Improving Strategy With A Better Measurement Approach

by Stacey Barr |

When we integrate a better performance measurement approach into the strategy processes we already have, we can make those processes work so much better, to truly achieve our strategic direction.

Businessman using a computer to create a flow chart. Credit: https://www.istockphoto.com/portfolio/KhanchitKhirisutchalual

It’s definitely the case that we, the global PuMP team, regularly find that strategy is fundamentally broken in organisations that struggle with performance measurement. What we mean by broken is that goals are vague, activity is the focus rather than outcomes, and that it lacks ruthless prioritisation.

We usually learn that the strategy was formulated as a check-box activity, rather than from deep analysis and dialogue about what really does matter. Trying to get proper performance measurement happening is almost impossible against the inertia of how strategy has always been done.

But we don’t have to wait for strategy to be fixed before we strive for better measurement. Integrating a better measurement approach with our strategy processes can trigger immediate, incredible improvements to strategy. There are three strategy processes that we can integrate a better measurement approach, like PuMP, into…

The first process is strategy design.

Strategy design includes analysis, then setting an overall direction or priorities, and then formulating goals with measures and targets for change, and finally the strategies and actions that will do the changing.

When you start using a proper performance measurement method, you quickly realise that the goals are not articulated well. And sometimes when you start to unpack them, you can realise that the analysis and priority setting wasn’t done very well either, because the goals seem trivial or too broad. But if the goals are still basically about the right priorities, measurement can improve the strategy design process from that goal-setting step.

PuMP’s Step 2 has a tool just for this: the Measurability Tests. This tool structures a conversation that helps us articulate our goals much more specifically and measurably. For example, it’s typical to see a vague goal like ‘Enhance Workforce Capability’ with no clear way to measure it. Along with PuMP’s Step 3 tool, Measure Design, it would become something like this:

Goal: There is no gap between our people’s skills and the skills required of their positions.

Measure: The percentage of total position skills required, that are successfully demonstrated by the people currently in those positions.

Target: 95% by Dec 2024

The second process is strategy alignment.

Strategy alignment starts with communication of the strategic direction to the whole organisation. And it triggers how the rest of the organisation will set its local priorities and goals and measures, to contribute to achieving the strategic goals.

When you start using a better performance measurement method, you quickly realise that many people don’t understand the strategic goals and can’t find out how they contribute to them. They feel stuck, and don’t know how to prioritise or set their own team goals. And if someone does that for them, they have no ownership or engagement.

The first fix for this is to use good measurement practices in the strategy design process, like we just explored, to make sure the goals are easy for every team to understand. But then, good measurement can improve the strategy alignment process by starting with the communication, and then helping teams build their line of sight to the strategic goals, to set their own goals and measures.

PuMP’s Step 2 also has a tool to build this line of sight: the Results Map. This is a visual map of how all the organisation’s goals link together from front-line teams through the strategic goals. For example, this is a line of sight for a team that works with cacao farmers, from their own goal to the left, through to part of the organisation’s strategic direction to the right:

A line of sight for a team extracted from a PuMP Results Map

The third process is strategy execution.

Strategy execution includes monitoring, project management, and course correction, all in the name of achieving strategic targets.

When you start using a better performance measurement method, you might notice how seldom the right measures are used to evaluate if a strategic change initiative is working or not.

The first fix for this is to use good measurement practices in the strategy alignment process, like we just explored, to be sure every team has local goals and measures that are meaningful. But then better measurement can improve the strategy execution process by providing regular and actionable feedback to keep strategic change initiatives on track to reach the strategic goals. Evaluating at the end is pointless – it’s a post-mortem. Measurement should be a health plan.

PuMP’s Step 6 through to Step 8 are all about using measures to reach sensible performance targets. It starts by displaying measures using XmR charts, which give us fast and accurate signals about when we need to take corrective action, or celebrate success.

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You could just take a random stab at how to integrate these back into your strategy processes. But we know that just leads you back into another version of the mess it’s already in. It needs a deliberately thought-through approach if it’s going to work, and going to stick. We have not found any other performance measurement approach that can help fix strategy like PuMP can.

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