Professor Andy Neely argues that a dynamic performance measurement system can be a powerful tool for coping in today’s fast changing world.
“May you live in interesting times,” says the Chinese proverb. With current political, economic and technological disruption few would argue that we are not all doing so. But what does this mean for businesses and their management systems? Can they cope? I believe they can, but new ways of looking at problems and putting in place systems that can adapt quickly need to be adopted. This includes understanding performance measurement fully.
A measurement system can give enormous insight into an organisation, and not just in terms of hitting targets. You can use performance measurement data to generate insights into the changes required for improvement. IfM’s research has been looking at how hi-tech firms are using their measurement systems to cope in very fast moving environments and we have found that these firms are very clear about their performance models and what drives success.
We identified five enabling factors that happened in all the organisations we looked at:
- Strategic intelligence:scanning externally for ideas
- Continuous conversations: continually exploring and thinking about the relevance of this intelligence across the organisation
- Accelerated learning: follows from successfully deploying the above and learning faster what is working and what is not working for your business
- Organisational alignment: to provide a framework for continuous conversations and accelerated learning to take place coherently across the organisation
- Engaged leadership: to legitimise performance measurement and allow people to use performance data to drive improvement
An additional enabler is ‘reflection’. Managers need to reflect on which projects they are going to execute to drive improvements, and whether those projects are delivering. They also need to be able to challenge others – even if things are going well.
In times of rapid change, performance measurement systems must be as dynamic as possible. They should help you to evaluate whether the things you are doing are really adding value to your organisation.
Professor Neely holds joint appointments at Cambridge University and Cranfield School of Management. He has recently published ‘Managing Performance in Turbulent Times’, co- authored with Ed Barrows.