Tuesday, October 17, 2017

CIOs as Chief Improvement Officer: Can you Play the Number Game Wisely?

Performance metrics are numbers in context, results related to the strategic goals of the business.

“You can’t manage it if you don’t measure it” is an old adage for modern business. A performance measurement system is a necessary foundation for continuous improvement. Because without measurements, it can be hard to tell whether attempted improvements make the situation better or worse. In fact, it is dangerous to impose metrics just because the focus on what’s measurable is manageable. It is not the measurement that is important; it is what you do with the data obtained from the measurement. Thus, digital leaders, today should continually ask themselves: Which goals shall you achieve through measurement? Can you play the number game wisely, either for unlocking IT performance, improving business management effectiveness, or lifting the overall business maturity?

Guidance: Performance management is never just about numbers, it’s even not just about explicit communicating the intention behind metrics, it is a matter of providing the guidance to help improve the future decision making or action taken. The business executives should understand the major performance metrics that the business uses to measure their performance, they need to make sure that the well-defined set of metrics can lead to continuous improvement and enforce data-based communication. Because it is not the measurement that is important, it is what you do with the data obtained from the measurement. Once Key Performance Indicators are selected and finalized, decision-making based on the results of them becomes ultimately important. If decisions are not made effectively, and then those performance metrics do not contribute to setting the right direction for the organization or help to improve the business result. Therefore, from the digital transformation management perspective, business executives should play the number game wisely, understanding them well will enable better business conversation about what they are doing and how to set further guidance for leading change toward the right direction and unlock performance for the business’s long-term advantage.

Transparency: Effective performance management can improve business transparency and enforce employee accountability. No doubt about it, transparency is a fundamental factor for performance. Business transparency can help business executives tell a story of the journey from the current state to the future state, of enablement, of improvements, of accomplishments, of the implementation of digital business strategies. From the IT management perspective, the well-selected set of metrics are those used to inform the business of multidimensional IT performance and value, with the goal to change the business perception of IT as a cost center.  IT leaders need to play the number game wisely to present IT value proposition on how to increase revenue, reduce cost, improve service/solutions, manage risks or enhance the corporate GRC disciplines, with transparency. These numbers should all be presented in business terms and evolve to something that matters to the business audience, at the same time that "business sentiment" needs to get put into something more tangible, with the goal to improve IT performance, transparency, and overall business management maturity.

Macro-management perspective: Performance metrics setting needs to strike the right balance of transactional measures and transformational measures. When IT performance management only focuses on the operational side of measurement, IT can only make linear, incremental improvement. It is not sufficient to run a digital IT organization. Playing the number game wisely means that performance management should bring up a macro-management perspective, either for running IT or the entire business. All indicators must be related to the outcomes identified in the organization's strategic plans. You select the critical few and the KPIs are a combination of leading, lagging, financial, and non-financial indicators. Every measure selected should be part of a link of cause-and-effect relationships, and ultimately affect the growth and long-term perspective of the organization. The good measurement aids in setting the direction for the business and brings the learning and growth perspective of the business. The good performance measure setting should focus on achieving the ultimate goals of the organization as a whole, not just the individual or one team’s as well. The good performance measures have to accommodate digital organization investment outcomes that have a higher level of business value in the long run, with a macro-management perspective.

Performance metrics are numbers in context, results related to the strategic goals of the business. The fewer the better, but they have to be credible and relevant also in the eyes of the stakeholders. And business leaders need to learn how to play the number game wisely, for making continuous improvement, and accelerate business performance seamlessly.


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