Expert business transformation coach Alexandra Poole considers the use of performance data for driving improvement.
Data. Those that don’t have it, want it. Those that have it, want more of it. And those who have more of it, are often paralysed by it! In a time where producing and harnessing data effectively is big business, it’s worthwhile taking a moment to consider; could measurement in some cases actually be wasteful, and actually do more harm than good?
According to McKinsey (2015), 74% of business transformations designed to improve performance fail. However, the rate of failure is substantially reduced in organisations that adopt a culture of continuous improvement. In fact, using transformation related metrics can make an organisation 3.9 times more likely to achieve success.
There are many reasons why measurements aid success. Firstly, adoption of a company-wide measurement system will improve communication of the company strategy by providing the necessary structure for cascading the vision and goals of the company, translating it into clear objectives for each department or team.
This, in turn, delivers a number of benefits – not least creating the environment for employee empowerment, and a positive daily attitude to problem solving and improvement. In fact, discussing results daily can be attributed to making an organisation twice as likely to sustain a change. Perhaps because it goes some way to answering the universal questions of any improvement programme: ‘why are we doing this?’ and ‘what’s in it for me?’.
Findings show a key barrier to sustained performance improvement is a lack of understanding or belief. Here, measurements help by creating a common language or currency for the transformation, meaning successes can be confidently communicated, reducing distrust in the information. It also means poor data can no longer be a reason for poor performance.
Additionally, in contrast to traditional reporting, tools such as daily performance dashboards can provide real-time data facilitating real-time problem solving. Using data in this way increases the likelihood of addressing the root cause of problems, and much like a sat nav, errors can be corrected mid-process, minimising wasted time, effort and resources. In fact, studies have demonstrated that companies using data to drive decision making are on average 5% more productive and 6% more profitable than their competitors.
However, data is measurement is only useful if it drives action. Care must be taken not to over-measure, as this will put emphasis on the analysis, reducing the time and resources available for solutions and improvement. As damaging as measuring too much (or too little) can be, the wrong measurements will also prove pointless for improvement, as Einstein once said, “not everything that counts can be counted, and not everything that can be counted counts”.
It’s often difficult to identify the most effective measurement and as a result, the more tangible, easily-quantifiable things are chosen. For measurement to be worthwhile, the parameters must not only be reflective of all aspects of a business, they must also only measure what is valuable. This may lead to more qualitative measurement but as W Edward Deming notes, “managing the unknowns is as important as managing numbers”.
To drive action, measurements must also be integrated with the correct problem-solving tools. Implementing visual control boards will allow processes and teams to become self-regulating and self-managing. Although this contradicts one of the key roles of management, to make decisions, it is in fact crucial in creating the continuous improvement culture needed for sustainable performance improvement.
There is no one-size-fits-all approach to choosing and deploying effective measurements, and consideration must be given to the culture of the company, as much as performance needs when selecting the right approach. For example, with a growing demand to create business environments that foster innovation and creativity, it is often argued the application of structure and measurement stifles creativity and as a result, damages the very value proposition of the company or function. However, innovation, like many business functions, is a process that requires specific tools, rules and discipline and therefore measurement can help deliver more effective results if deployed appropriately and collaboratively.
In summary, the phrase “if you can’t measure it, you can’t manage it” is not as conclusive as it first appears. Measurement is undoubtedly vital for understanding and improving business performance, but to achieve sustainable improvement results, it must be appropriate and supported by the right leadership to inspire collaborative teamwork and achieve mutually-beneficial goals.