Getting the green light from the board

In an extract from his book, Common Approach, Uncommon Results, Ian Gotts discusses managers' information overload and how to get...

Ten years ago, I was one of the IT directors at the Department of Social Security. I had 500 staff in eight locations and a budget of £40m. In my rather large office, my PC had an executive information system (EIS) with lots of traffic lights reporting on my organisation's performance.

But those traffic lights were not connected to any of our project processes or to any other definition of activity. I had no way of knowing what to do to change the traffic light from red to green. So I accepted the green lights and used the amber and red as early warnings to prepare excuses for the next management meeting.

Having an EIS that creates performance data that is not connected to an organisation's activities is like trying to play a video game with a disconnected joystick. The game is still in play (people are still at work) but the joystick operator (management) cannot influence the action.

The other issue with the EIS is that it was driven by lagging indicators - numbers such as last month's or last quarter's sales figures or customer churn. Things can start to go wrong in a business well before the performance measure turns the traffic light red. Using metrics that measure past events is like driving while looking through the rear window.

With increased access to data and greater processing power, every software supplier is adding scorecards to its products. This software scores the performance of departments, business processes or technologies against a range of criteria. This is being done because scorecards are a very compelling way to display metrics or numbers to the top executive team - the level at which every supplier wants to sell its software.

Certainly scorecard software systems can make good decision-making much easier by providing comprehensive information.

Every book on balanced scorecarding will tell you that you need to measure the right things - which are not easily measured. But what they don't tell you is that you need to present the measures within the context of their processes. If you don't, then the owner of the metric can see they are doing well or not - but have no way of knowing what to do more of if they are doing well, or what to change if they are doing badly.

So if you have a scorecard initiative in full flood with timescales to hit, how can you get better value from it? One example is a company that had grown rapidly for five years, transforming itself from a regional to national UK telco, providing telephony, internet access and broadband television service. Its business division set out to create a quality culture that would achieve outstanding customer service to maintain growth levels.

To achieve its goal, management gathered existing processes, rationalised some and improved others, and benchmarked them against other world-class companies. It knew that it needed a software system that could be used to standardise business processes across the company and allow them to be continuously improved.

Ian Gotts is chief executive of Nimbus. Common Approach, Uncommon Results, by Ian Gotts and Richard Parker, is published by Ideas-Warehouse
This was last published in October 2004

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