Utilizing Metrics for Enhanced Execution

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Business Relationship Manager - Product Lifecycle Management, Chevron Corporation

Execution, simply put, is the efficient and timely delivery of planned results.  It is always vital in business but never more than in this current economic environment.

Many an organization will “talk” the execution game but they fall far short on the “walk” side of the equation.  It’s almost as if it’s an alien concept.  I believe the primary reason is that the execution is based upon pure energy – action that is deliberate, focused and consistent.  And, unlike planning, execution does not occur in a controlled environment but instead in the real world where events are constantly susceptible to chance.

Our body executes continuously on a 24/7 basis.  It contains multiple organs and systems that comprise our bodily processes and these processes work seamlessly in unison.  However, the environment in which we exist is constantly changing and, therefore, so do our bodily systems.  Our systems change in response to certain stimuli in our physical and emotional environments. These changes are prerequisites for adaptation and continued efficient operation of our body as a whole.

Business organizations also execute continuously. And, like our bodies, organizations face continuously changing stimuli in their environments. As Darwin reminds us, we have two choices: adapt or perish. This suggests that execution – the act of putting our plans into motion – can never be the same and is constantly susceptible to change.

How then, with all this change in our business environments, can an organization feasibly expect to attain consistent, on-the-mark execution? It begins with a bona fide set of key indicators, or sound business metrics. Such metrics, when properly designed, represent the vital signs of the organization’s actions toward its goals. Similar to the indicators on a car dashboard or patient monitor, they signal the relative health of the organization and how well it is keeping its planned actions on course in light of changing environmental stimuli.

As we’ve discussed previously, planning for and then executing organizational performance does not guarantee delivery of planned performance. We need to align our performance across the three levels of execution that exist in every enterprise: organizational, process and individual performer. As these three tiers comprise the backbone of performance delivery in every firm, it is necessary to ensure a “line of sight” up, down and across the organization.

This line of sight is best achieved through a focused set of performance metrics. Metrics that are grounded in corporate strategy and customer needs. Metrics that monitor the health of your company’s processes. Metrics that drive accountability – and reward – to the individual performer.

The idea sounds very simple: create some key measures for my company, slap them onto a board that everyone can see and calculate their values to compare actual values to planned targets. What can be so difficult in that? After all, most anyone can create a collection of measures and design a display for them.

Frankly, far too many companies today adopt this attitude. They have key indicators in place for just about every performance lever in their enterprise.  They measure things because … well, simply, because they can. They have the technology and the resource to capture data about performance events, large and small. They maintain historical records of this “information” for as far back as their IT servers will allow. And in all this data comes comfort. Comfort in knowing that at any one time, if the need arises or the big boss asks, you will have a host of data points to either support the query de jour.

However, ask yourself: Are such hordes of data really “information”? Does having multiple data points about a minor activity or outcome guarantee business success?  Not at all.  I suggest that such gobs of data are not a focused set of performance metrics but instead “Management by Just-in-Case”. In case the boss asks. Or, in case we might need this information at some point in the future.

To enhance your execution with key performance metrics, it is essential that such metrics begin at the “top of the house”; that is to say, they must be firmly rooted in your organization’s strategy. A clearly defined strategy, supported by crisply-defined strategic objectives, is the foundation for developing and deploying a metrics system in your company.

Once you define your objectives at the organizational level of performance, most going concerns believe it’s a fairly easy exercise to trickle the objectives and deploy corresponding metrics down to each individual performer.  It is logical: cascade the company objectives down to each individual in the company and assign related metrics to each individual as well.  While this approach may seem straightforward, it is often far from it.  I have seen time and again organizations in which the metrics placed upon their individual performers have little relation to their key organizational level metrics. This almost invariably leads to frustration on the part of both the company and its employees.

Why does such a logical approach so often result in frustration and disjointed coordination across the enterprise? The answer lies in the company’s workflows. The key lynchpin to organizational alignment and achievement of your business objectives are your business processes. Indeed, it is not your firm’s strategy but instead it’s set of value streams that deliver your products and services to your customers.  Thus, this is a critical – and very often overlooked – element of a solid performance metrics system. Yet process metrics are often established around the key activities of the processes themselves, and with little regard for organizational objectives and individual accountability.

Just as the individuals and processes in your company must be aligned with organizational objectives, so must metrics be linked across the three levels of performance in your firm. This alignment – secured via an authentic set of performance metrics – is paramount to ensure razor-sharp and reliable execution.  Performance metrics weave together the actions that drive your execution and keep it on the rails.

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