Question 93
of 100
We use lead indicators and
other measurements to predict our long term sustainability.
We recommend that you answer the questions in the order determined by the "next" button below. However, to allow you flexibility, the links below allow you to jump to different Principles.
Where to next
|
You need to decide for which level of your business
you are answering these questions. We suggest that you first
answer for your most immediate work group, (If you are part
of a large organization, you may later choose to answer as part
of the larger group of which your work group forms a part.)
The information to the right is provided for
your guidance. You can answer the question without reading
any of it if you wish.
Information is presented under the following
headings.
Why this is important
Lead indicators
Indicators of sustainability
A warning
|
© World Rights Reserved.
netgm.com has legal ownership of the intellectual property contained
on this page and through out the website. Unauthorized use or
reproduction of any part of this material is prohibited without
permission of netgm.com. Permission can be obtained by contacting
|
Avoid doing these poor practices
Inability to articulate a clear view of several possible futures.
Over reliance and emphasis on a single view of the future across
the company.
Lack of strategic intent or supporting strategies to achieve
or support new futures.
No evidence of measurement of rate of improvement and no understanding
of its importance.
Learnings from overall performance analysis not deliberately
developed and not directly reflected in plans.
Not recognizing and building on Business Excellence strengths.
|
Do these good practices
A set of indicators that measure the health of the company.
A scenario planning process that leads to new strategy. Several
probably futures are identified, likelihoods and tell tale signposts
determined. These are tracked. People at all levels of the company
are aware of the scenarios, talk in terms of them and track
the likelihood of them being the actual future.
Strategies are developed to achieve desired outcomes. Strong
strategic planning processes.
Strategies and actions are put in place to achieve futures
that are most advantageous for the company.
Making time in the present to plan for and influence the future.
Balancing effort between present realities and future concerns.
Attempts made to predict the future using data and information.
Measurements predict sustainable business outcomes into the
future based on existing trends.
Ability (at senior levels) to articulate a clear strategy for
growth of the company – how much, when and why the business
will grow. A clear path for that growth and the risks associated
with that growth.
Processes to identify and respond to risks (economic, social
etc.) and likely changes to its environment (positive and negative).
Thorough strategic risk assessment conducted of risks and threats
to achieving success (Mission, Vision and objectives). This
is acted upon.
Plans include overcoming risks to the company (eg risks to
revenue, achieving mission and vision, market share, assets,
knowledge, safety, environment; risk of technology change; threat
to values).
The core competencies of the company (ie those things that
it does very well compared with other companies) are understood,
protected and developed through deliberate strategies.
Developing a pool of knowledge as a strategy for sustainability.
Lead indicators for rate of knowledge acquisition, innovation
rate.
Recognition of the relationship between improved company performance
(ie, the KPIs) and the application of the Business Excellence
Principles.
Business improvement (in line with an acknowledged Framework
– ABEF, Baldrige or EFQM) is a company level objective
with strategies that are given high priority and acted upon.
Improving results on staff opinion polls, cultural audits and
Business health assessment against a Business Excellence Framework
or the Business Excellence Principles.
Positive trend data on major indicators that the company uses
to judge its success, in combination with rational explanation
that what the company is doing to ensure positive trends continue.
|
|
Principle 10: Value for All Stakeholders (Item 9)
Sustainability is determined by an organization's ability to create
and deliver value for all stakeholders.
You should use lead indicators and other measurements to predict your
long term sustainability.
You have KPIs that tell you that you have been successful to now. You
want to answer the question "will the company continue to be successful?"
Most Key Performance Indicators in use by companies today are very
poor predictors of the future (as anyone knows who has had to predict
sales revenue from past sales figures). Most KPIs describe history –
they tell you what has happened in the past. We are not saying that
KPIs are useless and should be abandoned. Quite the opposite. Useful
KPIs are essential. You need them. However, when you try to predict
the future, you cannot rely solely on the past.
Lead indicators are indicators that you can measure today to give a
clue about tomorrow.
Here are some simple examples. KPIs that rely solely on historic data
are like indicators that say `the clothes on the line are wet so it
must have rained'. If we try to use these as predictors of the future,
it is like looking at the wet clothes on the line and trying to work
out if it will rain. Only partially useful as a predictor.
On the other hand, an indicator that says `clouds brewing and winds
are getting stronger it will rain soon and wet the clothes' could be
a very useful predictor. We call such indicators `lead indicators'.
In your battery of KPIs that you use to make decisions about your company,
you need lead indicators (predictors of the future) as well as
lag indicators (that describe what has already happened).
Indicators you can use to predict the company's on-going success, long-term
viability, competitiveness and sustainability of its success into the
future include:
- investment in stakeholder groups – these are strong
lead indicators
- the amount of investment in each stakeholder group
- the balance in investment between stakeholder groups
- focus on `creating and providing value' for stakeholders
- measure and track over time your estimates of the value you provide
and create for each stakeholder group. Compare this with your estimate
of their target.
- measure and track over time your estimates of the value you remove
from each stakeholder group – ie how much its costs them or
their business to do business with you.
- measure the balance in value you provide to your different stakeholder
groups. Is this acceptable?
- stakeholder perception of value – this should be obtained
for each stakeholder group. The reasoning is that if the stakeholder
perceives that they have received value, they are less likely to jump
ship. It is a compliment of the indicator above.
- have each stakeholder group make an assessment of the value they
perceive they receive from your company
- have each stakeholder group make estimates of the value you deduct
from them – their estimates of what it costs them to do business
with you
- paint word pictures of what you think the future will look like
- predict the future for several likely scenarios
- make plans to achieve the futures you want to happen
- develop indicators so you can tell which scenarios are emerging
- track your scenario predictions
- influencing the future – what the company is doing to
influence its important stakeholders (especially the owners, shareholders,
community, political, government, media, customers, alliance partners)
to ensure its future viability
- develop an index to summarize the perceptions these major stakeholders
have of your company. Their perceptions of the value you provide
to them; the value your company provides to society and the community;
your values. Subtract any major negatives, eg bad media coverage.
- develop an index to summarize your activity to influence the above
index. For example, lunches, breakfasts, meetings knowledge exchange
with your stakeholder groups; your advertising, positive media activity,
public relations, press releases, your attempts to influence the
media and the community to have a positive view.
- management of major risks
- assess your company's major strategic risks, e.g. the risks to
it being able to achieve its mission, vision and objectives or to
its values or core competencies. These may include risks due to
changes in technology; social mores; political situation; financial
situation of your customers, supplier or host country; government
policy or regulations; industry structure; competitive mix, competitors
offerings or ways competitors do business; natural environment or
decisions of parent company.
- these risks should be tabulated and their affect and the likelihood
of each occurring objective assessed. For example, if x happens
it will reduce our revenue by $200,000; however, the likelihood
of x happening is low at 10%. Multiply the affect by the likelihood.
In our example, $200,000 multiplied by 10% is $20,000. Total all
the risk*likelihoods.
- develop and implement plans to mitigate or eliminate the negative
consequences of these risks, turn your negative risks into opportunities
- estimate the residual risk*likelihoods. That is, all the risk*likelihoods
that remain after you have implemented your plans.
- graph and track the residual risk*likelihoods. If you have done
the analysis objectively and if you have found all the risks, this
is a good estimate of your company's sustainability.
- responsiveness and innovation indicators – indicators
for the company's
- responsiveness to change
- rate of knowledge acquisition
- innovation rate
- ability to cope with new technology
- willingness to embrace new technology
- competitive, innovative, responsiveness and technological capabilities
- capability with its core competency
- self-assessment against the 10 Principles - the Principles
themselves are indicators of future success and sustainability.
- Your estimate of how well you are performing on each of the Principles
is a significant indicator of future success and sustainability.
Use the questionnaire in Appendix 1.
- measure the extent to which your company is aligned to each of
the Principles.
- self-assessment against one of the Frameworks (MBNQA, EFQM or
ABEF)
- each of the Business Excellence Frameworks is an assessment tool
for the Principles. Make your own `self-assessment' of your company
against one of the Business Excellence Frameworks
- alternatively, you could have an assessment made by an external
organization or make a formal application for an Award.
- extrapolations – these are weak lead indicators
- extrapolate historical lag KPI trends into the future. Eg Project
historical financial data, cost or revenues into the future as predictors
A warning. Never build a strategy
based on a market forecast – it is like trying to capture the wind.
Depending on sales forecasts is a sure recipe for non-sustainability.
You should do it the other way around. Build strategies and plans to
reach the target forecast. When you get a sales forecast, verify it
(if you can) and build and implement plans to reach it. A sales forecast
is just another target – albeit an important one. And, like all
targets, you must put in place very good plans to reach it.
|
If you wish, you can stop for now and come back and complete the questionnaire another time.
We store your answers on your computer for a year so you can come back to them later.
|
|
|