January 24, 2012
Dr. Dean Spitze
r is widely acknowledged as one of the world’s leading authorities on performance measurement and management. His latest book, Transforming Performance Measurement, has been hailed as “a breakthrough,” “a masterpiece,” and “the most important book ever written about performance measurement.” Dr. Spitzer’s advice and counsel is sought by companies and government agencies throughout the world. During his distinguished career, he has helped more than 100 organizations on five continents improve their performance.
Performance measurement has become almost synonymous with information technology. True, technology is an invaluable enabler, but it isn’t the panacea most people think. It’s not the data, or even information, that counts; it’s what we do with them. No matter how impressive the technology, it is no better than the people using it. People have to use measurement technology, create knowledge and wisdom from data and information, and make the right things happen, consistently. Technology can’t do that.
In order for the full power of performance measurement to be realized, there must be considerable social interaction at each phase of the process leading to new insights about what to measure, how to measure it, and the meaning of the measurements. In the figure below, you will find depicted what I call “The Performance Measurement Cycle.”
This cycle shows many, if not all, of the activities that are part of effective performance measurement—and most of them are social.
The cycle begins with Plan. Planning is really the business engine that drives performance measurement. The most important aspect of planning is to frame the right measurement questions. The Select phase involves determining what to measure. Because what you measure is what you are likely to get, you should select your measures carefully—and don’t just rely on the same old metrics. Once relevant measures are selected, the Collect phase can begin. This is when the data collection instruments are developed and implemented.
The next phase is Analyze. Data analysis is often rather technical, and like the Collect phase, this one is also typically the province of highly trained technical professionals. Once the data has been analyzed, it must be interpreted. Interpret is a crucial phase of performance measurement that is often taken for granted. Interpretation is about really understanding the story that the performance measurements are attempting to convey. Nothing is more important in the interpretation of data than asking questions that deliver deeper and deeper levels of insight. Interpretation of data is enriched when it is done interactively with others, especially those with multiple perspectives.
Next, a Decision should be made about what to do (if anything) based on the insights. Once the action, or action options, has been decided upon, the next thing to consider how to get buy-in from others in the Commit to action phase. Then, there is the Take Action phase when action, if any, is implemented. And, finally, there is the Review phase. This is when the action, and, in fact the entire process, should be reviewed. This phase, then, feeds back into the Select phase. Empower people to question any measure. Reflecting on measurement can lead to dramatic improvements in all kinds of measurement-related abilities, such as increasing the accuracy of estimates and forecasts and deeper understanding of variation.
You will notice that at the very center of the Performance Measurement Cycle is Dialogue. An organization’s capability to learn from the measurement data it gathers is directly related to the ability of the measurement owners to understand the data, take appropriate action on it, learn from it, and keep measuring—and learning. Unfortunately, very few organizations allow time for any real dialogue or build the interactive skills necessary to support it.
The Performance Measurement Cycle is no stronger than its weakest link, and it is dialogue that can keep it from breaking. If you honestly assess the measurement capabilities in your organization, you will undoubtedly find that data collection and analysis are much stronger than the less technical aspects, and the weakest link in most measurement systems is Interpretation. That is why the most important thing you can do to improve measurement and analytics in your organization is to strengthen the human aspects, which includes educating your people about measurement. From here, increase the quantity and quality of interactivity around measurement.