Principle 2: Focus on Achieving Goals (Item 8)
Clear direction allows organizational alignment and a focus on achievement
of goals.
Alternatively: Mutually agreed plans translate organizational direction
into action.
You must measure your progress towards your goals. Measurement lets
you know if the plans are being implemented and if the strategies are
effective in achieving the Goals.
Measurement provides a very useful tool to focus on achieving the Goal.
You must measure two distinct things:
- progress towards achieving the Goal (remember a plan is an experiment
to see if you can do something)
- if the plans are being implemented by everyone (or every section
or every division) who should be doing them
Every policy and strategy must have an objective – it must be
trying to achieve something. We are constantly amazed at the number
of companies that fail to give meaning to what they are trying to do
by declaring their objective. If you fail to declare your objective,
and make that measurable, there is no way you will be able to
every tell if you achieved it!!
At a minimum you should measure progress on all major company statements
of mission, vision, values, all objectives and Goals, all targets, all
stakeholder demands. This is covered more fully in Principle 5 (`Improved
Decisions').
Many companies have an attitude of "We thought of all these wonderful
things to achieve our Goals and because we are very smart, we know they
will work and that we do not need to try anything else. If there was
something else we would have thought of it". That form of ego has
no place an excellent business. Excellent companies use a more scientific
approach and recognize that any strategy is nothing more than an experiment
about how to get to your Goal.
You must use some form of measurement to let you know if your strategies
are effective or appropriate in achieving the Goals. Then you can discard
or modify those that do not contribute significantly to your Goals and
concentrate on those that do contribute significantly.
As we discussed above, you should use many strategies and options within
those strategies. Asking which of the options or strategies is helping
you achieve your Goal may be the wrong question and may not be answerable.
You need to know if your strategies in general are being successful
and if you can discard any.
All strategies take up some of your scarce resources.
Unfortunately, the majority of strategies have little or no effect
on reaching the Goal. They may work for other people, they may have
worked in the past – but they may not be working now, for you.
Many strategies, although they may sound good, are actually destructive
of your Goal. (Ernst & Young's Quality Report confirmed this by
finding that some management practices are detrimental to a company's
advancement.)
What is the point of continuing with a strategy if it is not assisting
you to reach your Goal? Would it not be better to be working on things
that do work rather than things that should work? Of course
it is. However, business is not a laboratory. You may not be able to
find out what does work and what does not.
Effectiveness asks the fundamental question "are you achieving
your objective"? Efficiency asks, "are you working with the
lowest energy or resources".
Effectiveness is always the more important, because you must
first be certain that your chosen strategies and activities are actually
working towards your objective. Most companies assume they are and don't
bother to check .
The biggest problem with measuring is that you drive behavior with
it. Well, isn't that what you want? It is, if the measurements are the
right measurements and give you appropriate and useful behavior–
i.e. behavior that helps achieve your Goal. Unfortunately, most companies
measure what is convenient, what is traditional or what they can get
data on. And, this may have no bearing on leading you towards your Goal.
Cost accounting is a very strong example. It is easy to set up measuring
systems for money usage, and most companies do. This leads to all kinds
of measurements of "efficiencies" on which people are assessed.
It is often much more difficult to measure effectiveness – progress
towards your Goal. So, this is seldom measured. Because people are assessed
on efficiency measurements and not effectiveness measurements, most
company behavior is pulling the company in the direction of cost reduction.
This may be (and often is) away from its Goal. Cost reduction looks
good on the Balance Sheet and for the Quarterly results. Unfortunately,
Cost Reduction is seldom, if ever, the Goal of the company. And because
it is not the Goal, achieving it may produce behavior that takes you
away from the Goal.
Similarly, performance management and reward and incentive schemes
may be pulling you away from the company's Goal.
- Measure to see if what you are doing overall is leading to success
- Use everything you can think of (and afford to use) to throw at
the problem
- Be on the lookout for new options – for new ways of doing things
- Be on the alert for changes
- Be vigilant and discard what does not appear to work – accept
that well over 80% of your options and strategy will not be helping
you towards success
- If you can afford to, set up experiments to identify which options
and strategies to discard
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