A successful strategy leads to increased revenue from the target audience, and sometimes outside of it. It goes without saying that companies also hope to achieve greater profits in doing so, but this depends on the operational costs. The desired strategy shows an upwards-trending line of revenue and profits. But that dream is cruelly disrupted: all good things must come to an end. The central tenet behind the strategy's life cycle is that revenue will not keep increasing forever, due to all kinds of factors (saturation, competition, etc). At some point - we don't know when - revenue will stabilize and then decrease. The organization can't keep generating the same revenue using the old strategy. At this point, it's time for a new product offering, strategy, or cycle.
When developing a KPI system, you have to identify search fields and translate them into one or several yardsticks. After that the targets are defined, possibly with gradations or tolerances. Connect this to a measuring system and you’re in business. In practice, that means making clear agreements about how and when to measure, the design, and the starting date of an indicator. These are all important factors. But keep in mind our division of the Measuring Plan (yardstick, target, measuring system, and reporting).
Let's take a look at a case study: a large housing corporation has a reputation for being an innovative, ambitious real estate agency. They operate in a dynamic market, which is one of the reasons they started the transition from being a task-oriented to a more completely process-oriented organization. The (SMART) goals in this transition are organizing smarter, making processes lean, and driving the most critical success factors. The company is getting ahead of the measures that are expected to come from local and European governments in the coming years. Those measures will have financial consequences.
Not all indicators are genuine KPIs. Finding the right KPIs for your company can be a lot like looking for a needle in a haystack. To make your search a bit easier, we've described the 7 hallmarks of genuine KPIs, allowing you to identify and build on them more quickly. What sets a Key Performance Indicator apart from a regular indicator? This question is the key to a lot of the confusion surrounding KPIs. Using the 7 criteria below, you can determine if your indicator is truly Key, or just another gauge on a dashboard somewhere.
Research among almost four hundred organizations has shown that the famous PDCA cycle (Plan-Do-Check-Act) is crucial to achieving better business results. Not only can it improve your profit margins and drastically reduce workloads, it can also lead to increased customer satisfaction. Dr. Deming's quality cycle has proven to be the foundation of using management information and KPIs to achieve great success.
As we recently pointed out, data literacy is a hot-button issue. Only 24% of the decision-makers in international business spheres indicate that they have complete confidence in their own ability to read data, work with it, analyze it, and discuss it. This alarming conclusion was drawn by the worldwide Data Literacy Project. Spoiler alert: 2019 could be the year of data literacy. The concept of literacy is a lot broader than most people think, according to Wikipedia. It's the ability to work with information, understand it, and use it with purpose. In the Netherlands, Princess Laurentien has been working tirelessly to promote literacy since 2001. At her behest, the Foundation for Reading & Writing was founded in 2004. Although the foundation achieved successes in its fight against illiteracy, the war is far from won.
From time to time, the debate about the usefulness of KPIs rears its head. Recently, two Insead Professors, S. David Young and Kevin Kaiser, wrote that KPIs are not good barometers for value creation. Indeed, they say that KPIs often destroy value. KPIs send the wrong stimuli to employees, because they are rewarded based on hitting arbitrary targets. [global name="*PE*20190"] It's often said that KPIs are controllers, and that they slow down the pace of change and innovation. That would explain the interest in new organizing principles and behavioral influence. Does this kind of criticism of KPIs lead to the "classical" quantification of performance, including the search for KPIs, shifting to the background? I don't think so.
Good communication may help to allay many concerns and reduce resistance. It promotes faster acceptance of new internal rules. The main message that managers can communicate is "you can trust us." And that trust must be justified, of course. For management to win the trust of their employees and colleagues, they need to deal with resistance gracefully. As professionals, managers need to understand that resistance is completely normal. The introduction of performance management will inadvertently produce some kind of threat, which blocks a positive attitude.
The search method based on the strategic information plan is inherently top-down oriented. This approach features a systematic and consistent downward translation of the organization's policies at each level. The indicators are 'designed' by a small group, such as the board of directors or the management team that is responsible for that. The strong point of this approach is that management can contribute to this policy consistency. This 'integral' route is a logical choice, especially, when the top management wants to sail a new course and would like to adjust all departments to this course. In order to be able to monitor the performance and consistency of the new policy, a business intelligence system can also be set up.
The most frequently asked question during management training sessions is "how do I get my employees motivated?" If anything of this worked, managers would do but the following: figure out something for them, use some tools, send them to a training, convince them of the importance of different behavior, get on the soapbox, give a pep talk. However, those measures are rather arbitrary, while success is not guaranteed. During the implementation process, more guidance is provided by an internal communication plan, which should be considered before all other various messages that are communicated, such as the sense of urgency, the importance of ambitions and objectives, working out objectives and impacts in the workplace, progress made, the first results. This type of internal communication is important because it is expected to fill up the gap between the 'captains', those who think and decide which way to go, and the 'stokers', those who spin the pedals to make the changes successful.
A successful strategy will result in increased turnovers with the target groups and sometimes beyond. Of course, the Business Intelligence company hopes to achieve an increase in earnings, as well. This depends on the costs incurred by the company. The ideal strategy always shows an increase in sales and profits. Unfortunately, that dream is shattered; all good things come to an end. The premise of the strategy life cycle is that the turnover stops growing for various reasons (saturation, competition). At a certain point - no one knows when in advance - the turnover first stalls and then starts decreasing. A successful Busines Intelligence company would not keep profits at the same old level. The time for new product offerings, a new strategy and a new cycle comes.
When introducing performance management, employees always test whether they have influence. It is not about listening patiently to an employee, but, rather, about hearing what he says. What is more obvious, people who should concentrate on behaving as an indicator in the cockpit, are actually involved in the development of this indicator. So, giving the influence means creating a single line with the use of the principle of ownership. This implies that the indicators are developed by or with the managers and employees (the team) to which they relate. Moreover, they are involved in identifying and determining the best measures to get the indicator position in the target area.
Louis van Gaal has achieved and accomplished a lot as a coach. His views on improving sports performance show a great analogy with that of the PDCA cycle. "My motto has always been: analyze, implement, evaluate. I measure as much as possible." What makes constant measuring so important? And why should you apply more energy to good indicators? How important is it for you to work with common KPIs and indicators at every level in your organization?
One of the ways to anchor continuous improvement is to work with KPIs in the workplace. When introducing this concept at a client's organization, one of their team members asked if there was a convenient overview of the key principles around KPIs (key performance indicators). She wanted a cheat sheet! I've written a couple of key KPI tips & tricks below. There are more, of course, so if you think I've missed something, feel free to leave your comments below. [global name="*PE*20190"]
Dr. Huub Vinkenburg has recently been awarded by the Dutch Network for Quality Management for his important contribution to the (critical) quality improvement in the Netherlands. In 1995, Huub Vinkenburg received his doctorate with the thesis "Encouraging perfection; critical factors in improving services." Sigma (corporate quality management platform) editors asked a number of colleagues, including me, to reflect on some of Dr. Huub Vinkenburg's statements. I chose his statement on the measurability of service. The following is my argument, which was more concisely presented in Sigma magazine (issue no. 5, November 2015).
Information 'tells' us more about the situation. Something that we did not know for example. Information can also confirm whether our assumptions are correct or not. Then we can decide to take action with the intent to manage towards the desired situation. I knew there was a party tonight, but after I heard that my favorite band is playing, I decided to go. To go or not go, to do or not to do; they are simple choices. Decision-making is often more complicated.
Municipalities are working to make an impact on citizens and entrepreneurs. The key question here is "How can we increase our public value?" This means that organizational competencies such as results orientation, performance orientation, continuous improvement, and innovation are important in order to properly demonstrate its function in societal participation. In short, municipalities must explore new avenues.
When a dashboard is delivered from a Performance Management initiative, sometimes the creators then sigh: "Nothing happens with the numbers". In this brand new white paper, senior consultant Rick van der Linden creates a clear framework for effectively managing with figures and supporting the discussion about it. The fact that nothing happens with the figures is extremely unfortunate and can have many reasons. One of the reasons that we least like to see for figures to be unable to turn into actions is that they have no explanatory power, except for a predictive capability. They just reflect a fact.
Martijn Stuiver (40) has been the Director of Continuous Improvement at Passionned Group since the beginning of this year. Martijn is an expert in the field of change and behavior and will help customers of Passionned improve themselves continuously and learn how to be innovative. “Change is difficult,” says Martijn, “but if the objective of the change coincides with the goal of the team, the work becomes more fun and the team members end up producing better results.”
The adaptive capacity of an organization depends largely upon how well the organization processes information. It is therefore important that the handling process– the second process of the large Business Intelligence cycle – is well designed and supported within the organization. We define a number of steps within this process. These are shown in following figure. Figure: The BI cycle consists of 15 process steps where data is converted to information and knowledge.
Fast as lighting, when we consume (new) information we will run through existing structures and connections in our minds so that new knowledge and information can be connected to what we already know. We are, as it were, trying to fit this new information into our brain, which either happens comparatively easily or with some considerable amount of effort. During the internalization process, people should ideally be aware of which fixed beliefs and assumptions they, unknowingly or in fact knowingly, use. Unfortunately, various studies show that we tend to see what we want to see and that our brain is extremely lazy and prejudiced. "We like to think that our judgements, beliefs and opinions are based on solid reasoning. But we may have to think again."
Driving a car is in a way quite similar to steering an organization: when you know how fast you drive (an indicator) you in fact know nothing (yet). You want to know when you will arrive at your destination; you will want to know whether you are driving in the right direction; you want to know if there is enough gas left, and so on. Steering an organization well is therefore only possible when the organization meets the conditions for effective management:
Managers should be able to give good leadership, to know their position, where they are going and how to get there as quickly as possible ideally in a context of inspiration, mobilization, appreciation and reflection. In this article, Daan van Beek argues why it may be wise to consider at least doubling the number of managers in your organization. You may have too few. This statement may be somewhat incongruous because the general perception would be that there are actually too many managers. The major companies of this world are supposed to be populated with them. So why this statement?
In the book The cockpit of the organization, we want to clarify how you can make a strategy measurable using the organization Cockpit. We could therefore distance ourselves from the question of how to develop a strategy In order to prepare an organization Cockpit, it is sufficient that the organization has a strategy at a certain point in time. However, writing a book on strategic performance management without ‘coming clean’ is not possible. Because, in strategy formulation, content, tools like Cognos and BusinessObjects, and process influence each other. That is also the reason that the leadership of an intelligent organization tries to make content and process reinforce each other.
Strategy formulation can take place in completely different ways. There is apparently no ‘one best way’. The strategy schools with their four quadrants urge managers to make a choice themselves depending on their own situation. Despite the differences, I think that conclusions can also be drawn that are applicable to almost all situations. With these conclusions, I indicate how strategy formulation in an organization can be carried out more effectively.
A well designed Performance Management system has striking similarities with a well-designed game. I will describe below how to achieve cross fertilization between performance management and the game world. First, some definitions. We see two approaches within the gaming world that might be interesting for Performance Management: ‘Serious Gaming’ and ‘Gamification’. The term Serious Gaming is used when games are deployed outside the game environments that are traditionally meant for entertainment. Examples of this are management games, simulation games and board games that are used in a business context. We therefore temporarily step out of the work environment in order to be able to undergo awareness training and/or learning objectives in a safe way.
In the National Business Intelligence (BI) Survey, the public sector achieves the lowest score of all the sectors. It is interesting then to know what the business sector is really doing differently from the public sector. Where are the opportunities for improvement within the context of government, education and health care? And how much room for improvement is there actually, given the legal frameworks and regulations? Or are these not really an obstacle?
Possible objections to performance management that are often mentioned include: The introduction of performance management evokes resistance because it reduces existing freedom of action. This observation is correct: freedom of action is indeed reduced. However, in the context of the methodology, this is seen as desirable. Managers cannot confine themselves to flashy activities, but must manage the everyday practicalities.
Many organizations are increasing their focus on the key performance indicator (KPI). That's not surprising, because it’s a very powerful management tool and KPIs are at the heart of every business, including yours. The trick is defining the right ones. However, KPIs and SMART goals are very specific. It's easy to focus on the wrong indicators. Or to define so many (not) Key Performance Indicators that you can't see the forest for the trees anymore. We've listed the 5 biggest KPI blunders for you, so that you can avoid them in the future.
The Business Intelligence architecture will not be able to produce good results if we cannot link tools to it. This blog provides an overview of the most important Business Intelligence tools (BI Tools) in relation to the decision-making cycle. It also describes the purposes, the features and the workings of these tools. Each Business Intelligence Tool plays a supporting role in one or more phases of the decision-making cycle. The decision-making cycle comprises of the following phases, which can be supported by the following tools (see figure below):
In the Business Intelligence market various industry specific systems – so called analytical applications- are available. These systems help organizations to complete a first draft of information needs relatively quickly and then, possibly, to produce a first version of a Business Intelligence system. The market-driven approach consists of two steps: Market research and tool selection: analytical applications that are available in the market are being reviewed based on a number of (technical) selection criteria. The main criterion regarding the mapping of information needs is to see whether both the application and its indicators sufficiently match the organization’s business operations and critical processes.
For an organization to become as smart and agile as possible, the process of transforming data into information and knowledge should take as little time as possible and should run with minimal interruptions and errors. An Intelligent Organization will therefore also have to take into account a number of generic requirements that we impose on both consuming information and the Business Intelligence tools.
As a result of the pressure in the current work climate the amount of time that managers and staff have to take the right decisions is decreasing rapidly, although the complexity of the decisions is increasing. This is complicated further by the fact that the amount of data needed to take good decisions is increasing exponentially*, the so-called Big Data. These two factors, time to decide and the volume of data, are diametrically opposed. As illustrated below the Business Intelligence gap will only increase unless organizations taken steps to tackle the problem.