned with the LARGER PURPOSE or CAUSE. Hence, they are usually able to say what is missing for them to come back into alignment. Stated simply, alignment is the HIGHEST level of commitment that can be observed in groups- much larger and more powerful than agreement, acceptance, “buy in”, or any other type of organizational consensus that may be achieved.

Sounds pretty straightforward, until you look at the PROCESS by which genuine alignment is created. In contrast with the process of consensus or compliance building, the process of creating alignment is markedly different. Take a team whose leader is personally sold on a solution and simply wants to gain compliance to his strategy. That process can be a complex negotiation, or a simple mandate- but whichever path is chosen, it will likely result in a “compromised solution”- either a “watered down” version of the outcome, or a “watered down” level of commitment. Achieving that kind of consensus can be purely a people process- taking a group and leading them to the water, and hopefully getting them to take a sip. But it is nothing like the process of achieving genuine alignment around a bold vision and strategy observed in most leading edge organizations.

A genuinely aligned team looks very different. The commitments are not only bold and unwavering, but art fully EMBODIED in the individuals who set out on the journey to achieve the vision. Think about your favorite sports team when everything seems to click. Players are in the right spots, appearing to almost read each other’s minds. They know each other’s tendencies and always seem to be one step ahead of the game. That’s real alignment. And that’s something you can’t teach, instruct or demand… as it is a commitment that is built within the individuals themselves. Genuine alignment is integrated into the fabric of a business- from the mission of the team to the goals of each individual, to the plan that is put in place to achieve it. From there, it becomes an integral part of each individual’s roles and accountabilities from start to finish.

What are the key ingredients necessary in building this kind of alignment? Here are a few “common denominators” you’ll see in a well aligned team as it is being formed:

Built on a BOLD VISION- Groups cannot be aligned if you’re business processes sit on a weak foundation. That is, a large organization cannot create real alignment around small tactical initiatives like “grow revenue by 5% per year” or cut expenses by 10%. A bold vision stretches the imagination into a world that looks radically different (and better) to the team that will take you there. Think about the visions of our early pioneers, forefathers, and activist leaders. Whether you believe in their cause or not, most would admit that their visions were inspiring. Columbus, Washington, Jefferson, JFK, MLK, Reagan- all laid out inspiring visions to their following- many of which inspired their following to put their life on the line to achieve it. People get aligned around a “CAUSE”, not a budget goal. Find out how to turn your vision, mission, and business objectives into a “bold cause”, and you’ll get a lot closer to your desired levels of alignment.

A Story about the Future based on GROUNDED ASSESSMENTS of the past and present- If you’ve got a bold vision, and it’s based on changing a current “reality”, you’d better be good at your assessments of the past and present. That means when you lay out your case for change and your new vision, it needs to be based on an accurate and defendable assessment of current state- based on FACT- not feelings or opinions. Feelings and emotions might convince someone to follow you, but it won’t get them to “own” the outcome for themselves. People are smarter than that. In order to step out on the end of the plank, each member of the team needs to be sure that the risk is worth taking. For that reason, bulletproofing your assessments is a must in the early stages of alignment building.

Ability to WITHSTAND CHALLENGES and necessary course corrections throughout the journey- Most of the time alignment doesn’t just happen in one step, in fact it rarely ever does. Alignment building is iterative and continuous- from the start of the journey to the end. One of the accepted realities of alignment is that people can often come in and out of it, as conditions change. What’s different about an aligned team is that team members, once initially aligned, are able to see and declare for themselves that they have fallen out of alignment on one or more aspects of the roadmap. So, from time to time, you may (and should expect to) get healthy challenges and questions about the path you’re on. Your answers and responses will be the keys to bringing those team members back into alignment. A plan that is airtight and defendable at the outset of the journey may develop problems as conditions change. A team that is genuinely aligned will be able to handle the types of challenges and course corrections that may be necessary during the journey, without risking the integrity of the outcome.

TRANSPARENCY of INFORMATION- Rarely does alignment work in a “closed book environment”. “Do it because I said so” and “trust us on this” are fine for declarations and compliance building, but won’t get you anywhere on building ownership for a commitment, and a personal promise to execute it. If the above two tenets of alignment are real, then the data environment needs to support it. Optimally, the data environment should be conducive to questioning and learning. If your assessments are grounded and defendable, then there is only positive that can come out of sharing that data with your team openly and honestly. Closed systems will surely stifle progress toward genuine alignment.

ACCOUNTABILITY “Through and Through”- Embodied. Integrated. Embedded--- Getting commitment woven into the fabric of your business processes is not possible until the commitment is part of every team member’s personal goals and reward system. If the bold ambition declared at the top, is not seriously connected to an individual’s performance contract, there will exist a big alignment gap that will be virtually impossible to fill. Performance contracts and reward systems are what documents and connects the individual’s commitment to the broader ambition of the team. It is imperative that these ends of the spectrum get and stay connected.

So there you have it- a quick checklist to ensure you are on the path to an aligned and high performing team. While creating alignment is anything but “quick”, focusing on these items can make the process a lot faster and less painful than it needs to be. And the resulting alignment will a lot stronger too!

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

The Missing Ingredient in Change

2005-10-16T22:04:00.000-04:00

Over the last few weeks, a few readers have asked me to comment on “how a good performance management methodology plays into some of the newer, and more popular change initiatives” at play in their companies- “whether it be six sigma, lean, value centric CRM”, or any of the other major initiatives at play today inside our organizations.

First, I’d be remiss if I didn’t say, for starters, that performance management is NOT a change methodology in and of itself. Rather, it is a discipline- timeless in terms of its applicability, and blind of any bias in change methodology.

For years, we at ePGI have preached that Performance Management sits at the center of change. While it may appear a little self-serving for an organization providing PM solutions, few companies that have successfully embraced these newer methodologies would argue with the importance of performance management in their overall journey.

PM, in its most basic form, is a process of measurement, diagnosis, and reporting that accompanies the journey of change. PM serves as an organizational gauge, which measures both the progress and quality of change. Think of it like a pilot thinks of his altimeter, air speed and other key indicators central to air flight. No matter what model of aircraft a pilot chooses to fly from point A to point B- be it a single engine Cessna or a fancy new G4 cross continent jet- the basic elements of flying remain the same. The success of a flight depends on how well a pilot manages these critical indicators, and the supplemental diagnostic data that is available to the pilot on demand.

Case in point: I once sat next to a 747 pilot who described what the pilot was doing- play by play- as we made our approach into Sydney Australia. What he described was not what a typical passenger would think given all the dials, gauges, and fancy displays visible to passengers as they peek into the cockpit during boarding. Instead, what he described was very focused and deliberate- concentration on a handful of key indicators, with detailed drill downs available should something fall outside of “normal control limits”.

Long before balanced scorecard initiatives, six sigma programs, lean manufacturing methodologies…and the myriad of other efficiency and quality solutions that have come on the scene in recent years- Performance Management was the mainstay for any organization that was worth its salt. What the newer and more popular change methodologies have brought to the scene are faster, better, and more efficient processes to create and manage change. No doubt about that. But no matter which methodologies you choose to embrace, you’ll never reach a productive destination without a good performance management program. Performance Management is THE common denominator, central to any effective change program.

The great irony of performance management is that despite its importance in everything an organization does, it is perhaps the simplest of processes to get your arms around and master. And while organizations spend millions to train, educate, and master new and emerging change techniques, many still fail to spend the comparatively smaller percentage of time required to establish a good performance management foundation that will likely make or break the resulting ROI.

Simply stated, the PM discipline is really about providing the information and analysis required in effectively managing people and processes. For example, we’ve all been schooled with the age old- “Plan/ Do/ Check/ Adjust” method for managing a particular function, process, or organization. Without an effective and clear process for measuring and analyzing performance, the execution of each of these steps would be severely impeded.

Now, take something like Lean Six Sigma, for example- one of these more recent and popular methodologies for identifying and capturing performance improvement. At its very core is an acronym called DMAIC- Define, Measure, Analyze, Improve, Control- a technique leaders in the six sigma discipline call a “structured data-based problem solving methodology”. Sound a little familiar? DMAIC, while hard to argue with, is really not too different from what successful organizations saw in year’s prior. Are the newer methodologies, better, and more rigorous? Absolutely. But at their core are still the fundamentals of a good performance management discipline.

My intention with this comparison is NOT to criticize companies who have sworn to follow a particular improvement methodology- in this case, the six sigma following. Rather, what I am trying to illustrate is that without a solid performance management foundation-- good measurement techniques, good analysis and diagnostic practices, good goal setting procedures, and good tracking and reporting processes---few, if any of these approaches will achieve their desired outcome in terms of cost savings, quality improvement, or process speed and efficiency.

So as we embrace the new principles and techniques of these new change methodologies, let’s be careful to not overlook the simpler, and more important PM processes that are central to yielding the benefits these approaches promise. To use a sports analogy, performance management is really about good “blocking and tackling”. Gameplans and strategies can and will vary from competitor to competitor. New gameplans will emerge. New “gadget plays” will be introduced that will change the complexion of games to come. But without the fundamentals of blocking and tackling, few if any of those gameplans would achieve their intended outcome.

Such is the case with performance improvement. As we navigate our change initiatives, lets make sure we put the appropriate emphasis and resources on the PM fundamentals. The extra benefits that accrue will not only serve you well within your current improvement programs, but within the next generation of initiatives that are on your future horizon.

b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Don't Get "Stuck on Stupid!"

2005-10-04T15:39:00.000-04:00

Whatever your political bent, or your view of the American media, you’ve got to love the recent comments of Lieutenant General Russell Honore during the Katrina aftermath.

When interrogated by reporters about Katrina-related mistakes and miscues, during the immediate aftermath of Katrina and the pending arrival of Rita, the Lt. General fired back with one of the best “in your face” rebuttals in media history. “You guys are STUCK ON STUPID!”, he said, “...and I’m not going to answer those questions!” Then, as only great leaders can do, he shifted the attention to what could be done NOW... going forward. In one short phrase, he showed the insanity of a backward looking fixation in a time of crisis, and the importance of quickly learning from mistakes and moving on. If only we could instill that kind of thinking into our organizations and personal lives.

We, as a culture, waste a lot of time fixated on the past. This is a tricky topic, because in order to learn, we have to be able to look backwards. I don’t believe the Lt. General meant to suggest we not look backward. Rather, I believe, he intended to show us the art of WHEN and HOW we should look back.

Here are a few of my observations about backward-looking actions, and where that line exists between effective diagnosis and what the good General would call a “stuck-on-stupid” culture:
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1. When (and WHEN NOT TO) look backwards- the theme I believe was most central to the Lt. General’s comments was this: There is a time and a place for a backward looking assessment.

In a football game, assessments occur at various intervals- half-time, end of quarters, during time outs, in the huddle, and sometimes even right before the play during a “check off” at the line of scrimmage. But assessments and questions about fault or blame NEVER occur DURING the play. The few seconds it takes for the play to unfold is about execution only. How stupid it would appear if one of the sports reporters walked onto the field and began questioning the coaches and players in the middle of a particular play. In sports, we see that kind of on-the-field interference as unacceptable, but in other crisis situations (like Katrina), we don’t think twice about the appropriateness of it.

In business it’s even worse. We have management agendas, advisors and consultants, board politics, and a myriad of other factors all screaming their opinion about how the play should unfold. Let’s take a lesson from our sports brethren, and save those assessments for AFTER the play is run. There’s nothing wrong with good assessment. But let’s save them for a time when they’ll have real impact instead of being seen (appropriately) as a distraction.

One more quick analogy on when and how often we should look backwards. Think of the last time you drove a car. How much of the total time would you say you looked in the rear-view mirror. Most driving instructors will tell you that you should look up into the rear-view mirror about once every six seconds. That translates to about 15% ...probably not too unreasonable a number to shoot for in the workplace.
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2. Are our comments focused on specific behaviors or root cause? A lot can be observed by the questions we ask during a review of a failed strategy or play.

There is a great story that is told about a man who walks down a street and falls into a deep hole. He does the same thing each morning, with each day producing little or no real insight. The first few days are spent asking “why me?” type questions. The next few days are spent getting out of the hole quicker and more efficiently. The next few days, he walks around the hole. It’s not until the last day that the man decides to take a different route altogether, eliminating his risk of falling into the hole entirely. For many days, we might say this man was “stuck on stupid”. But he finally learned to ask the right questions, and only then was he able to solve his problem.
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3. The “SO WHAT” Test- Early in my career, I had a boss that would frequently add the margin comment “So What?” to his review of various letters and reports written by his staff. It was his way of saying, “OK I hear you... and I get your point, but what is the implication, or conclusion I should draw ?”.

I’ve since applied this principle to much of what I do in business and life, and I believe this was one of the Lt. General’s key messages in his “stuck on stupid” rant. Assessments are great, as long as they lead to new learnings, AND a new way of doing business. Most of the time, if timed right, good assessments will lead to changed strategies or actions. But there are many cases (and you see them everyday) where the main purpose of an assessment is to assign blame or channel criticism. It’s those cases where the assessment is better left alone, at least temporarily. Again, you can always come back to it later after the play is run, or the game at hand is over.
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4. Setting a new bar (measure the future not the past)- One way to get “stuck on stupid” is to keep hammering away at a measure of metric that has failed you more than once. If that’s the case, its time to either change your approach to the problem, change the measure, or both.

On first blush, you might say that changing the measure seems to be taking our eye off the ball, or conforming the metric to fit your situation. But in years of studying performance, I’ve found that repeated failures typically mean that you’re not sending the right signals. That is, often you’re tracking something that is too distant from an individual or team’s accountability area.

Last week, I played in a “scramble” format golf tournament in which each player hits a shot, and the team selects the best of those shots from which to progress. Our team was composed of a long hitter (driver), approach man (for mid range shots), an "up and down" guy (for greenside shots), and a good putter. Each one of us excelled in a particular area. We’ve played these kind of tournaments many times before. But this time, we tried something different. We decided to assign goals for each category of performance, so that for example, the driver was responsible for # of fairways hit, the approach guy was responsible for greens hit in regulation, and so on. The impact on our collective performance was significant and noticeable (I wont tell you our net score but I will say it was a notable improvement), and far better than the occasions in which we focused only on the total score.
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5. Avoid the blame game / Reward (vs. punish) failures- this one is related to, but a bit different from #3 above, in that it deals with how you treat and reward accountable individuals.

In all of our organizations, we have those individuals who try new things, embrace change, and have a real bias toward action. Sometimes, improvisation is necessary, especially if the situation is very dynamic. And it’s in those cases where you need to reward quick decision making based on grounded assessments and learning.

There was an old adage years ago called “Go Ugly Early (and Often)”. Give me someone who learns and implements change quickly, versus someone who gets “stuck” in analysis of past performance. Looking back is good, but you’ve got to reward those who can also look forward and ACT. To me this is the essence of the Lt. General’s comments.
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Let’s face it, there’s something about the word STUPID that gets our attention. We saw it in Clinton’s campaign with the catch phrase “It’s the economy STUPID”. And while we scold our children for calling someone Stupid, none of us wants to be viewed that way. Why do you think we play the blame game so much? It’s all an attempt to not be viewed by our peers as the one who “dropped the ball”.

What we don’t always see, however, is that it is just as (if not more) stupid to “lock in” on failures and analysis of those failures without a corresponding focus on the timing of our assessments, the changes that need to result, and the speed with which we can then move on.

Let’s hand it to Mr. Honore for calling it as he saw it, and getting all of us motivated on what the future holds, rather than getting hung up on our past failures.

b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Are our Strategic Plans Selling us Short ?

2005-09-23T12:04:00.001-04:00

This morning in the Northeast, we had another taste of Fall in the air. I’m sure it was just a fake-out, as the temp climbed back up into the upper 70’s. I know our friends down south, particularly those in the hot and humid “Big Easy”, see that as early winter. For the rest of us, it was a nice departure from the sweltering dog days of summer.

Being a native of the south, one of the things I like about the Northeast is the change in seasons. Not only do I like the change in weather patterns, but all of the other signs of change that come with it. Pretty soon, the leaves will be changing, the days will be cooler, and before long, the holidays will be in sight. I think all of us, deep inside, like the change that occurs in the seasons. And as much as we probably hate to admit it sometimes, some of us actually like change itself.

For performance managers, the change in seasons- particularly summer into fall- also means our lives are about to become pretty hectic. I like to think of it as our “tax season”. We start thinking about updating our strategic plan, preparing initiatives for the next year, and getting started on that old dreaded budget. And while we don’t look forward to the long hours that accompany it, this period of the year actually gives some of us the renewal we need to keep pressing ahead.

One of the things that has always fascinated me is the dichotomy that exists between planning and change…- a contradiction, if you will, between change (which by its nature is dynamic), and strategic plans (which have historically been rather static, at least from the standpoint of the plan that results)

Historically, planning was thought of as an activity that was designed to reduce uncertainty, or “manage change”, if you will. Of course, our plans have all the basics- vision, mission, objectives, strategies, initiatives, tactics, financial projections, operational implications, performance measures, targets, and implementation plans. For organizations of our size, that’s a lot of STUFF…so it should be no surprise that many of our organizations take most of the fall and early winter to build, refine, or update our plans- both long and short term. And by December or early January, we have a work product that is based on extensive analysis of all that stuff- THE PLAN- which is often memorialized in a physical document (the proverbial “planning binder”, and the even more important “almighty budget”).

There is nothing inherently wrong with preparing a plan and using it to guide the organization forward. Memorializing our vision, strategies, and tactics is not only necessary, but is by all accounts a good thing to do. But its what you do with that plan, and how you use it, that can make all the difference in the world.

Unfortunately, many organizations allow their plan to get “fixed” into the culture of the business. The plan remains on the bookshelf, only to get referenced periodically to validate our actions and thinking. In many cases, the plan almost acts as a history book, or “bible” for our strategic thinking. And that’s where the problem arises.

Optimally, strategic plans should be dynamic, living documents. While it may seem odd to some, I am not a real advocate of documents that “memorialize” the strategy. I’d rather see the documentation focus on the assumptions, and the strategic options we would employ as these assumptions pan out or change. This kind of “options oriented plan” puts more emphasis on the process and the underlying assumptions, than it does on memorializing the strategies and tactics chosen to respond to a fixed set of assumptions. “Options based planning” and its close relative “Scenario Planning” are both examples of dynamic planning. In both form and function, they are far more conducive with the reality of change that occurs daily in our business lives.

I offer these 10 questions to help you discern whether or not your strategic plan is “dynamic” or “static” from the standpoint of dealing with the realities of business and environmental uncertainties and change:

1. To what extent does your vision, mission, and key objectives “guide” versus “prescribe”? - I like to think of this as an airliner on autopilot, in which the system maintains the altitude and attitude of the plane within a band of acceptable limits that correlate to the set parameters. It is acceptable for the plane to deviate slightly, as long as it is within close proximity to the preset parameters, thus avoiding undue stress on the aircraft.

2. Does your organization have a “compelling narrative”- a strategic story that aligns with core elements of your strategic plan? In other words, how easily can your overarching strategy, mission, and key objectives be translated into a “30 second elevator speech” by each of your executives and key stakeholders? Or would their natural response be to go search for the most current strategic planning binder? Does your narrative contain a good description of “what success looks like“? Does it reflect overarching principles, or a prescribed set of tactics? (at this level, the former is preferred to the latter in what we call “dynamic planning”)

3. How aligned would that narrative be from stakeholder to stakeholder, and executive to executive? Is the core theme, “embodied” into the fabric of the organization? And can it be repeated, at least thematically laterally and vertically across the organization? Do your stakeholders understand the tactical flexibility that they have in implementing the strategic vision, or are they looking for a prescribed set of “to do’s”? Remember, a good strategic foundation/ narrative, does not prescribe tactics, but establishes a strategic direction in a way that allows lower levels of the organization to identify, relate to, and ultimately link into with corresponding tactics. It doesn’t define their specific actions. A good narrative will produce those naturally in the tactical phases of your process.

4. Does your plan allow for changes in the operating environment, or is dependent on today’s snapshot of the current situation? For example, is the plan to become a competitive provider of business services (something that is based on today’s competitors and their position), or the low cost provider (which allows for the realities of new competitors and business models)?

5. How balanced is your strategic plan and roadmap? Rarely does a focus on a single measure survive past the current operating environment. In the above example, would we focus exclusively on cost, or would our strategic ambition include other areas like service delivery and customer retention? In the “autopilot example” in step 1, the plane does not fixate on only altitude, but also involves attitude, pitch, and other variables in its parameters.

6. Do the intermediate levels of your plan embrace the potential for different scenarios and contingencies? That is, do you have multiple options for achieving the same business model and outcome? It’s OK to have higher levels of importance geared to one of your strategies or tactics. But to become fixated on one strategy that has a 60% probability of success is shortsighted.

7. Does your planning process include some analysis of options value/ alternatives? Options strategy can be of enormous value in a strategic planning process, and the lessons learned here can be significant. For example, one of my past clients was able to discern the difference between saving a dollar of O&M versus saving a dollar of capital- almost a 7:1 tradeoff. Using that kind of analysis can really inform your planning and subsequent decision making processes.

8. Do your roll-down performance measures reflect the same level of balance, flexibility, and outcome orientation as your top-level plan does? This is really a reflection of how “connected your plan is” throughout various levels of the plan architecture. But it also says volumes about the degree of balance between your objectives and the level of completeness in your tactical and operating plans. For example, if your tactical plans and performance targets were achieved, would there be a corresponding level of success for each of the key strategic options identified for implementation?

9. How often do you review/ iterate your plan in an effort to “rebalance” and evaluate changes in contingency options? For example, does the review look like a once a year “dusting off” of the plan, or do you continuously review (monthly or quarterly) the relevance and changes to key assumptions and scenarios?

10. Does your plan and performance measurement system have “strategic staying power”? Can you effectively differentiate between a static plan that doesn’t change, and what we call “strategic staying power”? By the latter, we mean that once measure have been put in place and are renewed during plan review, do those measures survive changes in organization and personnel? One of our clients actually employed a system that implemented a “vesting approach” where managers were compensated on success of a particular measure whether or not they still had direct accountability for that area. This helped compensate for rapid turnover environments in which managers would otherwise remain shortsighted as they “eyed” future opportunities. Instead, they ended up with high degrees of “carry-forward alignment” and teamwork in helping their successors achieve success.

In short, you don’t want your plan to get so locked onto a specific tactic or objective, and lose sight of other options and contingencies that would contribute equally or more to your overarching definition of success.

I know there are some that see a “lock in, and implement at all costs” approach as far superior in that it maintains focus and eliminates the distraction of continuously iterating the plan. They may see the embedded flexibility here as a bit of a contradiction- something that prevents strategic focus. If you are in that camp, I would encourage you to look more closely at the distinction between different levels of the process. While I do endorse analysis, definition of options, and contingencies, I do concur with “locking in” on the business model, strategic intent, and the overarching narrative of the business. At the same time, however, I like to see a process that allows for identifying various ways to achieve the planned outcome, ways of dealing will fall-back contingencies, and the ability to revisit the underlying foundation as a last resort when operating or environmental conditions change.

And above all, remember this- planning is a process, not an outcome. If you maintain that perspective, it will be a lot easier to implement a planning solution that is dynamic, flexible, and effectively drives long term success.

Tomorrow, the temperature in the Northeast is expected to be back into the upper 80’s/ low 90’s. Some of my plans will change based on that. My plans for the weekend might look more like a “summer plan” than a “fall plan”. We roll with the changes in the environment we live in. We accept change, and if our minset remains open, we can actually thrive on it.

As I look at the news today, there are many down on the South Central/ and South West Gulf Coast whose plans will no doubt be changing this weekend with the approach of Hurricane Rita. Our thoughts and prayers are certainly with them. That said, there is no better way to explain the importance of a flexible planning perspective, than to look at what our brethren down south have been dealing with for weeks. We can learn much from them, in particular those who can roll with the punches and still keep perspective on what really matters- principle wise. Those are the true hero’s from which we can learn much

.-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Peer Benchmarking Initiatives- Revisited

2005-09-13T14:49:00.000-04:00

Over the past several weeks, I’ve gotten more than a few comments on my June 16th column regarding Peer Company sponsored initiatives. Given the volume of comments, which ranged from “spot on” to “downright delusional”, I thought it would be a good idea to take another look at this topic.

First, my acknowledgements to some of the more prominent programs that were mentioned in the article. My intention was not to endorse or condemn any of these programs specifically. In retrospect, my biggest failing may have been the fact that I may “painted them all with the same brush”. That was not my intention. My failure to discern between the “good” and the “not so good”, while perhaps frustrating to the sponsor companies, was however, deliberate. The programs I mentioned by name were mentioned only to help the reader identify with what I meant by “peer company sponsored initiatives”- NOT to endorse or condemn any one in particular. If it was interpreted as anything other than that, I do apologize to both the program sponsor and their participants.

For clarification, my main objective with the article was to offer a guide, or checklist, to help the reader discern what to LOOK for, and what to LOOKOUT for, in such programs. All programs, whether sponsored by peer companies, consultants, or independent facilitators have strengths, weaknesses, and risks. In fact, if you look through my past columns on benchmarking (see article index), you’ll find that I offer similar analysis and guides for other types of programs as well. There is no perfect solution. Again, my only objective was simply to help the reader discern what is best for them.

This year alone, the number of programs available (peer sponsored, and others) will nearly double. And because of this, many companies are facing the tough decision of which ones to participate in, and which ones to pass on. Unlike the early 90’s, resource limitations prohibit companies for participating in everything out there. And despite what may be advertised by these programs, none of these programs are “free” on any dimension.

Our research has shown the cost of data collection alone to be many times the “entry fee” of such programs (assuming there is one). Offering a way for the reader to pick and choose in an educated manner was, again, my main objective. My other objective, while a bit in the background, was to encourage the facilitators of such programs to respond to these risks, and to help mitigate them for their members.

For example, within a few weeks of publishing the June column, I learned that one of these programs now requires executive review and approval prior to admitting a new member- a tactic that clearly manages one of the key risks identified. As new programs come on line, I encourage the facilitators and members to remain conscious of these risks/ issues, and continue managing them as appropriate. Those that do will no doubt end up as the best “draws” for future members.

As a refresher, I recommended several key questions for companies considering peer sponsored benchmarking initiatives. These questions are just as relevant today, as they were in my original column. Some of the peer-sponsored programs manage them well, and some don’t. As I indicated in June, and barring any formal comparison of these initiatives (something we may elect to provide in the future), it’s up to the reader to decide what is right for them. These questions/ issues are offered only as a guide to help inform the prospective member.

1. Do you know the GENUINE REASON the company is offering such a program? (Is it documented, written down and accepted by executives of both the sponsor company and the participating company

2. What is the REAL COST of the program? Again, both to the sponsor company’s shareholder, and the member? What will the real cost of data collection be? Is it redundant with other programs? What is the sponsor company doing to mitigate this cost?

3. How do the program INTEGRATE/ interact with other similar initiatives? Do they compete against them (creating more redundancy), or will they partner on data and other types of integration?

4. Does the program require both managerial and executive level APPROVAL and OVERSIGHT? Are competitive concerns and/or antitrust issues known and mitigated.

5. How will they PROTECT your data? What assurances do you have?

6. How ROBUST is the membership? Are there enough companies in their membership to provide meaningful information for your particular demographic or type of infrastructure?

While this may not be an exhaustive list, it is a start. I invite any of you to add to this list via commenting on it, and I will publish any additions/ modifications in future columns.

To me, some of these issues are obviously more important than others. As I go through the above list, I believe the most important issue to be managed TODAY is that of redundancy and duplication of resources. And as more of these programs come to market, this is a cost that will get more and more visible. For example, it would be nice to see some significant effort to merge data requirements so that the member only needs to collect the information once. Some of this occurs today, but only in a very informal and ad hoc manner. More often than not, these programs end up “competing” with each other for very scarce resources. While each program may have something unique to offer, most require very similar means (data required) to arrive at their specific end point.

An analogy to consider- There is a reason why there is only one set of wires running down my street. Anything more would result in stranded investment and underutilization of assets. And in a world of scarce resources, that can’t be good for the buyer. Likewise with benchmarking initiatives. There is a lot of this type of redundancy and stranded investment in the world of benchmarking. Call it wishful thinking, but why not have some type of “data clearinghouse” that feeds data to each program based on what it needs, but eliminating the data collection duplication that is present today.

We must approach, and address each of the other risks in a similar manner. Only in this way can we have programs that truly offer a win-win for both the member and sponsor.

Again, if I offended any of the program facilitators or members by my words or tone in the June 16th column. I sincerely apologize. But I do, and will continue to strive to offer observations and feedback that strengthens our collective ability to better manage our performance. And to this end, you comments and feedback are both welcome and appreciated. Please direct any of your comments to

rchampagne@epgintl.com

b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Squeezing Blood Out Of That Turnip

2005-08-29T18:57:00.000-04:00

I suspect all of you out there have someone that you rely on for insight and perspective – that wise old mentor that seems to have an unlimited depth of experience to draw from in helping you navigate life’s little challenges. You know, those little parables and anecdotal tales that always relate perfectly that very problem you’re trying to solve. Today, I go to that well of experience in responding to a problem I know many of you are facing right now- squeezing that last drop of improvement that never fails to elude us.

First, the problem: Most of you out there in the performance management world have worked for years trying to find hidden value inside your organizations. Along that journey, some of that value (be it cost savings, productivity improvements, or gains in service delivery and customer satisfaction) has come pretty easily.

We’ve all heard the term- LOW HANGING FRUIT (I’ll refer to this as LHF). Problem is that many of us haven’t heard that term lately. Why? Because most of your organization’s have already captured those kind of improvements… the kind that smack you in the face right away even when you’re not looking…and are very easy (perhaps too easy) to implement.

And along the way, capturing that LHF has created some real superstars within your company. How familiar is this- upon finding a bottomless pit of LHF, one of your esteemed, but intellectually challenged colleagues becomes the “instant hero” overnight! Reminds me of that FedEx commercial where they go on that long retreat, and the woman gets the idea of using FedEx in the first 30 seconds, and proceeds to get showered with kudos.

Of course now, months or years later, you’re now in the role of continuing in your esteemed colleague’s (aka new hero’s ) footsteps. Only the LHF you’re looking far has become much harder to find. Those “bit hits” and “home runs” have become fewer in frequency and impact. You work day and night to make your assessments, ground your conclusions, align management, and facilitate the necessary organizational changes. You put in more (much more!) work than your esteemed colleague ever put into it, but capture nothing close to the impact of those initial wins. Where did all that LHF go?

Truth is that it got replaced by the practice of “squeezing blood out of the proverbial turnip”. And you’re the corporate bloodsucker! You find yourself in that under-appreciated job that no doubt produces a lot a value, but not without several times the effort that used to be required. That’s life for many of our performance managers today. Boy, wouldn’t it be nice if someone made this job a little easier?

Enter my mentor, and one of his anecdotal gems. He starts by asking me to recall the first time I went out to the golf course. I’m sure if you’re a golfer, his experience will bring back similar memories. If not, just read on, as I’m sure you’ll be able to relate, at least in spirit.

He recalls his 1st time on the course: More misses than hits, a verrrrrrrrrry frustrating intro to the game…and probably one he’ll give up pretty quickly. But he continues despite his apprehension. It’s amazing how much one good shot (out of over 100) will keep you coming back, but I digress.

5 rounds later, AT LAST, he has more hits than misses- that moment of truth when the golfer gets “hooked”, and alas, the confidence starts to build

Round 10, now he’s starting to get the hang of it, and feeling pretty good

Round 15- end of his first full year- he’s cut his score by a whopping 25% (although he won’t mention our previous scores!)

Round 20- the following season- after a couple of rounds dusting off the “off-season rust”, he shaves off another 10-15%, and he’s now shooting somewhat respectable scores (measured, of course, not by the total stroke count, but rather by the number of people who aren’t embarrassed to have him in their foursome). He, on the other hand (although borderline delusional) is now thinking Senior Tour!

Round 20-320 (over the course of 30 years), He spends the rest of his golfing career trying to cut his score by another 5%- Where the heck is the LHF now, he asks ???

And, of course, the story gets worse….

He has spent virtually no money (except for those second hand clubs) getting that first 40% improvement, but could damn near retire on the money he spent chasing the next 5% (the latest driver, several hundred sleeves of those new balls that go farther and straighter (NOT), greens fees at clubs he has no business playing at,…you get the idea). How in the heck can I get that next 5%, he pleads ? Am I that poor of an athlete? Should I change my swing?

Now here’s the punch line… Most professionals don’t have this problem. Why, you might ask. Are they just naturals? Sure, that’s part of it. But there is more. My mentor calls this secret ingredient “the art of diagnosis”, something all of us could be much better at.

If you’ve ever read about the trials and tribulations of pro golfers (a far better investment of time than that new triple titanium, variable weighted, moon dust infused driver !), you’ll find one common thread. They know how to diagnose their game at a level we would never think of.

When we diagnose our game as an amateur (and it’s a stretch to call most of us amateurs!), - assuming we diagnose it at all- we think about things like % of fairways hit, greens in regulation, # total puts, etc…and that’s ok for a first cut. But the pros go much deeper.

I recently read some work by Dave Pelz- Phil Mickelson’s short game coach and advisor to several tour players. For those of you who don’t know, Dave is an ex-NASA engineer who worked on the first Lunar Module design who, over the course of the last several years, has applied his expertise to diagnosing and fixing the flaws of pro golfers. Interesting career shift to say the least, but it has paid off. His mission, is to help them find that next 5,4,3,2, and 1% (more like .001%) improvements. And how exactly does he do that?

Dave knows the art of diagnosis, which is no doubt driven by his engineering, scientific and technological prowess. Last weekend, I saw a special Dave ran on the Golf Channel in which he encouraged us amateurs to come up with a “short game handicap”. Without going into a lot of detail, this SGH didn’t just deal with one or two metrics, but many that worked together. Things like shot dispersion with different clubs, hit/miss ratios from points inside 30 yards for a variety of shot types, putting success from a half dozen different putt lengths and types, etc. You can see an example of this at http://www.golf.com/institute/sgh/sgh.aspx
Whether you’re a golfer, or identify better with another sport, the message is the same.

Many of us would cringe at the depth of analysis that goes into this one area of focus. In this case, the SGH only deals with shots inside 100 yards. But if you talk to pros, they’ll tell you that this guy is a miracle worker. Not because of his athletic ability, but because of his savvy at the art of diagnosis. He makes a living off of people (pros and amateurs alike) who have fully captured the LOW HANGING FRUIT, and want to begin sucking that turnip for some more blood. And that’s very similar to our jobs in today’s business environment as performance managers.

As performance managers, we must think like Dave. We must design scorecards that operate effectively at the executive/ “results” level. But we must also possess diagnostic measures that explore strengths and weaknesses in the very processes that PRODUCE and/ or CONTRIBUTE to those executive level results. We must be BRUTALLY HONEST with our baseline, and diligent in our goal setting. We must diagnose, challenge, and set new goals at the work-face- Goals that if achieved will make a difference in one or more sub-processes. In short, we must develop the equivalent of Dave’s breakdown of the TOTAL handicap in to SUB HANDICAPS like his Short Game and Putting-Only metrics.

There are many tools available to us that can help us achieve this. Tools that help us design these kind of narrowly focused, but strategically connected metrics and scorecards. Tools that help us integrate these scorecards so that we can see the rollup and rolldown effects on the bigger picture. Tools that help us translate our strategic plan into its manageable components. Tools that help us baseline and set targets. Tools that help us benchmark against the outside world. One of the things that our company (ePGI) http://totalperformancemanagement.com has spent many years focusing on is developing these types of integrated scorecards for business, and helping organizations use them to manage the small but vital pieces of that equation.

But whatever tools you select, the biggest challenge you will face is changing the culture and mindset of the business. Essentially, developing a mindset that recognizes the new game we are in, and that those 1% gains are going to be a lot harder to come by. A game where the entire focus is on that Turnip, and how to get that last drop of blood out of it. It is a culture of ACVTIVE diagnosis and analysis, not one of PASSIVE enterprise level KPI tracking and reporting.

And that challenge starts with you, the performance manager. The bad news is that it will take the right tools, the right culture, and a lot of hard work. The good news is that if you can apply this art of diagnosis in the corporate world, you’ll begin to find that next tier of performance improvement, not to mention, a much lower golf handicap.

…And with any luck, I’ll see you on the Senior Tour!

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

A Word (or three...) about Data Standards

2005-08-10T18:36:00.000-04:00

I've had a number of recent conversations with my clients and business partners about the importance (or lack thereof) we, as a community of performance managers, are placing on data standards. After all, the ability to compare, analyze, and effectively mine for insights among peers depends on being able to have some type of common data lexicon to rely on for our conclusions.

Throughout the course of history in the PM discipline (which is still relatively young), we have seen some bright spots. For example, many industries have in fact established reporting standards that exist to this day. Safety concerns, for example led to the establishment (and proliferation I might add) of airline accident and incident reports. If one wanted to (and I wouldn't suggest doing this before your next plane trip), you could literally find dozens of online databases that profile this type of data and be reasonably assured that the data is comparable across carriers. That is because the NTSB and FAA (save for some inter-agency inconsistencies and recent infighting) require very clear standards regarding when, how, and to what level of detail incidents should be reported. We also see this prevalent in the Nuclear power sector, where again, the main driver is public safety.

But what about where the main driver is something other than public safety? In regulated industries, we see evidence of similar reporting standards having emerged in banking , healthcare, and local transmission and distribution utilities. In these cases,the driver was more the regulator (e.g.- FERC for the utility sector) who set up these standards to prevent monopolistic control from being exerted on the industry and to hold these otherwise shareholder driven companies to "reasonable" levels of performance. Most of these reporting standards worked well for a while. But as deregulation occurred and competitive markets began to control themselves from a performance standpoint (as capital markets often do), the need for these standards began to wane. Sure, we still see some of the reporting artifacts still in place today (for example, the utility sector still requires FERC reporting), but it is almost always viewed as a necessary distraction for the real operational executives within these organizations. The vehicles that were designed to produce a rsolid eporting standard, now produce some of the least reliable information around And that should be no surprise. When standards are set up to oversee or punish an organization for not achieving a result, you can bet the data will be "worked" and stretched to the maximum extent possible in order to achieve that result.

While I may be accused of being a bit pollyanna, I genuinely believe that the setting of data standards can in fact work well. But the underlying PURPOSE that drives data standardization must be changed. I am of the opinion that if these systems were set up to enable each company to achieve their fullest potential, from both the cost and effectiveness sides of the equation, companies would be a lot more diligent and honest in their adherence to standards.

In the power sector for example, there are some benchmarking and best practice sharing programs that do a great job at reporting consistency. In fact, if I were to bet on the result, I'd put my money on the data that was reported in these programs well before I would trust the more institutional standards like FERC, NERC, and the NRC, for example (all of which have many more years of history under their belt). Why? Because the benefit of complying in the former case is directly proportional to how much an organization LEARNS from the data that is shared. If you twist the data to reveal a better overall position on the scorecard, you're only hurting yourself.

I believe there is room for a new standard to emerge across all of the industries I mentioned and beyond. A standard that originates from a desire to be competitive and learn, versus one that is set up to regulate and punish. Such a system would need to revolutionize everything from accounting treatment to the work management processes themselves- where a dollar means a dollar (no red dollars and blue dollars) and an outage means an outage. Sure, it's complex, but as performance managers, we've seen these standards achieved way back when it was done for regulatory and safety purposes. Not for long, but it did work. It failed not because it couldn't be done, but because it had an underlying driver that was flawed. A good system became just another form to fill out.

So let's try this again, only this time lets make sure that the people reporting the data see the clear benefit of complying with a standard. Only in this way will we end up with a system that is sustainable in the long run.

Poor Bernie? (Getting our head out of the sand)

2005-07-15T19:03:00.000-04:00

I must say that I've had numerous reactions to the Bernie Ebbers' news of late- from "good riddance", to pure apathy. Actually, I did feel a flash of compassion, as I read about his blubbering crying episode in the courtroom- although it was a very quick flash, kind of like when Jim Baker was filmed walking out from his sentencing. But by far, my overwhelming emotion was one of justice. For once, executives in corporate America were given the message that we don't reward corporate mischief. In fact we now punish it- hard. And that's a big step forward that was a long time coming.

But there's a lot more to do in terms of how we reward executive management in this country. Things have gone seriously awry when our executives are given enormous sums of money and other rewards, long before they actually perform. And while they may fail to get their second or third tier bonus when they fail to meet key targets (some actually still do, by the way), they're base compensation levels are often left untouched. Sure, maybe they lose their jobs somewhere down the road, but only after they've banked millions during their performance backslide.

While the recent conviction and big time sentencing of Bernie shows that we are not TOTALLY blind as a society of shareholders, there is a long way to go. Punishing those who overstep the line of executive integrity is a start (hopefully it wont take a year next time). But what about the incompetent executive that brings a company down in flames without having committed a federal crime? There should be clear disincentives that stop that kind of poor performance in its tracks. Just stopping the flow of rewards earlier in the backslide cycle would be a start. To me, this is clearly the next battleground in executive performance management.

Why isn't this happening today? Sure- part of it is that many Boards and CEO's continue to "wish these problems away" rather than taking swift action in terms of consequence. Part of it also is the poor design of our compensation schemes that posses precious little in the way of compensation DOWNSIDE for poor performance. Sales teams know this well. Some of the best guys and gals I know in sales have upwards of 90% of their compensation "at risk". Too excessive? Maybe. But no downside to base comp is equally ridiculous. Executive compensation, in design alone, could use some big time overhauling.

But even if we had well intentioned boards, operating inside of a near perfect comp structure, that was willing to act when it detected a performance breakdown ...My guess is that the system would still fail to stop poor performers any earlier than it does today. Why? Because of the way performance is reported. The metrics that we use are often compiled by individuals or sophisticated algorithms, and reported on a periodic- weekly, monthly, or quarterly basis. Sometimes (actually more often than not), at the executive level, the data is reported annually. Hard to believe in the kind of information environment we now find ourselves in.

If we are to reform executive compensation, we must fix all of the things I mention above. But without more timely, accurate, and available performance feedback, even the most perfect system will fail. We must take our collective "heads out of the sand", and bring our performance information to light, much quicker and more frequently than it is today. It must be broadly accessible, and accessible on demand. In the age of information we live in, there is almost no excuse for the kind of "back room" reporting that still takes place today. The more timely and accessible the information, the less poor performing executives will be able to hide behind their information reporting inadequacy.

So as you navigate forthcoming rounds of executive hiring at your company, do your part to drive performance information into the open forum. There are many tools and systems that will help you do that, in a manner that is more timely, accurate, and accessible. You might not be the most liked person at first, but if you survive the initial pain, you and your company will have a much brighter future.

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

PMD Index now available

2005-07-11T17:00:00.000-04:00

I've had more than a few readers tell me that the indexing feature/ archiving of the "Blogger" site we use for PM Daily is a little "clunky" /difficult to use. For example, there is no easy way to browse titles without going into each archived month separately.

I know "Blogger" is working to make the search and indexing features better, but in the interim, I have posted an index page that has a running list of all articles posted since inception of the site.

The link is http://www.rjci.com/pmdaily-index.htm

Hope that helps!

-b

Backtesting Anyone?

2005-07-08T18:12:00.000-04:00

One of the things I like to do is take a practice that I observe in one industry, and think about how it might apply to another very different sector. As I have indicated in past columns, I genuinely believe that the best insights are often revealed by looking well outside of your own organizational or industry boundaries.

To that point, I've had an opportunity to talk last night with a friend of mine who is a "big time" equity trader. By "big time", I mean he trades many times over what I could ever dream of investing. And for him, the last several weeks have been downright gut wrenching. Trends have had a real difficult time staying in tact, often reversing course on what would have normally been a longer term run. While his methodology plans for a good amount of that (i.e.- he expects to "lose" on about 40% of his trades (with built in stop losses of 2-3%)), he more than compensates by winning much larger returns (say 10-20%) on the other 60% that follow the expected trend.

But as most of you know, the market has been about as unpredictible lateley as it's ever been. Traders have, for years, banked on trends which, believe it or not, are generally pertty predictible. But the last few weeks have not seen the 'follow through' that they 'should' have. We've had big breakouts that have reversed course unpredictibly. We've also had big breakdowns (like the major drop we experienced after the London bombings) that sent many traders "shorting" the market, only to see a major buying frenzy that lasted well into today. I've done a little bit of trading in my past, and I can tell you that it's week's like this that make you want to throw in the towel. And it's those times that you need to be extra careful.

It's during the unexpected change in performance patterns that traders start messing with their methodology. And there is nothing inherently wrong with that, as long as you can be reasonably assured that the change would have produced better results. Traders call that "backtesting".

What differentiates great traders from poor ones (and I mean that literally) is that they backtest rigorously just about any change in methodology BEFORE they apply real money to it. How do they do that? They literally take the change in methodology (say entry or exit parameters) and apply it to all past trades, even ones they may have skipped, and see whether or not it would have produced more favorable results. Then and only then do they actually implement the process change. You may say that breeds over-analysis. Probably so. But I know from talking to a lot of these guys that it is this mindset that truly makes or breaks a trader.

I couldn't help but thinking how useful that practice might be to the art of process management and performance reporting. How well do we really implement the performance management mantra of Plan, Do, Check, Adjust? Are the adjustments we plan to make tested against our historical metrics? Sure we look at pre and post performance based on the process changes we make, but do we go back and see how the process would have performed during the times where our old processes failed? That's the real test of whether or not the process change actually makes sense. It's during the tough periods that our processes are really put to the test, right?

I suspect many of us make changes to our businesses processes based on a particular problem that appears to be hurting our business. Does that mean every process we change based on "gut feel" or political pressures is the wrong move? Of course not. But we'd all be a lot better served by our own little bit of "backtesting"...challenging our proposed process changes against history, and seeing whether the new change would have made a difference.

Certainly, this is not a black or white topic. There will be times wher we change things on "gut feel", just like the trader that breaks out of his method for a trade or two. That will happen, and you need to be flexible. But most traders will tell you that they do their worst when they trade for any length of time on pure instinct. Following a well backtested methodology almost always produces superior results.

Let's all take a lesson from all those traders who got burned over the past few weeks. The really bad traders have probably already implemented changes that will likely fail because they are reacting to what was just an anomoloy in the market. Good traders will realize that and most likely stick to their process for many profitable trades to come.

Next time you contemplate a change in your business process, try and do a little bit of your own backtesting in different environments and see how the changes would have held up. The answers may surprise you.

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Lessons from the Fairway

2005-07-01T13:19:00.000-04:00

Over the past week or so, I had the privilege of preparing my two boys, Bobby (10) and Michael (8) for the USKids Golf Qualifier for NJ. As most of you know from my past posts, they have both been avid golfers since they were toddlers. Their competence far overshadows anyone in our immediate family, so I have no idea where they get it from. Nevertheless, they perform astoundingly well for their age, and the pride we have for them is beyond measure.

Even more amazing than their performance however, in the number of life lessons and "take aways" that come out of every competition they enter- not only for the players, but even more so for the parents. Although there were many personal learnings that came out of this week's competition, there were a few that lent themselves particularly well to the discipline of performance management.

Unlike most of their tournaments which play 36 holes over two days, this particular event was restricted to only one 9 hole qualifier. While it may seem easier on the surface, this particular format leaves a lot less room for error. That is, while nearly every player in a 36 hole event has their share of ups and downs, a 9 hole event demands near perfect execution. If their game is "on", kids that age can typically perform well for strings of 9-12 holes before having a few rough patches. Few of them can do that in a 36 hole stretch. So as we prepared, we focused and practiced on keeping the performance going for a solid 9 hole stretch, getting off to a good start, and keeping it going for the balance of the round.

When we arrived at the course on Tuesday morning, we were confronted with pretty bad weather conditions- wet and rainy. Typically, after a rain shower, the greens play much softer, requiring the player to putt a little firmer than they would normally. While, my 10 year old is a near perfect putter inside 6 feet, the rain created a problem for him right off the bat. He misread the first green (expecting it to be slower than it ended up being), and blew the putt 2 feet by the hole, leading to a double bogey. A tough way to start, requiring him to dig himself out of a very deep hole. More importantly though, that first misread, forced him to be overly "tentative" on his putts most of the day, missing 7 putts inside of 6 feet, usually by no more than a few inches. And the score showed it. Having had practice rounds of 45 and 44, he ended up with a disappointing 49 (far better than his old man could ever do, but still disappointing to him)- :(

Naturally, as any parent would, I tried to talk him through it, putting an optimistic spin on things-showing him what he did well, and looking at areas to improve. All in all, he concluded that the day wasn't as bad as the score suggested. In fact it was a pretty darn good day. Net of the putting problem, we might have actually broken 40, which would have been his best round ever and certainly the winning score. Of course that's playing a little of what I call "would'a, should'a, could'a", but at least it gave him another perspective on what could have been a really demoralizing round. Instead he walked away with one big lesson about putting strategy in inclement weather, not a retooling of his entire game.

What can this teach us about the discipline of performance management? We'll let's look at how organizations gauge what they need to improve and when. Just like the golfer that draws inappropriate conclusions from the overall score (the equivalent in business would be looking solely at ROI, ROA, or EPS), businesses can be seriously damaged in the same manner. You've got to have a good dashboard that will enable you to assess your "whole game" before you start tinkering with processes, strategies and business models. It could just be one small facet of your game that's out of synch rather than the entire business model. In my 20 years in performance management, I've seen too many cases where businesses, on the advice of misinformed advisors and consultants, have retooled their business to correct problems that didn't even exist. A good performance management dashboard can prevent such mistakes, and tell you exactly what needs work and what doesn't.

In the case of my son, the dashboard looked pretty good. Drives were long and generally straight, and he was able to hit many greens in regulation (meaning his long and mid range game was well in tact). These are two of his main indicators on his personal performance dashboard. In cases where he didn't hit greens in regulation (2 strokes on a par 4, and 3 on a par 5), he was able to pitch or chip the ball to within only a few yards of the hole. So his short game was very much "on", another key item on his dashboard. In fact, when we reviewed his putting, his "line" (aim) was pretty dead accurate. The only area that didn't work for him that day was his distance control, which on a "normal day" would have been quite good. So it wasn't "distance control" in general that he needed to work on, but more so, how to adjust his distance control in inclement weather. To sum up, there was one very specific "thin slice" of his game that needed work. Although his round suggested he was way off the mark, his dashboard suggested otherwise. A little work on that area, and he's back to breaking 40. Not bad for a 10 year old.

For some, the above may look like I'm just being overly optimistic spin on things- a "glass half full father". That sure is part of it. But, in this case, the optimistic viewpoint was grounded with clear measures of performance for every aspect of his game. If you have good measures that are linked to overall performance, then you can look at the dashboard and see pretty quickly whether a positive or negative interpretation is in order. Without the dashboard, you're really flying blind, with little if any idea of whether or not massive change is needed.

So next time you're faced with a bad quarter of performance, try looking a little deeper at your total dashboard for the answers. In some cases, you'll have to dive into some pretty heavy process and organizational changes. In other cases, and perhaps more often than not, it may only be a minor adjustment that puts you into the zone of performance excellence. Only your dashboard can tell you that.

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

The Good and Bad of Consultant Sponsored Benchmarking Initiatives

2005-06-16T11:18:00.000-04:00

Over the past few days, I've been preaching the message: "BE LEARY OF THOSE WHO WANT YOUR BENCHMARKING DATA!" I've talked about new technologies and internet sharing platforms, peer company sponsored initiatives, and regulators among others. One group that I left out, deliberately, were the management consultants who run these types of consortiums. This is much harder group to discern, largely because there are many types and flavors of consultants to choose from.

I must preface this column with the fact that there are a few "good guys" out there. Programs that have been around a long time, and run these programs for the right reasons- to help their clients keep a pulse on their performance. They don't abuse the data they get, and they keep a clear line between the benchmarking and consulting side of their business. These organizations exist and are easy to find if you know what you're looking for.

There are other consultants, however who are after two things: BIG relationships and BIG Projects. Many consulting firms I know that run benchmarking and similar types of consortiums for one purpose- to "wedge inside" your business, identify problems, and then build a MUCH BIGGER relationship with you to to help you solve those problems. There's not a whole lot wrong with that. After all, I was one of those consultants in my past life. But it's when the ONLY reason your doing those benchmarking programs is for the bigger project, that things begin to go south. Remember, there are many "best in class" performers who do benchmarking to simply stay in touch with where they sit vis a vis others. I've seen too many of these companies get very distracted by what I call "consultant manufactured projects" they didn't need.

As I stated before, there are some consultants who don't move in this fashion. But there are many who do. Be on guard as to why your consultant wants you to share your data, and use the checklist posted in our previous column "Rules of the Road" to help you find the partner that is best for you.

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Peer Company Sponsored Benchmarking- What to Look Out For

2005-06-16T11:17:00.000-04:00

In many industries, there exists companies who sponsor benchmarking and other types of "data sharing consortiums". In the Utility Industry, within which we do a significant amount of work, there are a growing plethora of organizations who want you to exchange data openly with them rather than with consultants or other facilitator-brokered services. PSE&G Peer Panels, Southern Company, and others are among the top "draws" for this kind of information sharing among utility organizations. Other industries have similar types of players.

It is not my intention to label these programs "good" or "bad". In some cases they serve a valuable purpose for many of the participants. But you should also know that these programs are laced with risks- risks that must be understood if you are to manage your involvement proactively.

At the core, you need to ask yourself WHY these companies would offer such programs, other than to gain valuable competitive intelligence, potential acquisition analysis, or other covert reasons. If you're concerned about their motive, don't join.

But first, you need to get past the "lure" of these programs, as they all are VERY good at drawing companies in with the following arguments:

- They say the reason they manage these programs is to offer a public service to the industry. Sounds all too altruistic for me. See below- There is no free lunch....

-They say these programs are free. News Alert- they aren't! Someone always pays. If it's the shareholder that pays, then 9 times out of 10 they are looking for competitive intelligence. If its the ratepayer who pays, then these companies are about to have bigger problems on there hands, as there are few ratepayers who would support giving their money away to ratepayers in other jurisdictions. If you disagree, find me a few of them who are. Is there even one out there?

-They will also tell you that they provide these programs to "protect you" from the BIG BAD consultants. We'll here's another News Flash: There are TOO MANY alternatives out there for you to sell yourself out to your peer companies (future competitors). If you want to stay away from consultant sponsored initiatives, look to some of the other alternatives before you decide on the peer company initiatives, as the latter are a bit too risky in the long run.

-They market to "manager" rather "executive" level individuals. Why? Because mid level managers are more apt to share data without worrying about competitive concerns. Career advancement, workshops in cool locations, and networking are among the biggest drivers for these managers. Executive staff have many more concerns about confidentiality and the value of protecting strategic data and insights, and are often in a much better position to judge when and how to make such tradeoff decisions.

- They will tell you that they are the only option if you want to have "lots of participants that look like you". True, these programs are good draws. Also true that these companies look a lot like each other- same industry, same region, similar regulatory environments, similar management practices. But is this necessarily an advantage? Perhaps the biggest commonality between these companies are data sharing protocols may be a little "too loose". It's also worth pointing out that groups of 20 or so in a sector like Utilities is still a small fraction of the industry. If you total up all utility companies worldwide (and despite conventional wisdom, ther IS a lot to be learned from off shore peers!), there are literally thousands. Once you take into account that many of their members are big holding companies with 4 or 5 subsidiaries, you're left with maybe 2% of the industry. Hardly a quorum!

Once you get past the "lure" of these programs, you can then begin to filter out the good from the bad, or at least identify the ones where the risk/reward profile leaves a lot to be desired. Are there good programs out there? You bet. But it's your job to evaluate your benchmarking partner on each of these factors. It's also important to have a good "rules of the road" checklist (see past post "Rules of the Road") to use for every invitation you receive relating to data sharing. Without this, you put your company, and yourself at risk.

Benchmarking is a fact of life in best performing organizations. Withdrawing from the game of data sharing is NOT the answer. Managing the process proactively IS.

-b

Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

Data Sharing "Rules of the Road"

2005-06-16T08:45:00.000-04:00

Over the past several years. My partners and I have spent considerable time and effort applying our performance management technologies in the Energy and Utility Sectors, among others. One of the unique things about that sector is the "extremely open" nature with which they share performance information and best practices with each other. Perhaps a little TOO OPEN? When was the last time you heard of Proctor and Gamble sharing information with its closest competitors THAT openly ?

Am I saying that you should stop sharing information all together? Far from it. What I am saying though, is to TAKE SPECIAL CARE when doing so. You can instill a learning culture and share peer to peer information, but don't do it without taking the right precautions. As much of a paradox it is, you can BET that P&G is one of the best benchmarkers and learning organizations around. They are just very deliberate and careful about how they do it.

Here are some tips that will help you "manage" the information as you go about your benchmarking and best practice acquisition process.

a)- Don't even THINK about sharing information in an UNBLINDED fashion. This is cardinal sin #1. The ONLY reason someone would want you to do that is to be able to strip it down and glean information for competitive gain. If the information is blinded, the consultant won't be able to target you for that lucrative project unless YOU want him to. And that overly philanthropic peer company won't be able to use the data for competitive positioning. Only you will be in control of your data assuming it stays masked. Peer companies will often tell you that having the data unblinded is necessary in order to maximize value from the program. Hogwash. There are TOO MANY ways to foster learning with blinded data that I have discussed in previous posts for you to give in to that kind of BS. Either share information in BLINDED FASHION or NOT AT ALL.

b)- Don't begin without clear Executive approval, make sure they know EXACTLY how the program will work, make sure you know what the PROTOCOLS for that sharing are for your company, and follow that process diligently. Trust me, your executives are the only ones with a broad enough purview to make good decisions and tradeoffs between information sharing and shareholder value. Second, is a deep concern I have about decentralized sharing that is not managed centrally. True story: A member of one of these "peer company" sponsored initiatives told me that despite an "iron clad" confidentiality agreement, and the decision to mask data, the FIRST thing that occurred at their results meeting was an exchange of identity codes! No kidding? Do I believe this was endorsed behavior? Absolutely not. It was, however a direct product of information sharing being too decentralized- to the point that the employees sharing the codes had lost touch with their corporate policies on information sharing.

c)- Demand Confidentiality / Non-Disclosure agreements. I'm not talking about these little "we won't tell anyone if you don't" type of statements. I'm talking about agreement that will hold legal steam. Be clear about when and how the information can be used. For example, our data cannot be used outside of x, y or z departments for purposes other than a, b, and c. If the information is used for purpose d (e.g. acquisition analysis, competitive targeting, etc.), be clear about the penalty and how it will be enforced (who will enforce it, what jurisdiction, etc...). Also, the less "blinded" the information is, the more complex the non disclosure agreement must be. The first line of defense is in what you share and what the peer company can glean from the data. The non disclosure is your SECOND line of defense. Once they're in, they're hard to stop.

d) Avoid consultant and peer company sponsored initiatives. Then who do I use? There are many sources and technologies out there, from published studies, to internet driven benchmarking tools and services ( http://www.benchmarkcommunities.com/ ,for example). The key here is to avoid anyone who doesn't have benchmark facilitation as their CORE business. The farther their core business is from the facilitation of these programs, the farther you should stay away from them. And by the way, there are consultants whose sole business is benchmarking. In terms of benchmarking, these are the "good guys". Remember though, these companies are the exception rather than the rule as far as consultants go. So be on guard.

e) Make sure your partner's data management process is bullet proofed- Even with an iron clad NDA in place, a poorly configured process can be as dangerous as not having an NDA at all. Look for assurances from your vendors or partners that their process is secure. Ask to see their process. Was it audited or tested for compliance? Is it ISO certified in these domains? Is the data transfer technology and platform secure?

There you have it. A nice checklist to go through each time someone invites you into a .data sharing environment. Data sharing can be a very rewarding game if it is played right. But you need to be both cautious and prudent about the process. It's kind of analogous to "let the buyer beware", only we're dealing with bigger companies, more shareholders, and bigger stakes!

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com/ or contact us directly at 973-343-2806.

The Benchmarking Technologies You DON'T See

2005-06-15T17:30:00.000-04:00

Not too long ago, benchmarking anything was a major undertaking. Consultants and/or host companies would take us down a long and painful road of data collection, validation, workshops, and reports, all of which would ultimately lead to a voluminous reports that probably still serve as "ornaments" on your bookshelf. Clearly, a painful process that often led to frustrated participants and meaningless information.

Well, now that we have all these great new technologies to help us with benchmarking, those times are gone, right? Wrong. Despite numerous advances in both approach and technology, benchmarking still leaves a lot to be desired. Why?

Not unlike many of our business processes, benchmarking suffers from our tendency to focus on activities rather than business outcomes. We spend lots of time and money automating legacy processes, instead of truly rethinking how our process SHOULD work. The same is true with technologies that should, but don't enable us to do better benchmarking. There are clearly no shortage of benchmarking technologies that companies can use to acquire and report benchmarking data. But are these systems actually producing valuable information?

In my humble but vocal opinion, today's benchmarking technologies suffer from major weaknesses in EVERY stage of the benchmarking process:

1. Survey Design and Administration- most consultants and facilitators have put ALL their emphasis on the survey process. Poor prioritization, in my view. Sure, the survey is the most obvious process to try and automate. Since most data collection started as a manual process, it would only make sense to try and streamline it. What's wrong with that view? Nothing really, except for the fact that most data collection PROCESSES lack both the strength and sophistication that are key in a good benchmarking program. So what we end up doing, in essence, is automating a pretty crappy process.

For example, the internet now allows us to collect data online. Big Whup!!! If that's all that you expect of your technology, than you've got bigger problems with your process. Data collection is the foundation of your whole benchmarking program. Many things are (or at least should be) accomplished in the data collection process. Putting data on a survey is only one of them.

Distributed data entry, error checking, aggregation, internal vetting, boundary testing (against specific definitions), external validation, and range checking, are among the many other functions performed at this stage in the process. If the OUTCOME of data collection is QUALITY information, collected with the LEAST PAIN, in the FASTEST CYCLE TIME possible- then simply automating your old excel spreadsheets has done nothing but administer your current process via the internet. It's just another route to the same old destination. Nothing more.

Technology today, allows us to do SO MUCH more. Good benchmarking applications will address ALL of the components of your data gathering process, automate many of them, and turn your process into something that is better, faster, cheaper and less painful than your existing one. That's the true test for any benchmarking technology.

2. Results Presentation- This one is very connected with data collection. If your technology addresses all of the major aspects of data gathering, then you should only be one or two quick steps away from seeing your results. So why does your facilitator need weeks or months to deliver your results?

a)- because your facilitator's technology didn't likely deal with data collection the way it could, or should have. Validation didn't occur at the point of entry, did it? Data still had to go to the facilitator for aggregation, didn't it? Some definitions were misinterpreted, weren't they? All of this adds layers of cycle time to your process. The fact that your data was transferred over the internet bought you nothing in terms of being able to use it any better or faster that you would have before.

and b), because your facilitator ONLY focused on the data collection process to begin with. Today's technologies allow for your data to become instantly part of a relational database that can be easily queried and manipulated. More importantly, the internet allows for that querying to be done in a distributed manner. Which brings me to the main benefit in the reporting process- CUSTOMIZATION!

So, here we have two more requirements for a good benchmarking technology. ON DEMAND reporting (i.e.- instantly upon data submittal), and CUSTOMIZATION (i.e.- you define the form and function of how you view the results). Suddenly, on demand filtering of the peer group, "what if " and scenario testing, and many other possibilities begin to emerge. Does your benchmarking software do that?

3. Best Practice Sharing- This is one of the big gaps in today's benchmarking technologies. The tragedy of this one however, is that it is not simply an oversight. IT'S DELIBERATE. That's right. Benchmarking facilitators make their money by being the information broker, a service that was necessary 10 years ago. But today, they avoid these technologies because it moves them out of the loop, or at minimum changes their role. And change is not a nice word to these types of folks. Turf protection, protecting their job through retirement, etc.. become the real motivators. And who pays for that? YOU DO. The technology exists to make learning and best practice sharing a CONTINUOUS part of our day to day jobs, not a once a year event that puts your benchmarking process at the mercy of when he or she wants to call a conference.

Don't get me wrong, conferences are fun, especially when combined with little boondoggles like baseball games and trips to the big city. But when they are used to disguise the obstructionist role of data broker is when I call foul. A good facilitator will provide the technology to facilitate on demand peer to peer sharing and surveying. If they don't, you're better off finding a new source for your benchmarking information.

As you can tell, this is a subject that I feel strongly about. When I see technology that is avoided because an individual or organization wants to slow down or limit change, it infuriates me. I see it too much, and its about time it changed. I encourage all of you to exert all the pressure you can to get your providers to use your fees, or collective effort , to FULLY employ these technologies instead of using YOUR resources to protect their little patch of turf. Sure, it will create less dependency on them for benchmarking, but if they play their cards right, it will result in a stronger relationship bond and a higher degree of business trust and integrity.

-b

PS- Here's a tip. Want a better better benchmarking technology? -One that actually saves time, money, and employee frustration, while dramatically improving the quality and usefullness if information?

Visit http://www.benchmarkcommunities.com for a powerful solution that will help your benchmarking program serve you better!

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

"Grinding" Your Way to Success

2005-06-07T19:27:00.000-04:00

Earlier today, I spoke with a colleague who has been wrestling with a group of internal customers who seem to be in a perpetual state of "resisting change".

You know those types... the kind of people who defy the most logical solutions and what appear to us to be the most obvious of necessary process or organizational changes. Oh, those endless conversations about the most granular of insignificant details.Walking away and wondering if my organization will ever "get it". To add insult to injury, those days are often accompanied by conversations with others who appear to have found that holy grail. The grass always does always appear a lot "greener on the other side".

But today, my friend was given some very valuable (perhaps career saving) advice. As he wrestled with this dilemma, one of his partners shared a good analogy. He pointed to, of all sports- golf, where its not uncommon for a player to do everything "right" and just not have the "breaks" fall his way. While this has happened to almost every golfer I know, what's even more amazing is how often this happens to professional tour players. When you have some time, take a look at the tour results- wins, top finishes, earnings, and player statistics. What you'll find is that while there are 2 or 3 people every year that appear to perform flawlessly week in and week out, they are still few and far between. Most players practice hours on end, only to win one or two events in a particular year. Even the "top guns" go many strokes in between what they would call a perfect shot. Few, if any, ever claim to have a perfect round.

No, golf is a game of "grinding". Hundreds, if not thousands of shots waiting for that perfect swing. And boy does it feel good when it happens. Golf is a game of doing the "right things" over and over again, even when inspiration and motivation are lacking. Good players know that strength is gained in the "grind", and it is the process of "grinding" through the misery that ironically produces the best shots.

Changing corporate culture is much the same way. While you will spend hours and hours doing the "right things", most of the time, it won't feel like you've gained anything. You'll question yourself, your employees, your leadership, and your culture. Until one day, you'll hit that perfect shot. Someone in a meeting will utter something that will let you know the culture has begun to shift. Just like the well struck golf ball after months of "grinding it out".

To my friend and colleague, I say great advice. Hang in there and keep "grinding". Cultures take a long time to change, but there is nothing sweeter than seeing it occur in action, which makes the long "grinding" phases well worth the wait.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

Finding the "Metrics that Matter"

2005-06-06T13:11:00.000-04:00

A few weeks back, I had an opportunity to view some of the emerging performance management tools in the marketplace, and in particular, where they saw themselves headed. That experience caused me to reflect a little bit on these "new" performance management tools, and what really differentiates them as "best of breed".

There are literally tons of related tools and systems out there, many of which have historically evolved as part of an Enterprise Reporting System. More often than not, these tools were largely driven by the financial part of the organization, and hence were built upon a financial reporting foundation. That, in and of itself is not so bad, but all too often these systems left gaping holes in the areas most important to operations and line management.

Enter the new breed of performance management systems.

The tools in this class of PM systems (PerformanceSoft, Cyndrus ADS, and PilotWorks for example) have gone well beyond the financial reporting game, and have really delivered a far more powerful and universal solution- one that supports the entire organization's performance reporting needs. It is not my intent here to endorse one or the other (although I have my opinions), but rather point to some distinguishing characteristics that make these tools unique, beyond simply their "universal" application.

The, first and most important of these features is found in the tools' foundation itself -the Performance Management Architecture. Most of these systems require management to start with their strategic plan, and align around it. The plan, and its corresponding objectives form the basis for everything else that follows. Everything else "cascades" from it, and is linked directly to it. Nothing is measured or tracked unless it has a direct feed to one or more of the organization's top objectives.

The second distinguishing characteristic is what I call the "connectedness" of the system. Some might refer to this as "drill down" capability. In essence, what this means is that the user can, at any point in the system, probe deeper into what is driving a particular strength or weakness of a performance indicator or measure. For example, they can define what comprises a particular metric, what inputs are most responsible for current performance, which initiatives are being deployed to strengthen it, and how those initiatives are progressing. Each of these "levels" can be accessed through any of the others, producing a rich tapestry of "connected" information in terms of performance drivers and inputs. This puts the executive in a great position to lead, being able to "virtually" move up, down, and across the organization on demand...enabling her to really understand and manage the most critical of performance drivers.

The third differentiating feature of these systems is the flexibility and adaptability each of them possess. There are two aspects to this flexibility. One relates to how the data is fed into the system. In most ERP environments, the data feeds are "hard wired" , and often require programming to make any significant changes to those inputs. With these new performance management systems, however, inputs can be easily added, deleted, or manipulated directly from an administrative panel, often without a significant amount of external programming. With the advent of "web services" and other data publishing protocols, these features will become increasingly important to system administrators and users.

The other aspect of flexibility relates to the level at which the organization can deploy the technology. Not every organization has the appetite for "complete" drilldown capability, nor is it really necessary. For one organization, getting down to an individual turbine blade on a particular aircraft might be important to one of its strategic objectives, whereas another organization is comfortable just reporting at the level of regional operating budget. In each case, the system is flexible enough to be deployed at whatever level makes sense today, but adapted as internal needs and/or process changes arise.

Taken together, these features- the strategic architecture, the connectedness of these systems, and their flexibility and adaptability- help create an environment in which the organization focuses on doing the "right things right". Every initiative, project, and metric are PUT TO THE TEST of whether they support the overarching objectives of the business. And with that level of focus, the organization can achieve levels of alignment never before thought possible.

So as you look at your internal metrics and performance indicators, ask yourself do you really have in place the "METRICS THAT MATTER". Implementation of systems like these can really instill the discipline needed to realign and sustain your performance improvement initiatives, often at far lower costs that their ERP counterparts. If nothing more, take a good hard look at how these systems work. Even if you don't purchase or implement, the evaluation process will give you a much needed perspective into where your performance management process should, and could be headed.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

How Well Do You Know Your Customer(s) ?

2005-05-30T18:42:00.000-04:00

Welcome back to the grind. I hope all of you had a nice Memorial Day weekend. Weekends like this do wonders for "recharging the old battery" and reconnecting with family and friends. And if you're anything like me, weekends like this are also good for doing a little introspection on how the first half of the year went (ok, we're not quite at the halfway point, but we're close enough)...the challenges we faced, how we dealt with them, and a staging of priorities for the balance of the year.

It's in that spirit that I thought I'd spend a little time on an issue that I know many of you have been wrestling with recently. Many of you have shared some rather challenging experiences in defining and executing your role organizationally as "service provider". Not that we all don't understand the role of a service provider, but in the context of endless restructurings and reorganizations, many of you have had to deal with redefining your relationships, both with your executive leadership, and the line organizations which many of you are responsible for supporting. And while this has been an age old problem, it seems achieving that balance is getting trickier than ever.

Many performance management organizations report administratively to a "staff executive" (HR, Finance, Strategic Planning, are among the most common). But while these executives may serve as our primary customer, we cannot effectively do our jobs unless we win the support "line management". In the end, these are our real customers. And while its easy to get caught up in the daily grind of producing Board Reports, Executive Committee Briefings, and Corporate Performance Reviews, we must not lose sight of who the real beneficiaries of our services are. They are the real connection between what we do and the ultimate shareholder value that gets produced.

So as you think about your own YTD "report card" for 2005, here are a few things to consider:

1. What kind of relationship have you established with your internal customers? Is it one of cooperation and partnering, or is it more of the "corporate watchdog"? One of the biggest pitfalls I see performance managers fall into is misinterpreting the charter and authority they are entrusted with. Often, performance managers will look to their staff executives to reinforce the plans they've put into place. What do you do if the line organizations won't ""play ball? Be careful of falling into this trap. Before you look for more "backing" from your boss, try to inventory your relationship with the line organizations. Sometimes, the solution lies simply in how you VIEW the relationship. Do you see them as working for you, or do you exist to serve them? Simple but big distinction.

2. Are you a provider of "projects" or do you strive to "enable" your customers with the requisite tools and capabilities? I know many of you spend a LOT of time producing reports, presenting them, and gleaning insights FOR your customers. That's OK, but that, in and of itself won't produce actionable value. In fact, I would argue in favor of producing fewer deliverables, and a heck of a lot more emphasis on coaching and teaming with them on what these reports mean for their bottom line.

3. Key to being able to deliver on #2, is a clear understanding of what keeps your customer awake at night. What drives her success? What is the biggest driver of his P&L? What factors most impact their career/ personal success? If you don't know, ask. If you can position your initiatives in this context, you'll instantly produce a lot more buy in and alignment. Sometimes, its just a matter of reprioritizing what you do first, in the context of what will most impact their success.

4. How do you evaluate YOUR success? I've talked to some really good performance managers who view their ultimate success as getting a PM PROCESS in place, rather than a long checklist of completed projects. One performance manager once told me that his success would be having such a good process in place, that he would ultimately work himself out of a job. Scary for most of us, until we look at the value that gets created, both organizationally, and with you personally. Trust me, if you create that much value, and God forbid your organization doesn't value it, there will be many organizations waiting for a shot at hiring you.

5. Have you spent a day in your "customer's shoes" lately ? When was the last time you got out of the corporate HQ and really saw "first hand" the activities you are responsible for measuring? I'm not only talking about the "young gun" MBA types, but many of us who have spent a little too much too much time on the office.

A client once told me that the best test to find out whether you know your customer, is the degree to which you can name his/her customers and their needs (i.e. one level removed).
How well do you know your customer's customers???

6. How often do you ask "SO WHAT"? Take your last report or presentation, go to your conclusion page and ask, from your customer's standpoint- "SO WHAT?" If you get stuck on that one, its back to the drawing board, because that's what the ops folks are asking every time you put something new in front of them.

Of course, there are many questions like these that will help you reconnect with your internal customers. But my real purpose in posing some of the above questions to us is to get us back (I say back, because if your worth your salt as a performance management professional, I know many of us get this intellectually, and have practiced it in the past) in the mindset of your customers. We all know what makes our boss tick. But remember your boss (CEO, CFO, VP Planning) are not going to get your recommendations and ideas implemented.

So as you wrap up this holiday weekend, do some good introspection on your internal customers and THEIR business. It'll make tons of difference in how the rest of the year goes.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

The Neverending List of "Buts"...

2005-05-26T22:04:00.000-04:00

The "Buts" of Performance Management. This is one of my better puns. I know, that doesn't say much for my other's, yet I still think it's pretty good. So I'll stick with it at the risk of frustrating my readers for the next few minutes. Please bear with me.

One of the biggest challenges performance management professionals face is the neverending excuses that they hear from their internal clients. You've all heard them, "That's interesting, ...BUT we don't track that information, ...BUT that doesn't apply to us,...BUT we're too different,...BUT our culture just isn't ready for something that radical, BUT... You get the picture.

About once a month, I'm asked by a client of mine who is being bombarded with these kind of BUT's (or is that spelled with 2 "T's"?- sorry I couldn't resist!) how they should respond. So I figured now would be a good time to begin addressing this little dilemma, not by reacting to these "concerns" individually (perhaps I'll do a series of columns on each concern at a later date), but rather by addressing what I believe is the root cause of most all of these concerns.

And that is that people inherently do not like change. It's one of the oldest but persistent cancers in today's business environment. Given the magnitude of change that has occurred, particularly over the last decade, it's quite amazing how prevalent these arguments still are. But the fact is, people still resist change at every turn. Change goes against our most fundamental human desire to put "order" around "chaos". And for many, "change" = "chaos".

Tom Peters wrote a book in the late '80's called "Thriving on Chaos". It was one of my all time favorite books, right up there in my personal top 10. Ironically, in that book, Tom was actually not advocating companies learn to live with chaos at all, but rather to view this apparent chaos in a different light. Successful companies, he concluded, were companies that learned to live in a perpetual state of change. To embrace it, not fight it. It is a principle that I believe crosses over into every aspect of business and life.

In fact, some of the most centered and serene people I know are those people who live with more change on a day to day basis that most of us could ever imagine living with. People who dealt with long term illnesses, death of young children, or countless other personal tragedies that would spiral many of us into the ultimate crisis state. But many of these people who have learned to deal with change effectively see these events as part of life's plan. Some even view them as opportunities for personal growth. What we see as pain, they see as one of life's major turning points. Maybe you've never seen one of these people in in action, but I have. When you see it, its not only one of the most beautiful things you'll ever experience, but it will often put your own set of life changes into perspective instantly. Sorry to digress, but I think that little detour will be helpful in driving home the point.

Sometimes, it just comes down to a "glass half full" interpretation of things. For example, if your asked a question that involves collecting some performance data, and you don't have it readily available, you have two courses of action. One, you could rationalize that its just too damned difficult to get and your not interested in getting it....so why not fight it. Essentially you're saying, "that'd be interesting, BUT we don't track that data, so we can't go forward with this ". The other interpretation is "That'd be interesting, and while we don't track that data now, maybe that should be telling us something! Maybe we should start tracking it!". In fact, I've worked with many companies in which the PROCESS of gathering performance data they didn't already track, actually created more insight than the purpose for which the data was ultimately needed. You see, with the latter interpretation, you get a 2-fer. You get value from the result, but you also get value (often MORE value) from the process of getting to the result.

Since most of you are on the receiving end of the "buts" (jeez, this is really getting bad), its not only a matter of changing your perspective, its also a matter of changing the perspective of your client's. And while it may often appear to be a unattainable goal or un-winnable battle, it's your persistence that will make the difference. Many performance managers will avoid such conflicts and accept a much slower pace of change than would otherwise be possible. But having gone down both paths, I've found that going 'against the current' more often than going with it, while almost always generating significant pain, will win you the culture you ultimately desire. In these cases, YOU are the catalyst for change. And in most cases, the culture will follow. Maybe not tomorrow, or next week, but it will follow.

One last thought on "buts" (last pun, I promise). I once received a very sage piece of advice, when a colleague suggested that every time I was inclined to say "BUT", to replace it with the word AND. I wont go into all of his logic here, but I guarantee you, if you do this for a week of so, it will change your outlook significantly. I encourage you to use that little trick, as it can be rather infectious on both your staff and that of your internal customers

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

Challenge your "Kneejerk Reactions"

2005-05-25T09:55:00.000-04:00

Every now and then, you'll get a reading on a key metric that is just too good to be true, or too bad to be real. When you do, its time to do some challenging of that data before you draw conclusions and "run with it". Most often you'll find something that created the anomaly. Even if your initial impressions were if fact accurate, what's the harm of being a few days off on the reporting timetable in the interest of data integrity? In the end, a small price to pay.

We're all taught in school to double check our work. Remember reverse engineering your math and see if you get the same answer? Remember how many times you caught that stupid mistake? Remember checking and rechecking that spreadsheet just because something didn't feel quite right? Remember how good it felt when the world finally made sense?

For every error we catch because something didn't feel quite right, there are those errors that are not caught because we're not looking for them. Remember the last time you accidentally bumped into that spreadsheet error "by accident" 5 minutes before that key presentation? Not quite as good a feeling?

So what makes us so diligent at validating our work on some data but "cutting corners" on others? One reason is that it's human nature to have hypotheses about the performance of our business. Assumptions about what certain initiatives should produce. And when they do, it's human nature to accept it and move on. Think about that IT manager that completes an enterprise system implementation, and sees immediate results in efficiency. It's only normal to accept it quickly as truth, and move on. We all have a burning desire to be right, even if the data is just a little too good to be true.

A good friend of mine is an equity trader who trades on technical signals and observations (i.e. he works purely off of chart breakouts and breakdowns). I find it fascinating how he is able to keep such a level head, no matter how good or bad a day he appears to have. You see, most investors measure their success on a "mark to market" basis- essentially judging their success on the increase or decrease in the value of their portfolio at each market close. Most traders are either really enthusiatic, really disgusted, or neutral at the end of each day. However, my friend has an uncanny ability to always stay neutral. He knows that if he has a 10% gain in his mark to market numbers, it is likely an anomaly. He knows the data and performance patterns so well, that if and when such a condition occurs, he knows that there is something well beyond his trading savvy that has likely driven it. His first order of business is to make sure his calculations and assumptions are correct- that the extraordinary gain or loss did in fact occur. If so, he accepts the windfall or extraordinary loss, knowing that the anlomoly will likely be corrected in the future by an offsetting experience that will bring his portfolio back to reality. Of course, there may be times where he has changed something in his methodology that has yielded the improvement. But its only after challenging his initial data and initial impressions that he will ever draw that kind of conclusion.

So my message for today is to avoid "kneejerk" reactions to performance data, even if, on the surface, it appears easily explainable. Validate it, challenge it, and stress test your observations. You'll build a stronger reputation of data integrity, and your successes and "wins" will no doubt be sweeter.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

The Role of Independence in Performance Management

2005-05-24T10:24:00.000-04:00

Most of us Performance Managers have varied and colorful backgrounds as far as our careers go. Let's face it, Performance Management is not exactly something you study in college, at least not yet. Perhaps one day that will change, but for now we're all stuck with our pasts.

For me, that past involves more than a few roles in the auditing profession as an Operational Auditor. It's where I first learned the skills of organizational assessment, process control, and performance measurement, among others. As an internal auditor, there are three basic tracks you can take- Financial (the basic accounting related auditing), EDP (Data Processing and IT related Auditing), and Operational Auditing (basically a mix of the other two, plus a healthy dose of work in organizational efficiency and effectiveness ). I personally chose the latter, and in retrospect, found it to be an excellent training ground for a career in Performance Management (although, I must admit that I'm more than a little biased) .

Nevertheless (all bias aside), I feel very strongly and favorable about the Auditing Profession, particularly Operational Auditing, in terms of its ability to teach its practitioners some of the most valuable lessons in business assessment and performance management. And I believe it is these skills that prepared me well for a career in performance management. That, combined with a great mentor, Glenn Sumners (The quintessential Internal Auditing Icon/ Guru, for those of you who do do not know him) who not only taught me the essential skills and building blocks I would later need, but also guided me through my early years as an operational auditor.

While I owe most of my early career success to all of Glenn's teachings and advice, it was a very specific principle of auditing that I am most grateful to have had drilled into my head at an early age. And that is the principle of INDEPENDENCE and OBJECTIVITY. For those of you who have served in auditing roles, internal or external, you know that this is THE most important part of auditing. Without it, you become PART OF operating management itself, and lose your ability to make the kind of unbiased assessments that good auditing depends on. It is common believe among many in the auditing profession, that many of the corporate disasters (Enron, Worldcom, AIG, etc) in recent years can be linked, in part, to a breakdown in objectivity, and the inability of internal and external auditors to act independent of operating management. Clearly, not all of these corporate scandals were the auditor's doings, but most would agree that it was a lack of good auditing (not enough of it... and not independent enough) that helped enable and precipitate the "meltdowns" that ensued.

No doubt, independence is a tough attribute to hone, both externally (where audit fees and long term contracts hinge on management relationships), and internally (where more than a little of your career success depends upon an administrative reporting relationship to corporate management). Independence is perhaps the hardest thing for an auditor to achieve, while at the same time being the most important attribute of success. The ultimate paradox.

So what does this all mean to Performance Managers?

The performance management discipline is very much like the auditing profession in many respects. While it may not be as compliance focused as Financial or EDP Auditing, it's similarity to operational auditing is quite significant. As performance managers, we often work for executive management, but live in the reality of having operational management as some of our most important internal customers. We often wear two hats much like the auditor does. We measure and report as independently as we can, but we all draw our pay check from the same coffers. Quite a balancing act, to say the least.

As performance managers we must strive for the same level of independence and objectivity as the auditor does. And for answers on how to achieve that, all we need to do is look closely at the auditing profession. Do our internal reporting relationships support us being objective and independent of the processes we measure and evaluate? Does the level and stature of our PM executive command the organizational respect of the Board and Executive management ? Is our PM charter and mission built on the principle of objectivity ? Do we undertake projects (like benchmarking, for example) "on the fly" through our internal staff, or do we use an unbiased third party who will view the information and comparisons as neutral and objective ? Are we trained to tell it like it is, or do we conform our measures and recommendations to win the support of our internal customers ?

I am not suggesting that we become auditors, or transform ourselves into compliance officers. But there is a big benefit to embracing the their principles of independence and objectivity. These skills can be a very powerful addition to your toolbox, if you use them effectively. Over time, your value to the organization will increase in the eyes of your board and executive management...and yes, ultimately those internal customers as well!

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGI’s product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGI’s services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

Accountability for the LONG HAUL

2005-05-23T10:44:00.000-04:00

Not too long ago, companies swore by their long range business plans. 2 year, 3 year, 5 year, ...heck, I even remember one client with a 10 YEAR plan, complete with 10 year performance targets! Long range plans and targets were the norm. And our executives were put in place to manage these plans. And MANAGE they did. Many viewed themselves appropriately as CARETAKERS or custodians of the business plans during their time at the helm- their primary job being to avoid disaster and keep things moving along.

So what makes made these leaders operate like this? And why do many still operate like this? What makes a good "leader" turn into a "maintainer" of the status quo? I have a little theory, and it goes right back to how we set up and execute our our performance management system. My theory is that there are three fundamental flaws inherent in most PM frameworks today. They are as follows:

1. Our planning horizons are way too long. Few individuals (actually, I can't think of one!) have the ability to "crystal ball" accurately into the future. I've talked to many a sales executive who tell me that their long run sales forecast is, at best, "a finger in the wind guess". Two things bother me about this. First, these kind of projections directly drive the forecasts these companies give to individual and corporate investors (a very scary thought if you base any of your stock purchases on little things like PE and growth ratios!) Second, God help the poor soul that inherits that "finger in the wind" projection in year 3 of a 5 year plan. Planning horizons that are too long term, by definition, create very shake foundations on which to build future success.

2. Within these "long term plans", our managers remain "SHORT TERM ACCOUNTABLE". I've often wondered what kind of performance we'd have if our executives remained vested in the performance of a business unit, once they've moved on to bigger and better things. Why don't our PM systems give some level of weighting to the later stages of their business plan, say years 2-5, once they've departed ? It's interesting to wonder how many plans fail because they are built on bad foundations- foundations that never become visible because a) the executive that built it is long gone, and b) there exists a very convenient fall guy whose bad luck has left him holding the bag. Something to think about.

3. Finally, many of these executives have already achieved financial success. (note I stopped short of just using the word success, which would imply overall success) Yet we still try and motivate these executives with money. OK- I'm not being that naive. I know executives will always aspire to more money. But I would argue that an executive who has banked millions will be a lot more likely to take big (and often bad) risks, than those who have not, even if there's a pile of cash awaiting him when he wins. These kind of executives have little to lose and a LOT to gain. Far better to find rewards that go well beyond financial success. Find those attributes that make a Phil Mickelson or Tiger Woods still compete even though they've achieved well beyond any reasonable definition of financial independence. Remember, some of the greatest executives in history have turned companies around without asking for a penny of salary during the turnaround. Remember Chrysler? Where are those executives today?

Also...and this may go without saying...you must have very solid risk controls in place at this level. At lower levels of the organization, money can be as good of a motivator as it can be a deterrent of risk (i.e. make the wrong bet and lose your job). As wealth builds, however, the "money governor" begins to lose its steam. Organizations must turn to controls to govern decision making and other related executive behavior.

There you have it...my little three part theory on why its difficult to achieve sustainable performance against long run business plans.

The optimal solution to the problem (my opinion only) is to stop fooling yourself into target setting more than 12 to 24 months out. That would solve 90% of the problem. Of course, I don't mean stop "visioning". But I do think we should stop guessing at longer range targets, and fooling ourselves into thinking that we can effectively manage them successfully given the almost certain changes you'll experience in personnel and business dynamics.

But if you must have long run targets, give some serious thought to points 2 and 3. They can be useful tools for managing the long haul.

-b

Overcoming the Elitism of Performance Management

2005-05-20T11:25:00.000-04:00

We've all seen it before. Companies who are just a little "too good" for the rest of us. Every industry has them. The best of the best. The elite of the elite. Companies who are so darn good (or at least they think they are) that they believe they have little if anything to learn from other organizations in the peer class.

For the past 20 years, I been involved in all aspects of performance management, from simple performance measurement and reporting, to the formation of benchmarking and other peer to peer learning consortiums. I can tell you, from experience, that in all the work we've done, we have yet to see a company excel in EVERY aspect of performance. In fact, on average, these self proclaimed "elite organizations" tend to fair no better than the overall average on actual performance efficiency and effectiveness. And after all these years, that average still hovers between 25 and 35%. That is, companies tend to "lead the pack" in, at most, 35% of the functions they perform. That leaves at least 65% of the business where they LAG the average- well shy of what most of us would define as an "elite class". And for that reason, these companies remain (to coin a phrase from Clint- the famous actor turned politician) "legend in their own mind".

While it may appear to be, it is not my purpose to publicly 'dis' these organizations. If it were, we'd be naming names and sharing some of the real comedy that these companies produce for the rest of us in the performance management arena. Trust me, these companies know who they are, and so do you. My purpose here is to lay out the facts. And in the performance management realm, those facts say that there is no such thing as an "elite class". Most every organization has more to learn than they have to contribute to the best practice treasure chest. And embracing that little fact can be the difference in whether you end up with a culture of learning, or a culture of ungrounded elitism.

So as you traverse the course of your performance management program, beware of the tendency to proclaim yourself a member of that elite class. Doing so will most certainly slow the degree of learning you are trying to foster in your business.

To the contrary, maintaining a healthy level of what I call "organizational humility" is a far more powerful ingredient to long term performance success. Without it, some of the most toxic ingredients such as the "NIH" (not invented here), and WSD (we're so different) syndromes are allowed to thrive. And when this happens, any semblance of a learning culture that exists is most certainly put in jeopardy.

So in the words of Roy McAvoy (the Kevin Costner character in the movie Tin Cup) as he took the tee in the final round of the US Open- BE HUMBLE! Your peers may be less impressed (assuming they ever really were), but you'll be the silent winner in building a long run culture of learning and innovation.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

Catalysts for Change

2005-05-19T08:46:00.000-04:00

As everyone knows from Chemistry 101, a catalyst is an chemical agent whose primary role is to initiate and accelerate a reaction among the other agents in a particular process. In simple terms, it is the one chemical agent that starts the "launch sequence".

Just as certain agents are catalysts for chemical processes, performance data can be just as effective in catalyzing organizational change and performance improvement. While much of the data we collect is aimed at monitoring and controlling our day to day processes (i.e.- compliance within control limits), there are other data that have a much bigger purpose. When we benchmark ourselves, for example, one simple data "gap" between you and other organizations (assuming the data is reliable and trustworthy) can initiate a process of exploration, best practice implementation, and major organizational change. All that from one very simple but insightful comparison.

Sometimes we get so caught up in using our data for management controls and day to day reporting that we dismiss much of the data that could be very valuable in our organizational change efforts. For example, performance gaps that may appear on the surface to be outliers- big gaps that we shrug off as being bad data, or rationalize as coming from a company too different to be relevant to us. But with a little work and exploration, many of these "outliers" can serve as catalysts for MAJOR leaps in performance.

I once co-facilitated a data validation workshop for a consortium of companies who annually benchmarked their performance vis a vis each other. The purpose of the workshop was to create a "challenge environment" where participants could openly challenge their peers on such things as definitional compliance and reporting consistency. During the meeting, someone pointed out what appeared to be an anomaly- a company who failed to report maintenance cost on a certain type of electrical breaker. When challenged, the respondent replied, "well, for that particular type of breaker, you're right, we did not report any cost..." Before he could finish his explanation, the challenger blurted out a big "AH HA!", which was followed by a wave of frustrated grunts from the audience similar to what you'd see in British Parliament sessions when dissension occurs. After the noise subsided, however, the respondent said softly, "that's because we have found that this particular type of breaker is much cheaper to let fail and replace, then engage in a continuous maintenance cycle. There was little reliability or safety risk associated with the failure of the breaker, and the failure rate was so low, that we eventually decided to seriously scale back our planned maintenance on that piece of equipment...and that saved us a ton of money, with little if any drop in service level or quality."

WOW- now that was an AH HA moment of biblical proportions. Talk about a catalyst. A year later many of the organizations had made changes to their maintenance cycle, most of which had resulted in serious cost reduction. All from what appeared to be one erroneous piece of data.

Are you looking at your performance data simply as a component to your management reports, or as potential catalysts for change? As you go forward, try and remember that the real value of performance information is usually deeply hidden, and its your job as performance managers to uncover that hidden value and to leverage it to the greatest extent possible.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

A Flash in the Pan Culture- No More!

2005-05-18T10:46:00.000-04:00

One of the most common questions I get from clients is how to best create "buy in" from the organization for their performance management initiatives. This question pops up frequently, as performance managers struggle to collect and report performance information, and then get the organization to actually follow through on best practice implementation and other improvement recommendations. The problem is not new, yet many are still searching for the magical answer.

Truth is, there's probably not one magical answer. Organizational cultures are built over time, and are the result of a lot of pieces and parts working together well. Nevertheless, there are some common characteristics that exist within organizations that have achieved the type of of buy in and alignment necessary in building that kind of culture. One of those characteristics (and the most important in my opinion) is the ability of the organization to free itself from what I call an "initiative driven", or "flash in the pan" culture. That is, a culture where management and workers are in a constant state of having something DONE TO THEM, rather than encouraging and enabling them to take ownership for their own performance improvement.

Let's face it- we are largely a codependant workforce. We surround ourselves with consultants for everything from restructuring initiatives to the hands-on management of the company itself. This has created many problems, the most significant being that the organization loses the ability to "own" the results of their actions. I've actually had executives acknowledge using consultants and temporary workforces so that "there is someone else to blame when things go south".

Most organizations used to claim they did a major restructuring every 7 years. Now, many of the same organizations (including large consulting firms, ironically!) go through an organizational shakeup every year or two. Benchmarking programs run on an annual cycle and tend to be big distractions for the workforce as these initiatives peak. Couple that with process redesign, quality, and six sigma initiatives, and what you've got is an organization in a perpetual state of working for the consultants and internal PM staff. Kind of backwards, wouldn't you say?

We need to get to a place where these programs are no longer viewed as "initiatives". A place where things like benchmarking and process improvement are woven into the fabric of day-to- day management. A world in which managers have PM tools on their desktop so that they can drive their own conclusions, rather than being spoonfed via consultant reports and presentations.

Several years ago, I led a very interesting engagement where we (the consultant) spent our time setting up profit centers throughout the enterprise. Basically, we created these small workgroups organized around business lines and service areas, each of whom was given their own P&L. Rather than redesigning their processes for them, benchmarking them, or reorganizing them, we placed all of our attention on changing the philosophy of the business model and the incentive structure. We basically incented them to think like owners, and once they did, all of the other things just fell into place. What was once done TO THEM, was now done BY THEM. A new culture was born, one which had fewer initiatives, special projects, and task forces. Fewer distractions, better alignment, and a highly innovative and productive culture.

What are you doing to rid your organization of "flash in the pan initiatives", and the dependency that goes with it? Start doing less TO THE ORGANIZATION, and more FOR THE ORGANIZATION. Enable management rather than spoonfeed. A more aligned and motivated culture will follow.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

Online Technologies, and Implications for Performance Management

2005-05-17T08:02:00.000-04:00

Over the past decade, nothing has been more revolutionary to business than the advances made in online technology and the internet. Businesses use the internet for everything- from online transactions and e-commerce, to management of inventory and supply chain. So it is only fitting that we explore the implications of this technology on the discipline of performance management. In particular, it's interesting to look at how online technology initially supported performance managers, how it has evolved, and how we can best harness the power of its future advances.

During the mid '90's, most of us can remember conversations with those "far out" colleagues, telling us what this " internet thing" was going to do for the world. Most of us scoffed at the idea of the internet being as "life changing" as these prognosticators were forecasting. Even if we embraced some of their far out thinking, we all had some reservations with respect to its short term impact and relevance. It was a cool technology that would have it's place in business, but would it really be as life changing as they were saying? Truth is, most of us were dead wrong. I won't waste any time convincing you of this, since most you are reading this column online or in your email application. Better we focus our time on what it all means for the discipline of performance management.

A lot can be learned from looking at the evolution of performance management applications that have grown from these online advances. In the early days of the internet, simple email and bulletin boards made for easy and painless communication between individuals. It was also a faster and cheaper way to send information. But even in the early days (96-99 say), internet driven communication was still largely "one way at a time". In essence, we were automating our existing processes. Little work was actually removed from our processes, and few enhancements to performance quality ever materialized. It was simply a slightly easier way to do what we were currently doing.

Once the glamour, and "newness" of these tools wore off however, people really started questioning what the broader implications of these technologies were. As security protocols were improved, more and more performance managers began to trust the internet as a way to collect and pass around information. ASP models emerged, enabling server side processing of information, bringing scale to data management, thus lowering transaction and processing costs (i.e.- everyone didn't have to have their own homegrown system). "On-demand" became a key word in our vocabulary, not only for reporting and validating information, but for viewing results and analyzing trends. One way communication became two way and dynamic. Bulletin boards that once required users to post questions or comments, and later check back for answers, were quickly replaced by online discussions (chats) that occurred in real time. Online file sharing among common work groups and project teams became the norm for document exchange, outpacing the more traditional and static internal server or intranet vehicles. Desktop sharing quickly became a preferred way of presenting (live or recorded) information via tools like WebEx, Placeware, or Readytalk. The age of online COMMUNITIES was born, and what a difference that made for performance management. From data mining to performance reporting, benchmarking to best practice sharing, implementation to project management- the internet became our primary tool of choice. It's no longer a stretch to say that the internet has reshaped, and perhaps even rebirthed, the discipline of performance management as we know it.

There are many performance management tools that have truly leveraged the online technologies that are currently available. Tools like Benchmark Communities for confidential external data sharing (http://www.benchmarkcommunities.com) , Cyndrus ADS (http://www.cyndrus.com/products/ads.htm ) and Pilot Software (http://pilotsoftware.com) for internal performance reporting and analysis, and Collaboration Zones (http://www.cozones.com) for community and network communication, are all good examples of how this toolbox has evolved.

So, armed with a good understanding of how all of this evolving, where do we go from here?

First, performance managers must learn to harness the power of existing technologies to step up their value-add, and that of their organizations. Take advantage of what's already out there. These technologies not only help performance managers do things better, faster, and cheaper, but also can help the performance manager actually incorporate the PM process into the operating work groups and culture of the organization. Use these technologies as the vehicle for getting the PM process on the desktops of your executives and operating management. Become enablers of good performance management rather than an information clearinghouse.

Second, be "at the ready" as new technologies emerge. For example, the advent of "web services" provides a very smooth and easy way for information to be passed to and from performance managers via the posting of data elements to corresponding "subscribers" of that information. This technology alone will likely reshape the practice of data surveying, offering a far more efficient and secure vehicle for collecting and managing data. If you're not already familiar with web services, and what it will mean for you, its time to start exploring. Most of these technologies will not arrive on your doorstep in a nice package. Effective performance managers will stay abbrest of these developments, and work with these technologies to invent creative ways in which the technology could be applied to their business. New opportunities will be born.

Third, you'll need to think hard about how you will control the flow of information both within and outside the organization, in the presence of these technologies. This will likely be your most significant challenge. Right now, people throughout your organization are exchanging information with the outside world. That's right- operating practices, data, benchmarks, you name it. A lot of this this takes place in the spirit of organizational learning, but even more occurs for the sake of career development and personal gain. You and I both know that as information sharing and community exchange technologies become more proliferated, it will be increasingly difficult to put the "genie back into the bottle". Good performance managers will learn to live with this reality, using these technologies to create lead time advantage over their competition, rather than attempting to "dam" the free market flow of ideas and learning.

The leaps we've seen in technology will no doubt continue. They have, and will continue to offer opportunity and challenge to performance managers as they traverse their careers and continuously redefine the PM discipline within their organizations. Harnessing tomorrow's technology will be a central element in that success.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

The Importance of "Follow-Through"

2005-05-16T09:48:00.000-04:00

Sometimes, the consequence of one's performance is not near as important as the ability of the manager to consistently APPLY it across the organization.

A few weeks back, I discussed the various types of consequences (positive reinforcement, negative reinforcement, punishment, extinction), as well as some of the pros and cons of each.
Today, I want to talk a little bit about the consistent application of these consequences, and the damage that can result if we don't follow through. To some, this may be a bit obvious. But I challenge you to look around you're organization, and your life, and see how many times this principle breaks down.

Case in point- Over the weekend, I decided to confront my neighbor with a problem that has been festering for some time now. He, as well as 4 or 5 others in my neighborhood have been parking their unsightly work vehicles/ trailers either on the street, or in their driveway overhanging the sidewalk. I live in a rather old, very quiet neighborhood, with lots of 3rd and 4th generation families. I am not the only one with this problem, but I was one of the few who was actually willing to say something about it (call me a masochist). I tried everything, from talking quietly to the owners of these vehicles, to talking extensively with town officials, and even called the police and asked that they issue a warning. All of this to no avail.

Well, this weekend, we went at it again. The police came out and "negotiated" a solution which resulted in one of the individuals moving his vehicle (luckily, for us, it was the worst of the offenders). But the police officer advised us that despite the laws on the books, we needed to be a little bit more tolerant of these vehicles because of the "tenure" of the owners (translation: "they've been here a long time...so let's not rock the boat"). Say what? We have laws on the books, fines for those who don't abide by them, and a city "pride committee" who positively rewards clean up efforts. We have all the makings of a great performance management system that will drive all the right behaviors. So why doesn't it work? Because we don't enforce them!!! To the city mayor, I say- "Guess what Einstein, you're going to keep paying your officers $50-100 per call to go out and negotiate solutions hundreds of times a year, when all you've got to do is enforce the rules on a select few". No brainer? You would think so, wouldn't you?

To some of you who have parented small children (or any children and young adults for that matter), you know the importance of follow-through all too well. I, myself see the results of my past follow- through (or lack thereof) every day. It's the best testing ground for follow through you'll ever get, largely because of the speed in which you can see the results of your actions and the effect of different types of consequences on behavior.

Same for the workplace. People react to consequences, positive or negative. As I noted a few weeks ago, the type of consequence will certainly determine the type of response you get. Consequences always drive some type of behavior. But failure to apply a consequence will ALWAYS produce inaction. If you want your instructions, project plan, business plan, or any other management direction to fall on deaf ears, you need only apply your performance consequences inconsistently, or not at all.

My challenge to all of you today is to look at one area of your business, try and define the specific consequences of employee actions and behavior, and then take a hard look at whether you're applying them consistently. Document this for a week, and then look back and see where this worked , and where it breaks down. I believe you'll see pretty clearly the importance of consistency in this arena.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

The Prudence of External Data Sharing

2005-05-12T08:31:00.000-04:00

There is clearly no shortage of external requests for performance information. Requests from regulators, requests from stock analysts, requests from large customer consortium, and perhaps the most common but least understood of all requests- the requests of external peer organizations, be them friends or competitors. Some of these requests must be fulfilled, but many, such as the external peer request, are discretionary- in terms of both the response itself, as well as the manner in which you respond.

It's important to keep in mind that most of the organizations requesting information are only interested in getting information from you. Few of them are actually interested in how it affects you, the company. It's up to you to be prudent about what information you share, and how you share it.

Whenever you share information with external parties, whether it be a regulator or competitor, its important to keep in mind a few "rules of the road":

1. First, understand WHO is requesting it WHY. Is it discretionary or mandated? If discretionary, what's the ultimate purpose of the information request? What's in it for you? Admittedly, you may have little say over regulatory or analyst requests, but when it comes to sharing with other companies, it helps to know what you're going to get out of it BEFORE you share. If it doesn't support mutual learning, its probably best to pass.

2. Have clear terms governing what can and CANNOT be done with the information. Almost always, this will mean setting up a confidentiality or non-disclosure agreement between you and the requesting party. While you many never have to enforce such an agreement (it can often be very costly and time consuming to do so), it will serve as a good deterrent, and add a level of structure to the sharing. The parties are likely to take much more "care" of each other's information when an agreement like this is in place.

3. Be discriminating about what is shared, and more importantly, HOW it is shared. For example, if you're sharing information with a group of peer companies, you should insist that any information that ends up in a report is appropriately masked to protect the identities of the companies.

Sometimes a simple coding protocol will work, but I've found that in most cases "the code" is relatively easy to break, particularly if the information is to be shared with many people inside your company (i.e. those who may not be aware of, or do not have the same degree of respect for the confidentiality terms you've established).

A practice that I use (a derivative of the coding protocol, of sorts) is to only show the median of a group of companies that match a particular demographic. If they're not more than a half dozen or so companies that match the criteria, I do not show them because of the risk of detecting the identities. This way, you get the benefit of being able to maximize insights and learning without incurring the risk of full disclosure. This will also help in the regulatory environment, in which (because of discoverability laws) it may be easy for a regulator to demand the codes of other companies. If you only report in the demographic clusters I discuss above, there are no codes to reveal.

In general, you should assume that any coding system is made to be broken. My advice is to be careful in how you use them.

4. Use a third party where multiple companies are involved. This ensures that there is a layer between the data and those who may wish to use the data against you. Having a third party between you and the reporting of information (whether it's done through coding, or through the manner discussed in #3) will ensure that there is at least one more BIG hurdle that others will have to go through to get to the data. And since a third party is bound by confidentiality with MANY companies, it's virtually impossible for another organization (e.g. regulator) to mandate those data be turned over. They may have discoverability laws governing YOUR data, but they certainly do not have jurisdiction over the collective group's data, insights, conclusions, etc. Hence, it becomes harder to use the data against you. Data becomes only relevant to a regulator in the context of some type of comparison. Without that context, it's just a data point. A third party insulates that "context" via a strong and enforceable firewall, and serves as another good deterrent.

5. Understand the nature of "give for get". I know many companies who, because of the risk and fear associated with sharing, simply don't do it unless they're forced to. But when these companies need information, they don't hesitate to ask for it. Companies are getting smarter and more discriminating about their data sharing, and it's pretty safe to conclude that if you build a solid wall around your data sharing, others will do the same with you. Multicompany data sharing is a reciprocal business. Far better to share prudently, using the above risk management practices, than to opt out of the sharing game altogether.

There are many other smaller items that will help you manage the risk of data sharing. I've given you the "biggies".

If you're going to play the game, as I suggest most do, it pays to be prudent.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

That Old (Dusty) Credenza

2005-05-11T09:10:00.000-04:00

One of our past clients said something that really stuck with me, becoming more relevant as the years have gone by.

The setting is at one of our executive clients' offices. We are at a project briefing, in which one of our senior partners was presenting the findings from a recent consulting assignment in which we had diagnosed the performance of his organization.

The executive stops the conversation abruptly. Sitting at his desk, in a beautifully appointed office, this rather seasoned executive leaded back in his chair and points to this lavish mahogany credenza behind him. He injects these words, in a rather soft but sarcastic manner: "This credenza has just about every answer for how to improve my performance". As he opened the cabinet, there're these bulging shelves with report after report from consultants. We recognize many of them from their logos and report cover style. Many are ours from years past. He continues: "The last thing I need are more answers. What I need to know is how to put all this into action !"

Getting the report off the bookshelf and into action is a dilemma for many of us performance managers. We don't need someone to "borrow our watch and tell us what time it is" anymore. We know what time it is. What we need is to improve the effectiveness of our implementation, capturing and releasing the value of the plethora of findings and recommendations we've acquired over the years.

Once, I decided to do a little survey of my own. I looked at the performance of about twenty companies, each of whom were implementing most of the same business practices. If business practices were all that mattered, you would expect performance results to be similar. But not only were performance levels different, they were, in many cases, different by orders of magnitude. It wasn't the business practices, per se, that made the difference. It was the implementation that mattered. Specifically, how the business practice was implemented and integrated into the organization's core processes.

It's like implementing that fancy new voice recognition technology. Two companies can implement the technology flawlessly. But one company implements it on top of their existing legacy process, which has a very complicated and "layered" menu that doesn't exactly match today's customer inquiry patterns. The other has spent time working out its process, focused singularly on maximizing "first call resolution" performance. In fact, for them, the voice recognition is just a finishing touch on a process that , even without it, would generate significant improvement over previous performance levels. Clearly the latter would show up as a better performer despite the fact that both companies had introduced the same exact technology.

Perhaps this is an overly simplified example, but I use it to make a point. Anytime you are told about a technology or practice that is considered "leading edge", remember that it's only leading edge FOR YOU if it has a noticeable impact on YOUR performance. And for that to happen, you need to look at every practice in the context of where you are in your business processes, organizational design, and management philosophy. Give your implementation team a specific target- one that goes well beyond simply project completion. Give them a business "results" target instead. By doing this, you'll change the entire dynamic of the implementation, often getting the focus where it needs to be for the business practice to be successful.

So stop adding to that old credenza, and start harvesting the contents of what's inside. And do it with a renewed focus of what a successful implementation looks like.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

Leveling the Playing Field

2005-05-10T15:05:00.000-04:00

Part of every performance manager's repertoire involves some degree of benchmarking or outside performance comparisons. Through the years of my career in performance management, I have yet to meet many who actually look forward to this part of their job (save for a handful of you super quant jocks). Nope... for most of us, it's a necessary evil, laced with the almost certain stream of data denial and defense shields that follows just about any type of benchmark study. So what you're saying, Bob, is that we should just grin and bear it? Not quite.

Actually, there is a lot that can be done to minimize the kind of negative reactions most of you face. But you need to first understand the root of all data complaints. And that is, acknowledging that your company is, in fact, different. For example, throwing comparisons up on the wall that compares maintenance budgets of two very dissimilar companies would almost beg dissent. How big are they, versus us? What differences exist in customer base? What differences exist in the labor workforce? The list goes on, but you get the idea.

So you, as performance managers are faced with two choices:

a) Compare only against companies that look just like you? (virtually impossible unless we're cloning companies now), or,

b) come up with some kind of way to level the playing field .

And it's the latter that will improve your ability to defend your findings.

There are five things that I've found to be useful when attempting to level the playing field:

1. Make sure you definitions are clean and clear. When you ask for apples, are you asking for red apples, green apples, or both.? Are you looking for them with the skin on or off.?...you get the idea. Definitions matter A LOT!

2. At a minimum, adjust for scale. This is a fundamental requirement when looking at any performance ratios. Cost per customer, cost per million dollars of revenue, cost per employee are all good proxies for scale. Sounds simple, but you wouldn't believe how many managers still report comparisons of total budget without any regard to scale differences (A special note about scale- sometimes, there is a secondary adjustment required because scale effect is not always linear- for example, very large companies should have a lower cost per unit, all else being equal, simply because of the transaction efficiency involved. I'll expand on this in a later column.)

3. Adjust for workload, and its complexity if possible. Ok, so you've made adjustments for company size, but what if the maintenance requirements at company x are more than those of company y, because of say, regulatory requirements? Far better to adjust for the actual workload involved. For example, cost per square foot maintained might be a better indicator for a cleaning crew, than cost per customer, which may be more useful when measuring customer service functions.

If you want to add another level of rigor, try making adjustments for the complexity of work. If your company builds in hilly / rocky terrain, ask how much more difficult that is versus more average soil conditions. If you can gauge that, then a simple adjustment vis a vis the mean effort required in that particular task, can be made on the appropriate cost inputs. It may seem like a complicated and unnecessary step, but not adjusting for workload can seriously distort conclusions.

4. Adjust for key inputs, particularly those management cannot control. For example, if you are in the northeast US and you're comparing yourself against a southeastern company, you'll need to give some consideration to the embedded wage differential that exists regionally between the two, again, with all other things being equal. Same thing for cost of living, and differences in material costs. You can use things like bureau of labor statistics or CPI to help define the necessary adjustments. Like workload adjustments, this can be the difference between a decent comparison and a meaningless one.

5. Create enough diversity, so that there are a few companies that do look "a bit" like you. So let's assume you've done all your homework and you've taken into account all of the above forces and drivers. You still have skeptics, because some people are just hard to please. That's why I recommend trying (and I emphasize trying because its virtually impossible to match one for one) to find at least some companies that match your company demographics. It's always good to show comparisons with your attempts to level the playing field, but conclude with a few comparisons from your "like peers". Trust me, it will neutralize a few of the snipers out there.

So there you have it- a few items that will help you level the playing field. Remember, we're looking for indicators to help you navigate, not statistical perfection.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

More Thoughts on Performance Consistency...

2005-05-06T17:13:00.000-04:00

Here’s another quick story that reinforces the importance of performance consistency in you’re your core processes.

On my plane ride out west this week, I had the opportunity to speak with someone who trades (equities) for a living. And I mean "for a living" - not dabbling with a few trades here and there, but this is someone who uses his trading income to put food on the table. Needless to say, when he began talking his approach, my ears perked up more than a little.

One of his "golden rules" of trading is to perform consistently, within clearly established guidelines. As I talked with him, I realized how different this guy was from what most of us think of when we think of traders. The image most of us have is one of a quasi- gambler who operates amidst high pressure and continuous uncertainty. I can tell you though, this guy couldn't have been further from that stereotype.

What I saw was an individual who had a clear process. He had rules he followed regarding when to enter a position. If certain signals were not present, he didn't enter the position- period. Unlike most of us, he knew when he would exit BEFORE he entered the position. Say what? I'm not talking about just a stop/ loss should the price reverse against him. I’m talking about also having gain targets. If those targets were hit, he was out. No questions asked. If the position kept going up, it didn't bother him. He judged success not by the amount of money he made each day, but rather how well he followed his method or process.

Of course, his process was based on years of back-testing in many different types of markets, so there was a clear linkage between his process and his expected results- a linkage that I suspect had played out many times over given his level of apparent success.

But when it came to managing his trades, all that mattered was that he followed his process. He had winning trades and losing trades. Losing trades were just part of the process. He knew how to accept those and move on. His process didn’t require him to be “right” 100% of the time. It just required him to stay within his trading parameters.

I couldn’t help but seeing some big connections, and implications for the discipline of performance management that all of us would be wise to consider. Look at how much focus he placed on having a clear process, with indicators that told him whether or not he was following it. Look at how he judged success, not by any one day’s outcome, but by whether he was within his guidelines. Look at how he handled losing trades. Unless he deviated from plan, they were an expected part of the journey (kind of like an airliner on autopilot - the aircraft does not hold a precise altitude, but rather an altitude that is +/- some programmed variance to deal with normal movement and turbulence).

No doubt results are important, and you’d be foolish to follow a process too rigidly, particularly if you don’t have good linkages between the process and results. But if you’ve taken the time and built your measurement framework well, this “process control” element can be a useful enhancement to your performance management program.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

To “Meet” or “Exceed” Your Targets ? The Answer May Surprise You…

2005-05-05T16:38:00.000-04:00

We’ve all been trained to think more is always better- that exceeding expectations should be our ultimate performance goal. Tom Peters, and others like him, have made careers out of spewing anecdotes from companies who blew the lid off of their customers’ expectations. Our inclination is to “oooh and ahh” at these types of stories. We’re trained to think ‘ the more ridiculous the story’, the better the company. Well hang on there, Tom- not so fast…

I’ll admit that exceeding customer expectations is a nice thing for a company to do. And sometimes, it can pay big dividends. I’d be lying if I said that I didn’t enjoy that occasional airline or room upgrade. And when I get one, it usually makes me feel good about the company and reinforces the “buy decision”. Hell, I may even buy more from them if I feel really good about it. At the same time, however, those little upgrades can become expected, and when you don’t get them…well, let’s just say I’d rather not be the agent that has to tell you “NO”.

More often than not, management would be a far better served by placing most of their emphasis on consistency rather than “beating” the expectation or target. After all, isn’t a target something you shoot for ? If you’re firing a gun, don’t you try to hit the target ?… or do you try to shoot beyond it ? OK, maybe that’s a bad metaphor, but then again doesn’t it ring true?

Companies like McDonald’s, Southwest Airlines, and Target, among others place far more emphasis on good old fashioned performance consistency. Utopia for them is to meet expectations 100% of the time. I suspect that far less attention is given to those who exceed expectations, unless they consistently do so. And for most of these organizations, cost is part of those expectations, so you don’t see a lot of dollars going into those fancy frills or wild heroics. (Remember the FedEx employee that rented the helicopter to get a package delivered on time when the scheduled plane had been diverted due to weather?) Case in point- Jet Blue has a commercial out that talks about how excited customers get when the employee says “hello” to them, or serves them a soft drink. The theme in their ads is that they (Jet Blue) have managed to do those “little things” consistently well…you know, those things that most other airlines have forgotten about in lieu of all the other frills they’ve been focusing on during Jet Blue’s rise to stardom. Frills that Jet Blue, through this campaign has quietly but successfully labeled as useless distractions.

So as you manage performance at your company, make sure you are very clear on what the expectation should be, set your targets at those levels, and focus the majority of your efforts on consistently delivering against those expectations. Customer satisfaction and loyalty will follow.

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.

The Importance of Leading (versus lagging) Indicators

2005-05-03T19:54:00.000-04:00

Most of us who follow the economics scene are familiar with the term "leading economic indicators". These are indicators that are likely (with reasonably high probability) to correlate with future movements in the overall economy. Things like unemployment, durable goods orders, and housing starts can help economists predict future movements in GDP, for example.

The importance of leading indicators in performance management cannot be overstated. But they are only valuable if you are able to influence the outcome, or better manage risks by knowing things sooner rather than later. Perhaps a better analogy for the importance of leading indicators are the early warning signals relied upon by pilots in a modern aircraft. If an alert goes off, pilots are trained to react- first in a diagnostic manner, with further action initiated should the diagnostic validate the early indicators.

All to often businesses rely on outcome measures without much emphasis on these types of early earning signs. You can do a great job at measuring performance, but unless those measures can help you MANAGE performance, you're on your way to wasting a lot of valuable time.

Yesterday and today, I played 54 holes of golf with my 89 year old uncle, on the front end of a business trib out west. It was a rather humbling experience for me (not unlike every other time we've played), both because of his uncanny ability to make great shots, as well as my own incompetence with the golf club. Why I let this man torture me through 54 holes is probably a discussion for another day, but suffice it to say that good friendship and the game of golf, when combined, can make you do foolish things- like play 54 holes of golf when you're shooting poorly. Anyway- I digress. Back to the point.

During the 1st round, I noticed that ,despite my good performance with my driver and irons, only 25% of my greenside chips were executed well. I also noticed that I missed 13 putts inside 7 feet during our first round. From there, I pretty much concluded I was on my way to a bad round- well into 3 figures if I didn't do something different. But instead, I corrected and ended up with an embarrassing but somewhat respectable 99. But those two leading indicators gave me the foresight I needed to make big changes in my next two rounds... a focus, if you will that helped me immensely. By focusing on the leading indicators, I managed to squeak out a 92 and 86 in my subsequent 2 rounds. I still lost by 3 strokes overall, which is a subject for another day. But without the help of my leading indicators, I'm confident it would have been much worse.

So, the message for today is to not focus simply on outcomes. By the time you know the result, it may be too late!

-b

About the Author: Bob Champagne is Chairman and CEO of ePerformance Group International LLC, a privately held company specializing in performance management systems and solutions. Included in ePGIs product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions delivered in an online and on-demand environment. ePGIs services are utilized by over 50 leading edge companies across numerous industries and geographies, and are licensed by many high profile consultants committed to delivering world class PM solutions to their clients. Visit ePGI at http://www.epgintl.com or contact us directly at 973-343-2806.