Resource for Peer2Peer Forum

There are so many things that organizations do well! A friend once sent me a joke that a pessimist sees the glass half empty, and optimist sees the glass half full, and an engineer sees the glass is design as twice the size it needs to be. However, an optimistic sales person may see the glass as half empty as well that she would like to see filled with new revenue and customers. The pessimistic accountant may see that the organization has only spent half the budget it should have spent according to their plans so they can cut the rest and save some money. In this type of rhetoric there is no wrong or right, but there is opportunity for improvement. Whether pessimist or optimist being static is not natural. Picture our glass of water, there is nothing static about it. Natural forces are transferring thermodynamic energy across the various mediums and the glass will slowly empty just from evaporation.

So, as I head up to the Peer2Peer Forum in Austin, I am providing a free case for a workshop. It is under my Resources Tab. Email me at bob.merrill@gopacelinellc.com if you need some help or have questions, but I am confident it can lead your team to making some simple first steps to looking at your business in a different way to help drive innovation and value.

Here is some additional background information and overview:

A Story About Running Around Objective, KPIs, and Incentives

A few years ago I attended a presentation on value creation.  The author's premise was that organizations were driving short term objectives but not creating a sustainable increase in value.    Managers and leaders were highlighting metrics such as stock price, cost per anything they felt relevant, average ticket, customers per day, average funds raised, year over year growth, etc..  These metrics are helpful at  simplifying messaging for organizational focus and operational efficiency, but in some cases were being used as Key Performance Indicators (KPIs).   In many instances, the very important strategies and objectives to create sustainable value for the organization were not being achieved. This created a cycle of frustration which resulted in more data and more metrics and more of the similar results.  Organizations failed as value was destroyed, or more accurately transferred to competitors, investors, consumed assets as poor performance, or lawyers.  KPIs are bad, but as data began to flood into management systems we start generalizing that everything is a KPI.  If an employee is not performing, someone will ask “how are they doing on their KPIs?”  Wait, what?  Leading up to Board Meetings, senior managers scramble to create slides full of metrics.  This starts a lot of querying on operational metrics with normal bias.  Anything red means you are failing and not doing your job, fix it.  KPIs are about learning and using judgement for decision making.

A few months ago I was asked to be on a panel at an audience of non-profit executives to discuss this very topic.  After that discussion I did a workshop for an organization to help them establish a standard framework for their KPIs as they are driving some significant change and many different groups were developing metrics.  We helped build a framework to start with an aligned platform.

In the presentation I stated that one of the biggest challenges for this conversation, is many people use KPIs as their objectives and/or outcomes.  The obvious question that follows is what is the difference between a KPI and an Objective?  For illustration, the difference between a KPI and an Objective is the same as the difference between behavior and behaviour.  The former has fundamentally different definitions and the latter is just spelling.    The higher up in your organization, the more material this has on the impact of decisions, value creation, risk to your organization.

So let’s start with definition:  

· KPI (Key Performance Indicator):  A measurable value that demonstrates the effectiveness of a process that is used to meet organizational objectives.  

· Objective:  A concise statement describing an outcome the organization wants to achieve within a set time period.  

Rather than continuing with an academic or philosophical approach, I crafted the following story that you can download as a PDF file.  This can be used in a leadership team meeting, as a workshop, or as a case study to generate discussion and conversation that will provide you some insights into your organizational culture and where focus is currently.  First step is raising awareness that there may be improvements to make the team more effective, then we can begin working to prioritize what information is really helping your organization deliver in the short term while creating value.

Running Around Objectives and KPIs.pdf

Download PDF • 263KB