Performance measures Initiatives – “The Next Big Thing”
By John Kittredge
Managing Partner, CEO Performance Inc.

Here’s a career-boosting opportunity for proactive, “big-picture” management accountants.

A couple of weeks ago I sat in on Jim Love’s “Lean Six Sigma” presentation to the Canadian Association of Management Consultants (CAMC). Jim is a world-class practitioner and an unusually sensitive observer. (I’m sure most seasoned management accountants would agree that, without fine-tuned observational skills, analytical talent alone won’t take you very far in support of business performance management.) In the closing Q&A segment someone asked Jim what new trends or changes, if any, he was seeing in the concerns and issues of his clients.

Checking off the usual laundry list (“tremendous competitive pressures,” “global economic risk,” “delivering customer value,” “staying out of jail” (oops, I mean “compliance”), “making astute technology investment decisions,” etc.), he said they’re pretty much still the same. “But,” he added, “I can tell you what I think “The Next Big Thing” will be - performance measurement initiatives! ” Jim had stressed effective measures and measurement as key, if not the critical, elements in lean six sigma and was now suggesting that senior management will soon co-opt the tremendous performance potential of the right metrics combined with proactive performance management.

By coincidence, I listened to Mike Mankins in a seminar the next day entitled, “Turning Great Strategy into Great Performance.” Citing a major survey of senior executives of multi-billion dollar global companies conducted jointly by The Economist and his company, Marakon Associates, he told members of the Strategic Leadership Forum (SLF) that they had examined five primary breakdowns in strategy execution and six keys to superior performance. They concluded that measures and measures management or lack thereof were vital contributors.

That pretty well covers the business performance territory, doesn’t it? In every phase from strategy to tactical action, measures are the “secret ingredient,” making things happen and facilitating performance improvement.

While I agree with Jim and Mike that measures are a paramount consideration in the management of performance, mark me down as someone who considers it a “pre-existing condition,” not tomorrow’s “The Next Big Thing.” There’s nothing new about the potential of measures in good management. It’s not a secret ingredient. It’s a forgotten item in the performance recipe! Fifty years ago, Peter Drucker discussed the need for innovative measures in “The Promise of Automation.” Thirty years ago in his classic, “Management,” he claimed, “The fourth basic element in the work of the manager is measurement. The manager creates yardsticks – and few factors are as important to the performance of the organization and of everyone in it.”

Is there really anyone out there, possibly excepting politicians the world over, who doesn’t already know that measures and measures management influence behaviour and improve performance?

How could corporate management have forgotten this obvious and vital fact so completely that, looking at their businesses, serious consultants, seeing so little evidence of it, could think that performance measures initiatives might be “The Next Big Thing?” Why hasn’t it been “The Big Thing” all along?

The answer lies in the senior managers themselves, abetted by their own short-term-focused, corporate performance systems. Under constant pressure from the marketplace, shareholders, regulators and other stakeholders, they have developed:

1. Incredibly short attention and memory spans (time is at a premium);
2. A desire for immediate gratification (short-term results are a must);
3. A need for constant stimulation (the next fad will do it);
4. A distressing credulity (the belief that a solution exists that will literally implement itself without undue management effort);
   and, perhaps most dangerously;
   
5. A compelling neophilia (love of change and a sense that, to be any good, something has to be new, different and not used by anyone else).

(Editor’s Disclaimer: There are some high achieving businesses out there and they tend to distinguish themselves from the herd with strategic management and in how they manage and commit to the basics. If you work for one of the few organizations that “have it right” and that are consistently at the top of the league tables in whatever counts as performance in your sector, then count your blessings and ensure that you learn from your environment. These are “life skills.”)

Take a look at your own organization. Is it the alpha performer, just a member of the herd or lagging at the margins waiting to be picked off? What is the character of your management team?

As a management accountant, you can and should play a leading support role in business performance management whether or not you believe performance measures initiatives are “The Next Big Thing” or “Business as Usual.” Measures management facilitation is your “rightful domain.” Be a passionate, proactive champion, not a passive, reactive specialist. You owe it to yourself and your company to elucidate and promote an understanding of your corporate performance architecture, of the current and potential role of performance measures in it and of the resultant value of an optimized alignment. (Consider framing your assessment of potential benefits in language that will reflect and constructively exploit the character and concerns of your management team. In this way, you can ensure that their interests are recognized and served, albeit in the corporate context. Whatever you do, add detail to show how it will save time, produce short- as well as long-term benefits, contains some “new thinking,” will return the effort invested, is “best practice,” etc.) The analytical and design tools are not difficult to learn and apply.

What Jim Love was referring to as a performance measurement initiative is nothing more than answering five questions (that have probably been asked since the beginning of time, let alone in the AD years (“After Drucker”)):

1. What’s important around here? (Enterprise measures)
2. How does what I’m doing (or investigating) relate to what’s important? (Performance architecture)

3. How do I know when I’m (it’s) performing well? (Cascaded measures)
4. Is there a performance gap? And even if there isn’t, what can I (it) do to perform better? (Measures monitoring and rational problem solving and decision making)
5. How can I ensure my (its) consistent on-going performance? (Performance management and execution)

The starting point is “context.” Understand the performance architecture you are in.

And the career plus?

Management requires the intelligent contribution and stewardship (not ownership) of subject matter experts, ideally the management accountant!