"Trick or Treating" with my children provided some interesting perspective this year. In addition to the motivational power of candy, I observed an interesting discussion concerning measurement development and performance assessment. This is an area where some folks (the “grown-ups”) seem to struggle, having lost that piece of their imagination that simplifies the complexities of reality into the measurable “so whats” that really matter. This is NOT the case for children. I refer, of course, to the incident between Frankenstein and Dracula.
Along our improvised route through the pumpkin-lit streets, my older son boldly pointed out (without any provocation) that if Dracula were to fight Frankenstein, Frankenstein would win. When I asked him why, he stated (with complete confidence) that “Frankenstein is bigger than Dracula”. I couldn’t argue with that. However, my younger son immediately countered that Dracula is “too fast for Frankenstein”, and that he could “punch him a million times in a second”. I couldn’t argue with that either. My older son nodded and added “yeah, Dracula could probably beat the Wolfman, too”, and from there the discussion digressed into something about Transformers and ninjas.
The point is this – in a conversation that occurred over the span of one minute about a potential conflict between members of a pool of imaginary characters, two children designated and evaluated measurable aspects of a situation. Frankenstein is bigger than Dracula (size is the measure), but Dracula is faster than Frankenstein (speed is the measure), and in the end, speed overcomes size (while I cannot verify this conclusion with any data, I can offer confirmation that the two parties are considered to be subject matter experts). While children are afraid of monsters, not metrics, the opposite seems to be true for adults.
So why is it difficult for some (not all) business leaders to grasp the concept of measuring and assessing performance in organizations around the world? Reasons abound, including a lack of education or training, misunderstood links between financial and operational performance, poor or absent analytical support, and sometimes, maybe, the pursuit of the metrics themselves.
The need to identify and define organizational metrics should not be the goal in and of itself – performance improvement is. To support this goal, leaders must actively investigate their organizations. They must strive to better understand the key elements, variables and relationships associated with customer requirements, supplier agreements, primary and supporting processes, and more.
The good news is this: Operational Excellence (OPEX) best practices support this endeavor, the quest for the right business metrics. Supplier, Input, Process, Output, Customer (SIPOC) diagrams or detailed swim lane process maps can be used to trace and measure products and services as they flow across different value streams. Various facilitation tools can be utilized to translate the sometimes-nebulous Voice of the Customer (VOC) into specific Critical Customer Requirements. Cause and Effect (C&E) matrices and regression can be employed to understand relationships between different business components, activities, and variables. Statistical Process Control (SPC) charts can be developed to gage and predict performance over time and can also be used to assess the reasonableness of any designated targets or specifications.
While most business leaders are not engaging in combat with the denizens of the undead, many are fighting for survival. Defining and applying the right performance assessment criteria, the right metrics, allows business leaders to properly identify their foes (e.g., waste, rework, scrap, overspend, etc.), exploit their own advantages, and achieve victory.