How do you prove your organisation’s success?
How do you prove your organisation’s success?
Steve Robbins, the Get-It-Done Guy from the Quick and Dirty Tips podcasts, says that the ultimate responsibility that rests solely on the CEO’s shoulders is the success or failure of the organisation. And the CEO’s top two duties, which only they can perform, are building the culture and setting strategic direction.
Building culture and setting strategic direction are the two most important drivers for organisational success. That’s not a surprise to most CEOs. And measuring the right things is the key to proving organisational success. Also, not a surprise to most CEOs. But what is a surprise to most CEOs is that measuring the right things gives transformational leverage to building the right culture and setting a strategic direction that gets executed.
Measuring performance is like gravity
Measuring things – using metrics, KPIs, whatever you call them - pulls our attention and action toward a centre, toward the most important things we should focus on and improve. When we measure the important performance results, we move more directly toward those results and we achieve them sooner and with less effort. Measurement is fundamental to proving an organisation’s success, but also to improving it too.
This means that CEOs can’t be just masters of culture and strategy. They must be masters of evidence-based leadership.
Evidence-based leadership brings culture, strategy and measurement together
When we are practising evidence-based leadership, we are:
- using objective evidence to design and monitor the organisation’s strategy;
- inspiring and encouraging and expecting evidence-based management from everyone in the organisation; and
- making it easier for everyone to practise it and apply it to what matters most.
There are three evidence-based leadership habits of high performance that only c-suite executives can do. No-one else in the organisation can do them. And they must master these habits. They must personally practise them, and by practising them routinely they become role models that everyone else within their organisation will follow. These habits are called Direction, Evidence and Execution.
The first habit of evidence-based leadership: Direction
The habit of Direction means articulating a well-designed strategy that is results-oriented, understandable to everyone, and ruthlessly prioritised. Too often strategy is thrown together without a deliberate approach or enough analysis and thought. It sits on the shelf and gathers dust and cynicism.
Mastering the habit of Direction requires the adoption of three specific mindsets:
- The first mindset is that strategic goals are results-oriented, not action-oriented. If the strategic direction is a simply a list of initiatives or projects or things to get done, then people confuse completion for success. But there is little point in getting stuff done if we’re not aiming that effort at the results we want to achieve.
- The second mindset is that strategic goals are expressed in language everyone will understand. One of the worst problems with strategy is the excessive use of ‘weasely’ language: ‘efficiency’, ‘capacity’, ‘diversity’, ‘quality’, ‘fit for purpose’, ‘productivity’, ‘sustainability’. People can’t buy into what they don’t understand.
- The third mindset is that strategic goals are ruthlessly prioritised to focus on performance results that matter most, right now. In The 4 Disciplines of Execution, Sean Covey, et al., explain how achieving strategic goals on top of day-to-day work follows the law of diminishing returns. The more goals we have, the less we achieve.
Second habit: Evidence
Evidence is about setting meaningful performance measures for each strategic goal, that are quantitative, aligned to what matters and focused on improvement. Nothing is more urgent than measuring what matters. Most other things higher on the to-do list, like fixing problems, reacting to other people’s priorities and catching up on overdue milestones, are the product of not measuring what matters!
The three most important mindsets for the habit of Evidence are these:
- The first mindset is to use evidence to learn like a scientist learns, without judgement. When measures are tools in people’s hands, not rods for their backs, people feel an intrinsic motivation for using KPIs to improve business performance, and it’s easier for them to feel and be accountable for the right things.
- The second mindset is to design measures as quantifications of the observable results of strategic goals. Measures aren’t actions or milestones or trivial counts. They are quantifications of objective evidence of the degree to which performance results are occurring over time.
- The third mindset is to measure only what can be aligned to the priorit ies: mission, vision and strategic goals. A clear and measurable mission and vision is the starting point, the inspiration, for aligning the entire organisation’s measurement and execution of the strategy.
Third Habit: Execution
Execution is about implementing the corporate strategy and achieving the strategic goals using the leverage found in the continuous improvement of business processes. It’s about implementing change initiatives that can take a big bite out of our performance gaps, closing as much of the gap between current performance and targeted performance as possible.
These are the three most important mindsets for the habit of Execution:
- Implement or execute strategy based on working smarter, not harder. To improve performance, to increase our business’s capacity for excellence, requires leverage. If an improvement can only be sustained by continually putting in more effort, we didn’t find the leverage.
- Make strategy execution about removing and managing variability, not about hitting the numbers. We can only understand performance by understanding the patterns of variability in performance. Averages only tell a static story, like a photograph; but variability shows a movie. It’s the patterns we need to look for, not the points.
- Execute strategy to improve business processes and how work is designed, not to control people and what work is done. At least 90 per cent of performance problems are in the processes of the business, not in the people. So we must master the measurement of processes, and their outputs and outcomes.
There are no short cuts
The people in an organisation will not practise evidence-based management without it being deliberately led from the top. What the c-suite talks about and does, the rest of the organisation talks about and does. Evidence-based leaders routinely talk about:
- the purpose of the organisation;
- the evidence that the purpose is being fulfilled; and
- what that evidence says about how well that’s happening.
There are no short cuts. If we want high-performance organisations, we have to be evidence-based leaders, every single day.
Stacey Barr is one of the world’s leading specialists in business performance measurement and KPIs. She is known for her practicality in solving the most common struggles with measuring what matters. Her new book Prove It! How to create a high-performance culture and measurable success is available in stores now.
For more, visit www.staceybarr.com.