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The first thing to do is
to really analyze some of
the myths that we tend to
have in relation to
performance management.
Let me go through this
slide line-by-line.
The first one is that the
holy grail or the end result,
is often what we see as
so-called objective data,
something that has no
subjective interference,
that is rational, that is true.
Now, from what we've
covered so far,
you've probably seen that
this is a bit of a myth.
Objective data doesn't
necessarily exist.
It doesn't mean
that anything goes,
but it doesn't mean either
that we can find the truth.
Perhaps we can land
on something that is
a bit clumsy when
we talk about it,
but probably we can relate to.
In academic language, you will
call this inter-subjective
information,
which means something that
different people make
sense of in the same way.
So, maybe it's not the truth,
but is something
that we regard and
understand in a similar way.
It's not the truth that the
ratio between sales from
new product divided
by total sales is
the perfect measure
of innovation.
But actually we can probably
understand it together in
the same way and understand
the fact that this
gives us an indication.
It's an indication of innovativeness
as much as new ideas,
or customer reactions to
new products or
services, and so on.
That inter-subjective
component is probably
more interesting than aiming
for something that
is a bit of a myth.
The second one is about
the criteria that we use.
Now, of course, we
want our systems to
be accurate and precise
in the information
that they give us.
At the same time,
perfect accuracy
and precision will
never be there.
Perfect accuracy means that we
measure something
and get the data,
again that are true, and
precision that every
time we do something,
we'll get the same result.
Now, we can aim
for some of that.
We can probably aim for something
that is less demanding,
but still very useful,
that you could
call adequacy and
usefulness - so something
that is good enough
and that we can use.
That's the most important thing,
is not the data "per se",
but actually what can we do
with them that matters the most.
Therefore, what creates value?
It's not the process of
gathering and analyzing data
and communicating them,
but it's actually what
we can do with it.
The user performance information
becomes the priority.
It's a bit of a myth that
the fact that we can
gather and analyze data in
the perfect way is
going to give us value.
The value comes from the fact
that we can do
something about it.
Information about
individual performance, or
group performance, and
what we can do with,
it's more important
than trying to
find the best system that
we can ever come up with.
Now, we've spoken
about alignment
in various talks as
part of this series.
Alignment is often
thought as something that
is achieved from the top-down
to different levels,
so functions or business units,
teams, individuals and so on.
Now, it's important
to do so, and we
certainly need to have
clarity of direction,
but we also need to have
involvement and a sufficient
degree of discretion,
particularly now that
organizations have to
navigate environments that
are much more dynamic,
complex, ambiguous than
we used have in the past.
Relying only on a top-down
implementation with lots of
performance measurement systems,
that essentially become
disaggregated as we
go down, is probably
not the best way to think about.
The most important
thing is that we
try to get engagement
and involvement
and have a certain level of
discretion of authority
lower down the system,
particularly in
large organizations.
The focus in performance
management is often on the tools
that are typically measures,
or KPIs, and targets.
Now that's important, of course,
we want to try to understand
and guide performance and give
targets to individuals or
teams in a way that
incentivizes them,
or motivates them
towards what we want.
But ultimately, the most important
thing remains our objectives.
We want to aim for
something that it's
important to us as
an organization, so we can
try to improve customer loyalty,
for example, or advocacy
or reputation -
those will be objectives.
Then we can measure
this in different ways.
We can run surveys,
we can use Net Promoter scores,
we can look at waiting times,
re-purchase intentions,
compliments and complains,
sentiment online.
There's plenty of
ways we can do so.
But the most important
thing is that,
eventually, we see
that the loyalty and
advocacy of customers
is something that
increases in the various
ways that we measure it.
It's the objective that matters,
not the mechanisms that allow us
to gather data and
analyze them in some way.
It's important that we think
about change over time
that comes not only from
the fact that our
measurement system,
at whatever level we look at
it, is very comprehensive,
but actually that is
concise or it is not
too big and it's
sufficiently flexible.
If we have measurement
systems that are set in
stone and remain the same
for a long period of time,
they tend to drag us back
into what we were doing in
the past and
unnecessarily pushing
us forward to where
we want to be.
Measurement is
mainly not so much
for reporting and monitoring,
but it has to be there for
learning and improvement.
It needs to have more of
an attitude of trying
to give us a push towards
the future, again,
something that we can
make better over time,
not just something that we want
to understand and essentially
doing what is called
managing by looking at
the rear-view mirror.
If you look at all
these seven myths,
the point is not that
the column in the middle
is entirely wrong,
but the column on the
right probably gives us
a better sense of what we
should be trying to do.
Achieving a situation where
the information is
understood in similar ways,
even though it's not perhaps
perfect, that is
good enough, and
it's useful, and the usage of
performance information is
there to improve performance.
There is an element of
top-down implementation
where we can
also involve people throughout
the cascading of the process,
but also the design of it,
where what's most important
are the objectives and the
main aims of the organization.
Not only the tools that help us
measure performance and the fact
that the measurement system is
sufficiently small, so
it doesn't mushroom
into dozens of performance
indicators everywhere,
and it's sufficiently
flexible and eventually
get us to learn and improve,
not just monitor and report.
