Sunday, June 10, 2018

How to Measure the Digital Relevance of the Business

Performance Management should be the holistic management discipline which needs to connect many relevant dots to involve development, enablement, enhancement.

Due to the increasing pace of changes, overwhelming growth of information, fierce competitions, and unprecedented uncertainty, many organizations are at the crossroad to either ride the learning curve for shaping a self-adaptive and self-renewing digital organization or become irrelevant. From a performance management perspective, it’s fair to say any organization that doesn’t have a holistic management discipline has a giant blind spot which is impairing their performance. It is important to measure the digital relevance of the business and ensure the organization is on the right track to change and build the business competency for the long term.

Use metrics to help stakeholders understand what is going on: The essence of leadership is to set the right directions for others to follow. Digital leaders today need to be trusted experts who understand a lot about the performance dynamic and are perceived as value-added participants in making information-based business conversation regarding the business performance and potential, the need to increase in business capacity, market penetration, the increasing velocity/performance in every dollar spent, as well as risk management. Those leaders or stakeholders are not always in a position to visit the team or talk to team members personally, so the well-defined metrics can be very helpful to track the digitalization progress. Without the proper measurements, it can be hard to tell whether attempted improvements or radical change make the situation better or worse. Thus, it is critical to define a set of measures which should cover all areas that contribute to business value creation. Those measure-based communication improves business transparency and helps digital leaders tell a persuasive story of the digital journey from the current state to the future state of digital enablement, business improvements, staff empowerment, strategy implementation, and overall organizational accomplishment. Top executives will spend time on communicating with the board, between the management teams, and communicate with employees and customers to explain the digital shift in thinking, present the performance result, and ask for feedback.

Keep track of performance at the strategic level is important to evaluate the digital relevance of the business: Digitalization is the strategic movement. The purpose of managing performance is about setting performance metrics to the status of strategy management, making objective assessments, and understanding performance measurement results. It is also important to focus on measuring the performance of the organization as a whole for the long term, not just individual, one team or one department performance only. Digital is the age of people, at the strategic level, organizations concern about the long-term business results, organizational capability building, customer satisfaction, and employee engagement. It’s important to track the right metrics and know what to do with them, see the performance improvement, and ensure organizations ride the learning curve to make change happens as well as sustain change effort.

Monitor the innovation pulse of the organization to ensure digital relevance: Digital is the age of innovation. Evaluating innovation performance enables the leadership team making an objective assessment of the business’s innovation competency and digital relevance. The goal of innovation measurement is to create new revenue and drive early success to create a positive spiral. Innovation performance indicators need to focus on measuring profit improvement, margin targets, quality, product variety, time, cost, turnover, shareholder/owner return, and talent sustainability, etc. The other important perspective is about measuring innovation failure, as failure is part of innovation. If the organization allows reasonable failure, not repetitive mistakes, it will learn from those failures fast and become more successful in managing innovation. Only innovation can keep the business cross the sectors relevant. It is critical to select the right set of KPIs by deciding which are seen as critical to making trackable progress in order to deliver more innovation.

Keeping digital relevant is not just about technical excellence or process efficiency, but also about structural elegance, business effectiveness, organizational adaptability, innovation, intelligence, and people-centricity. Thus, Performance Management should be the holistic management discipline which needs to connect many relevant dots to involve development, enablement, enhancement and ensure the business on the right track for the digital paradigm shift.


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