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April 19, 2005

The Performance Analysis Framework Pt. 1

All businesses operate on the presumption that progress is viewed through purpose. But in assessing progress, too often the business is distracted by the pressure for efficient activity, to the detriment of managing for effective achievement.

Typically, when managers translate a leader's mandate into actions, the step initially considered is to decide how to configure resources and methods to leverage environmental conditions that "drive" progress.

"Drivers" are the conditions that usually obtain for value to emerge from the interactions of the organization's operations, locations and relations with other parties.

Management's job is not just to orchestrate the interactions but also to cultivate those conditions and, through designing the co-operation of conditions and interactions, to prescribe when the emergence of value is most likely supported or inhibited.

Attending to the drivers, managers first need information that identifies how the key condition in question is helping or hurting progress, and this means identifying what underpinning aspect of the plan's cause-and-effect prescription is being influenced.

Management typically puts a lot of attention on monitoring the "components" of a plan, in the sense that there are mechanical parts such as the steps in a procedure or the quality of a particular resource being used, and the plan assumes that their use is necessary.

But those specified components are just one aspect of the plan's underpinnings. An equally critical aspect involves the actual reasons why their usage is necessary, and the requirements that are success factors for their usage in the planned way.

Those reasons and requirements are what make the components "appropriate" for the organization's attempts to execute its strategy. Managing this appropriateness is generally a matter of establishing policy.

Cross-referencing the reasons and requirements forms a framework for understanding how the organization can actually organize for performance, because it looks directly at organizational characteristics that will tend to inhibit or protect opportunities for progress.

This follow-up activity constantly confronts opportunities, restrictions and expectations that surround the ability to use procedures, tools and people for getting things done.

The practical intelligence about those constraints is distributed throughout the organization. To allow discovery of how to optimize resource utilization for the plan, that intelligence must be coordinated and integrated. Then, refined activity can realize the plan, and drivers can be supported, to produce desired outcomes, which will be observed as good performance.

The utilization of that intelligence is the focal point of performance analysis.

Posted by Malcolm Ryder at April 19, 2005 8:50 AM

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