Measures Provide The Leverage For High-ROI Strategy Execution

February 23, 2016 by Stacey Barr

Great strategy execution should be about implementing high return-on-investment (ROI) improvement initiatives. But finding that high ROI requires a few mindset shifts about what leverage really means, about the role of data in helping us find leverage, and about where to act to implement leverage.

feet on pedals

Archimedes was an Ancient Greek mathematician, physicist, engineer, inventor, and astronomer. In explaining the concept of leverage, he said something like this:

“Give me a lever long enough and a fulcrum on which to place it and I shall move the world.”

Leverage is everywhere. The cranks on a bicycle. A golf club held in our hands. A beer bottle opener. The see-saw in a children’s playground. Leverage is the principle that makes hard things easy. The leverage that Archimedes speaks of in the above quote applies just as appropriately to how we lead high-performance organisations. Archimedes’ world is the result we want our organisation to create, articulated through our corporate strategy. Archimedes’ fulcrum is how we measure that result, so we can base our action on a foundation of fact. The lever is our improvement initiative, the action we have chosen, informed by our measure, to reach our goal.

To improve performance, to increase the capability of our business processes to sustain a higher level of excellence, requires leverage. If an improvement can only be sustained by continually putting in more effort, we didn’t find the leverage. If we give a team a new target to increase their output by 20%, they will ask for 20% more people or more budget in order to hit that target. But we want the increase in output without having to buy it. We want the team to find their untapped potential and use that to increase their output. What we want is leverage.

It’s usually desperation to make a fast difference that drives this tendency to use effort rather than leverage. Everyone can try harder, immediately. But usually they have to keep working harder, for if they slacken off again, performance drops. Leverage requires some time to finesse a solution, but it’s the kind of solution that is implemented once and performance continues to stay elevated henceforth.

Humans – including leaders – also have a blind spot when it comes to interpreting data properly and lack of patience to wait for enough data that can reveal the truth about performance, what is constraining it, and what works in lifting those constraints. If measures of performance are going to be the fulcrums they should be to help us find leverage in our actions, we have to learn how to use them properly to decide when to act, and whether our actions worked.

DISCUSSION:

What does leverage mean to you, in the world of performance improvement?

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