Bible for Business Seminar#10 Performance Measures

Highly recommended books are "Transforming Performance Measurement" by Dean Spitzer and the books and writings of E W Deming.

In the Strategy Map talk, we stressed much the need to define measure to enhance understanding about the objective, to help define what success looks like and then to set target. Measures direct behavior, focus attention, increase objectivity, enable accountability, bring visibility and enable prediction .... etc.

D Spitzer, in his book, pointed out 4 important aspects about measurement. The Context, Focus, Integration and Interactivity. The context of measurements is the most important but often neglected issue. The context involves not just the measures, the measurement process, but include the most important factor of all - the People. The perceived consequences and controllability of the measures determine the how people will respond to the measure - either positively or negatively.

Wrongly defined measures will create dyfunctional behavior. Typical example is measuring the number of calls handled per hour to try to increase the productivity of the Call-Center. The end result is unhappy customers with calls being diverted or abruptly ended as operators try to meet or exceed targets.

The Focus and Integration of Measures correspond to the drawing of the Strategy Map of Cause and Effect Objectives. By doing the strategy map first, we can bring out focus and integration. Interactivity of Measures refer to continued review and improvement of measures and measuring systems to increase learning.

Two Main Uses of Measures

1. System centric: As information to gain understanding of the improvement and working of system. i.e. to increase knowledge and wisdom.
   
2. People Centric: As monitoring and control with intention to rewards or punish.
   

It is strongly recommended that measures be used for usage-1 only -gaining insight to the operation of the system and looking into areas for improvement. For People-Centric usage of rewards and punishment, it is important that the measures be outcome and value based. The effects of the contribution of either the individual or team or system must be identifiable. It is very difficult in team work to identify the contribution of any particular individual. E W Deming's System of Profound Knowledge also explains why incentive for pay does not work. Incentive is an Extrinsic Motivator where as Recognition is an Intrinsic Motivator. There is the need to understand the motivators better.

In the Bible, Luk 6:37-42, we discussed judging is finding out the internal intention of the heart. In context, Jesus was not trying to tell not to judge but to judge wisely. Correct our brothers is our responsibility and we can't do that without judging. We need to be trained to be like our Teacher (v40) to judge wisely. See Judging Rightly and Judge Not yet Correcting

Target Settings
4 ways

1. According to your Vision - Goals - Where you want to be.
2. According to your Market Standing - Relative Rank or Share of Market
3. Relative to your Competitor - To beat or catch up with your target competitor.
4. Relative to your Past performance - what improvement over last year.

Deming System of Profound Knowledge

Do a google search on the above topic and you will find a lot of good information about it.
It has four main parts

1. Appreciation of System
• system exists to accomplish a purpose or aim
  
• made up of interdependent sub-systems
• whole greater than the sum of its parts
• must optimize for the whole and not of its parts
• system does not improve itself - It is manager's responsibility
2. Understanding Variation
• understanding probability
• variation is to be expected
• find out the particular outcome is due to common or special causes.
• no tempering or ranking
• understand system capability.
• See The Black Swan: The Impact of the Highly Improbable and Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets and
  The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers
  
3. Theory of Knowledge
• Highest form is Prediction
• Learning from theory and experience
• Operational Definitions (see Measures above)
• PDSA for learning and improvement
4. Psychology
• Understand People and Behaviour and interactions
  
• Motivation - Intrinsic vs Extrinsic. Deming's Forces of Destruction.
  
• Beliefs and Assumptions

Management is about Accurate Prediction of Good Outcomes.

Management is responsible for

• improving the system; no one will
• prediction vs prescription
• application of Profound Knowledge

The Gathering & Feedback
About 12 of us gathered together for the seminar. The overall rating is 90%. The highest scores of 100% go to Knowledge of Speaker, followed by Expectation Met, Recommend to Friend, and the lowest score is Relevance to Job 78%. The feedback from the attendees are shown below:

Like Best

• Intrinsic & Extrinsic Motivation
• Traditional vs Positive Measures
• Application of Profound Knowledge. Like & Agree with the idea that we are in a world of systems
• Also the fact it that with humans around, there is always psychology involved and there is variation (random outcomes)
• Lk 6:37-42 Understand what is judging

Like Least

• nil

Others

• Good session. Not too fast and not too much materials in one go.
• Good participation from audience.
• I would recommend more group discussion.
• Sometimes audience can be a little shy or slow to start asking questions.
• So may be help with some prepared questions.
• As usual, the speaker has good in-depth and practical examples.
• Because the participants are regulars and probably those who are really interested, perhaps small group setting may encourage more interactions.