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The KPI.org Blog

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

Wigs, Pigs, and Desserts

By Gail Stout Perry

Jan 31, 2014 22692 Views 0 Comments FacebookTwitterLinkedInGoogle Plus
Some of our clients use Franklin Covey’s methods to improve human and organizational performance, including the use of WIGs (Wildly Important Goals). I’ve wrestled with how to integrate Covey’s approach, which is sometimes loosely or creatively applied, into the balanced scorecard framework in a way that is disciplined, consistent, and simple to understand.
   
Recently, it dawned on me that WIGs are really based on the concept of contribution – a concept we use when measuring performance in the balanced scorecard framework. So first, I need to explain the concept of contribution.

I recently wrote a blog (Skinny Jeans and the New Math) in which I was trying to watch my weight but could not directly measure my weight via a scale, so I used a correlate measure based on a pair of skinny jeans in my suitcase.  A different technique to measure something indirectly is to use a contributing measure.  A contributing measure is something you can measure directly and which you believe will influence the results on the thing that you cannot measure directly (in this example, my weight). I actually have two contributing measures that I use while traveling, but until now I haven’t told anyone my secret.  

Science has shown that several things contribute to weight gain or loss. I have chosen two that are within my control and are easily measurable: (1) How often I eat sweets while on a trip, and (2) How often my gym shoes actually get removed from my suitcase for a brisk walk around the hotel. By setting goals of one or fewer desserts per week (chocolate is my weakness) and using the gym shoes at least once a week, I can keep track of these two contributing measures, both of which will influence what the scale will say when I finally get home.
   
And that’s exactly what Franklin Covey’s WIG approach is.  It’s a series of contributing goals/measures in which one action influences resultant performance on another.
 
So, how can the Covey methodology effectively integrate with the balanced scorecard framework?  Here’s how:  An executive’s WIG must be based on either a strategic performance measure / target or on a strategic initiative.  These are two scorecard elements that are most likely to have actionable contributing factors that an individual can relate to.   The contributing WIGs (which individuals are tasked to create to support the executive’s WIG) are the individual activities or measurable milestones or measurable contributing indicators that ensure individual performance contributes to the overall executive WIG, thereby contributing to the execution of organizational strategy. To further align the Covey execution methods to the organization’s strategy, a disciplined process should be deployed at Tier 3 (individual and team performance objectives for the scorecard system) to ensure that the individual understands the strategic context of their personal and team WIGs.
 
To learn more about how different frameworks integrate into a logical, holistic system to improve organizational performance, we invite you to explore The Institute Way: Simplify Strategic Planning & Management with the Balanced Scorecard.  
Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

Translation Please

By: Gail Stout Perry

Oct 31, 2013 15277 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

I am absolutely addicted to the television show, “Big Bang Theory.”  Have you seen it?  I catch myself laughing out loud at it...even when watching it on planes (yes, that’s a little embarrassing). People who are fluent in the language of math and science are actually bilingual.  And that’s what I love about the quirky characters on Big Bang Theory. They not only understand how to string words and punctuation together to form sentences and paragraphs that communicate meaning, but they also know how to string numbers and symbols together to form equations that communicate meaning.  And when someone is fluent in both, sometimes they slip back and forth between the two languages and things get comical.
  
I’ve already admitted that I am a geek, so let me give you an example from my own life. When I was in college, I had to go over to the business building to take a class.  As I sat down and prepared for class to start, I noticed something carved into the top of the desk.  It was a calculus equation.  When read aloud using the literal “word” meaning versus the “math” meaning, the equation said:  “The limit (e.g., cannot go any further) of an Engineering Student when his calculus GPA approaches Zero is a transfer to the College of Business”. I laughed out loud.  Several of my friends had recently transferred out of engineering and into business. I can only imagine which one scrawled this equation on the desk.  Or how many students had looked at it and not understood that it was a funny message. 

Understanding that math is actually a language is a very important concept for developing meaningful performance measures for your organization.  Some people are fluent in the language of business. Others are fluent in the language of math and statistics.  Few, it seems, are fluent in both. 
 
We’ve found that whenever an organization is struggling to develop KPIs (Key Performance Indicators), it is most often due to a “language barrier” in translating from the strategic intent of the business (words and sentences) to meaningful measures of performance (numbers and equations).
 
And there is actually a very simple solution. In the Institute's Nine-Step-To-Success™ framework, we use something called “intended results”. These brief written statements are the “Rosetta stone” for translating the “in plain English” strategic intent of an objective into a meaningful measure that can be used for strategic performance analysis.  

To learn more, check out Chapter 10 of The Institute Way or join us for an upcoming training course. We’ll show you how to crack the code and move fluidly between both languages.

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

Dear Abby-Gail: How Much is Too Much?

By Gail Stout Perry

Oct 29, 2013 8265 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

There has been a lot of interest in my recent blog post:  “Balanced Scorecard Gone Bad: What’s that Funky Smell?”  Several people have posted comments and questions in various forums, but one in particular deserves special attention.
  
From Gary: I believe a key point in your message is that a strategy is never static due to external changes (e.g., competitor moves, new technologies), so it will require continuous adjusting.  But this raises a different question. Since as strategic objectives change or the emphasis of what to accomplish within strategic objectives change, this means some KPIs may be dropped and others added (or their weightings may need to be tweaked). As a result, how much change in KPIs can an organization tolerate?

Dear Gary: This is an excellent question.  When strategy changes, then KPIs will have to change. Organizational tolerance to change is affected by several things. 

(1) Is the scorecard system engrained in the organizational culture such that management trusts the system and uses it to make decisions?  If so, they will have relatively high tolerance for change in the KPIs because they understand that the change is necessary if they are to continue to rely upon the system to make strategically relevant decisions. 

(2) Given that you know you need to adjust the KPI, how quickly can you achieve 7 data points on the new or adjusted KPI?  In other words, is there baseline information available that will help you quickly establish an XmR chart?  If not, can you achieve frequent enough reporting points to have useful trend analysis within 6 months?  If you were using an excellent KPI in the past and then switch to one in which it will be a year (or more) before you have enough data for management to have the 7 data points needed to make statistically sound decisions, this will cause frustration and lower the tolerance for the necessary change.

(3) Can your software system handle these changes without losing your historical performance on the objective (assuming the objective does not change)?  Knowing that you won’t be throwing away historical information increases tolerance for change.

(4) What about rewards tied to KPIs?  How do your Human Resources processes link individual or group performance and incentives to KPI performance?  What will be the result of changing a KPI right now?  If it can’t be changed due to a covenant with employees, can it be removed from the calculation so that you don’t keep working towards an “expired strategy”?

I invite feedback from others.  What else has impacted your organization’s tolerance for needed change in its KPIs?  And does anyone want to share their tips for overcoming resistance to this sort of change?

For more challenges and solutions, we invite you to explore The Institute Way: Simply Strategic Planning & Management with the Balanced Scorecard.

David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

Garth Brooks and the Music Industry’s Performance Measurement Problem

By David Wilsey

Oct 11, 2013 17076 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

guitarThe rock music industry in 1991 was in transition. The glam-rock and new wave music of the eighties was out and the industry had not yet settled on alternative rock and grunge as the iconic sound of the decade. And most shockingly, after almost forty years of fans preferring rock music to country music by a reliably constant percentage, sales figures were indicating that preferences were shifting from rock to country. 

The industry made what seemed like a very logical assumption: the shift was obviously caused by the incredible crossover appeal of Country superstar Garth Brooks, who had recently taken the music industry by storm. They also took very predictable actions in response: several promising rock bands were dumped while resources were shifted to other country acts.

In the short run, these actions seemed to reinforce the trend, with even more country music sales. But then something very strange happened: the sales numbers slowly drifted back to the exact pre-Garth Brooks percentages, with rock being preferred by the same percentage it had for decades. Industry analysts were left scratching their head. What just happened?

What they found after some analysis was surprising. In March 1991, the industry began counting record sales using the Nielsen SoundScan system. Before that, sales were counted by calling stores across the U.S. to collect sales data – an incredibly ineffective collection method. Unfortunately, not all record stores were able to implement the SoundScan system immediately and continued using the old method for months or even years. On the other hand, one behemoth was online immediately: Wal-Mart. In the early days of SoundScan, every single time a Wal-Mart sales associate scanned a CD, it was counted by SoundScan and reordered, whereas record store sales (and reorders) were hit-and-miss. 

Here’s the thing that nobody had thought about before: in 1991, country music fans primarily bought their music from Wal-Mart and rock music fans primarily bought their music from record stores.  Once all of the record stores were online, it became clear that the appearance of a shift in preference was nothing more than a measurement data collection problem.

The lesson to this story is that it is critical to resist the urge for a knee-jerk reaction to data such as dumping promising rock bands! There is a process discipline to performance analysis and improvement and the steps are simple. First, a Smart Chart should be used to make sure you are correctly interpreting the data. Then, a root-cause analysis is in order to understand why you are getting the results you are getting. This root cause analysis would have likely revealed the issue with the data in SoundScan being dominated by Wal-Mart sales. Finally, an improvement action plan is implemented and the results are monitored over time. 

To learn more about how to interpret, report and react to your performance data, see the KPI Professional Certification course, or see The Institute Way: Simplify Strategic Planning and Management Using the Balanced Scorecard.

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

Skinny Jeans and the New Math

By Gail Stout Perry

Oct 9, 2013 15580 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

I am an engineer by training and a math geek at heart.  So articles about girls and math catch my eye.  Did you know that researchers agree that one’s ability to excel at math and science is as much about attitude as it is about “natural gifts” or gender?  This affirms my own less-than-scientific research findings.  I have a daughter and from her earliest years, I showed her how to apply math to everyday activities (baking was our favorite hands-on lesson, of course).  And anytime friends of hers would complain about how hard math was, I’d make them all stand up and shout, “Girls ROCK at math!!!”   It’s all about the attitude.   Of course, I had a good role model for this. My father showed me how fun math was when I was a child as we built motors together and played around with electronics...scribbling equations and schematics as we went.  I never feared math and science...they were FUN!  

In my work life, I’ve discovered that dread of math, especially statistics, is widespread in the business community.   So let’s tackle something fun:  the concept of correlation.

When developing performance measures in business, we sometimes face a stumbling block in that the thing we desire most to measure is, unfortunately, impossible to measure directly.  So, we have to look for a “proxy” measure that is correlated.

Let me illustrate with an example from daily life.  Let’s say I want to know if I am maintaining my ideal weight versus gaining weight.  It’s easy to measure that directly - hop on the bathroom scale.  But, unfortunately, I can’t.  I travel constantly so I do not have a bathroom scale with me most days. 

So I have a correlate that I measure.  I always carry the same pair of skinny jeans with me.  As long as the jeans will button, I am fairly certain of what the bathroom scale might say, if I had one.  The fit of my jeans is correlated to my weight.   Now, a statistician will remind us that “correlation does not equal causation.”  This simply means is that I need to consider that other things may be causing my jeans not to fit – for example, maybe they shrunk in the wash.  But understanding this, I am reasonably certain that they are a good proxy measure while on the road.

See how easy it was to master two important concepts for measuring performance in business - Direct Measure and Correlated Measure?  It’s all about the attitude!!

To learn much, much more about how to develop meaningful performance measures, we invite you to explore The Institute Way or join us at an upcoming training course.

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

PS: Our Balanced Scorecard Saved The U.S. Army $26 Million

By Gail Stout Perry

Sep 30, 2013 11519 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

I was working with an Army command at Ft. Sam Houston this week and had invited a special guest - Scott Hencshel - to address the group regarding the organizational challenges of implementing a balanced scorecard system within Army.  (Scott’s command is also stationed at Ft. Sam Houston -  Army Medical Department Center & School (AMEDDC&S), an Institute “Award for Excellence” winner.)  

As Scott was wrapping up, someone asked a final question, “What was the biggest benefit that AMEDDC&S realized after implementing its strategic balanced scorecard?”  Scott talked about alignment, focus, and data-driven decision making.  Then as he was making his way to the door he turned back and said, “Oh yeah, we immediately saved the Army $26 million.” 

Say what?!?!

AMEDDC&S is where the U.S. Army educates and trains all of its medical personnel – over 27,000 soldiers. One of the strategic measures on AMEDD’s balanced scorecard is “attrition rates.”  Before the scorecard was implemented, it was commonly believed that discipline issues were the primary reason for soldiers not completing their training programs – because resolution of these discipline issues were what consumed everyone’s time.  Once the scorecard was implemented, attrition was measured more thoroughly and two discoveries were made:

  1. Attrition was MUCH higher than originally thought.  The traditional calculation was flawed and attrition was actually over 34%.  That means 1/3 of those entering the medical training programs would “drop-out” thereby wasting the Army’s investment in their training.
  2. Academic performance, not discipline, was discovered to be the primary reason for attrition.

So as the scorecard team delved further, they looked for root causes of poor academic performance resulting in attrition incidents.  They discovered that a major cause was a lack of communication between the Brigade leadership and the AMEDDC&S faculty.  Students in the medical training program were being assigned Brigade duties that prevented them from having proper opportunities to study and prepare for classes and exams.   A prime example was students falling asleep during final exams due to having served Brigade guard duty the night before. 

Once the communications issues were corrected, overall attrition rapidly dropped from 34% to below 20%...thereby saving the U.S. Army $26 million.

PS:  Did I mention that I have the best job in the world?!?  It is extremely rewarding to hear about results like this.

For more examples of break-through performance, we invite you to read “The Institute Way: Simply Strategic Planning & Management with the Balanced Scorecard. 



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