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November 30, 2005

Communications in Performance Management Pt. 2

"Performance" rates the value provided under demand.

With that working definition, it's easy to see why modelling processes is so important: the process model is expected to account for how the organization successfully and predictably handles the stress of the demand and allows "performance" to be engineered.

That is, process modelling interprets performance in an explicit operational language that connects capabilities to requirements.

Process Management attends to those connections by maximizing the availability, economy and efficiency of the connections. To leverage potential connections, the management effort carefully but quickly associates the model of a process with the requirements of a demand. The associations that prove to be the most frequently successful lead to two things: refinements of the models, and standardization of the selections made amongst potential connections. In that way, we decide that the reliance on processes is improved according to the definition of "success". Net: we decide that "process improvement improves performance."

But the number one problem in managing performance is not a matter of correct processes; rather, it is a matter of knowing what is currently really going on. This knowledge is not simply a matter of timely fact-finding but instead of sophisticated interpretation of the state and trajectory of current conditions. Assuming that the right facts are discovered and studied, we rely on the analysis of facts to accomplish this interpretation. Properly done, the analysis must examine facts to determine their significance to the definition of success. So, given our working the definition of "performance", the analysis of facts is potentially critical, but it is irrelevant unless the current definition of success is well established.

In practice, success is generally identified as a "goal", but what practically matters are the characteristics of that goal. Whenever a goal has multiple stakeholders (which is, most of the time), it is necessary to not only "get there" but to get there "in the right way". The understanding of the right way to get there must drive management decisions about what processes are "best" against demand. The right way is defined through "terms" of success.

Meanwhile, the immediate priorities of the different stakeholders can and do change independently of each other, so in a given instance of demand the most proper (balanced) response may be very specific to the moment. Politics notwithstanding, this inherent complexity also means that the management effort itself may not be practical (towards high performance) except through on-the-fly collaboration that allows the true current terms of success to be properly recognized.

Net: modeling the collaboration is more important than modeling the process.

Collaborative management fundamentally acknowledges that different perspectives must be reconciled in a process, not just that the process should mechanize the stability of operations. As seen in the following picture, each stakeholder has a point of view offering at least two perspectives -- perspectives that can raise and evaluate issues, actions and likewise events.

Therefore, proper management calls for an integrated management communications platform that allows all members of the organization to:
- continuously observe and immediately understand the context and implications of operational events; and...
- communicate the issues pertinent to the observations and understanding, and...
- appropriately collaborate on timely follow-up decisions and actions that create or restore critical alignment of activities to the directions of strategic and tactical goals.

Observation becomes meaningful when the items within view have definition. In performance management, the importance of communications is to indicate the impact of events, but this cannot be done unless both events and impacts are specifically and suitably defined. The caveats are that Events are defined within the mode of monitoring, and Impacts are defined within the mode of interpretation. Consequently, the actual implementation of these management activities can be highly specific to time and place -- and for any given implementation, the modes of monitoring and interpretation must be logically related to each other. Thus, "one size does not fit all."

Understanding is accomplished when:
- those above-made definitions of events and impacts allow their associations to be determined and classified, and when...
- those classifications can be used to account for the status and dynamics of circumstances, both present and future.
In implementation, the degree of understanding achieved is usually represented in a level of compliance to rules and plans that are intended to control, by force of design, the status and dynamics of circumstances. These exert their influence as "requirements" for the processes that are ultimately selected to respond to demand.

To establish and maintain credibility as an agent of performance, management must be directly responsive to the implications of current circumstances. As shown in the diagram above, a performance management solution must bring practical visibility to the fact that any of the terms of the operations environment, and any of the values in the management context, may change at any time. Changes will affect both the events and the impacts observed, thus their relationship can change and take on a different meaning.

Ultimately, what the “business” must gain from performance management is the ability to better orchestrate the changes -- in order to direct affairs in a logically calculated way towards the meaning that the business desires.

Posted by Malcolm Ryder at November 30, 2005 7:52 AM

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