Friday, February 19, 2016

What’re in your Digital Management Tool Box

What gets measured, gets managed.

There are two levels of goals to run a successful business, at the strategic level, organizations concern about the long-term business result, business capability building, customer satisfaction and employee engagement; at the operational level, the business needs to take care of quarterly financial result, employees’ weekly report, customers’ purchasing transaction and more. Today’s digital business is complex and dynamic, managing both levels of business goals are challenging for digital leaders and managers. Therefore, systematic approaches, efficient tools and well-defined measures and KPIs are all important factors to manage business performance from a variety of perspectives and keep track of strategy execution effectively. In practice, which tools are in your digital management tool box?

Strategy management tools: Strategic development is too often seen as a linear process, but it is, in fact, a cyclical process that needs constant attention and tuning within bounds. This process defines an approach which will leverage some popular strategy management tools such as Five Forces, SWOT, PEST, Blue Ocean, etc. So the “art” comes in both aspects - initial strategy formulation is a highly creative process, better strategic options usually result from a more creative and open process. When developing a strategy, one should always plan an execution of strategy, and prepare for “What If” scenario. Strategic scenario planning is to navigate through the digital dynamic, discover the path via unconventional or out of the box thinking, believing in yourself and most importantly in your team to achieve the high performing result. Strategy and execution are two completely different things and skill sets, but they are interlinked. Unless executed well, the greatest strategy will flop and without all dependencies and influences placed in the melting pot, risk-management of the greatest strategy will be a costly activity. The other important management tool is the balanced scorecard which offers a way for a corporation to gain a wider perspective on its strategic decisions by considering the impact on finances, customers, internal processes and employee satisfaction.  The Balanced Scorecard framework is a great way of selecting, scoping, and aligning specific projects to overall strategic objectives and the budget.  A well-defined scorecard should contain a good mix of outcome measures (or long-term strategic value) along with performance drivers to track the progress in the short term (operational value).

Business agility metrics: Metrics is a tool in the toolbox, but just because you have a hammer, not everything is a nail. What gets measured, gets managed. Metrics is not the end-all solution to management, but simply another set of tools, data, and information sets. Numbers permit one to collect and build out a quantifiable history for reference, particularly for trending. It is practical to measure, whether you are getting what you want to get out of being agile. In agile, measure directly what you want to achieve, what your organizational goals are like go to the market time, cycle time to develop a feature, anything that you truly want to see results from. Some of the key measures of Agile effectiveness are creating value, timely delivery, teamwork and productivity for the work done. By benchmark and comparison within the organization groups and their characteristics over a period of time may be the way to go.

Innovation management tools and metrics: Innovation performance indicators need to focus on measuring quality, quantity, time, cost, revenue growth, profit improvement, margin targets, product variety for stability, turnover, shareholder/owner return and talent sustainability, etc. Normally organizations look for KPIs measuring business results generated by innovation efforts. The innovation metrics in the context of business impact include such as, % of revenue from new products introduced. You could also change the variables and create something like % of the profit from new ideas implemented. But it takes quite some time for a new innovation drive to produce those measures. One of the solutions is to define innovation process KPIs, which demonstrate the growing capability of the organization to deliver more innovation with business impact in the future. The process KPIs could link to strategy, to make progress on the percentage of projects in the total innovation portfolio which contain a major part of external innovation. You choose those KPIs by deciding which are seen as critical to making progress on in order to deliver more innovations. Select the few (3-5) KPIs, to keep the measures simple and understandable.

Performance Management tools and measurement: Every function talent managers touch and activity HR handles have efficient tools and potential metrics for improvement comparison: engagement, cost control, return on incentives, recruiting efficiency, the number of stars rejecting outside offers, speed in revising performance objectives, clarity of organizational structure, depth of backups in succession plans. By tracking these measures, you can focus on where targets are not being met that support planned revenue and profit levels, and what actions might be taken to improve at the individual, functional, and corporate levels.

Change Management “tool set” and metrics: Oftentimes, the organization may not have the systems and structures in place prior to implementation to actually monitor and track the change. Measuring change involves first accurately identifying where you are now. Then, clearly identifying where you want to be once the change is complete. Both require the necessity to be brutally honest and to establish clear, understandable, and easily calculable metrics.That metric needs to be SMART, so people can see what the outcome will look like throughout their transition. Second, there should be a consideration for a balanced scorecard that measures the progress you want to achieve during the change transition, this keeps people focused. A balanced approach may be sensible as they move away from providing towards commissioning services; looking at finance, working in partnership with others, contracting services out, building relationships that can help to support new ways of offering services. How do you measure these in a meaningful way? Perhaps the answer lies in using a range of different tools rather than relying on a single method.

There are both “hard tools and software” in the digital management toolbox. But still, leaders are the tool master. Do not confuse the means to the end. Follow the “KISS” and “SMART” principles, and always keep the end in mind - to strike the right balance between long-term business strategy execution and short-term operational efficiency.


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