One of my biggest “pet peeves” lately is the degree to which the consulting industry, including many of my peers for whom I have the greatest respect intellectually, are tending to gravitate toward the complex solutions, over the simple and more powerful INSIGHTS that our clients demand. At the risk of offending some within my industry, it’s a problem worthy of some straight forward discussion, and one in which even the best management advisors (including those who “advise from wiithin”- i.e. internal consultants and change managers) can stand to learn a great deal from.

Nowhere is this more prevalent that in the discipline of Performance Management. I’m referring here to all phases of PM including defining, measuring, benchmarking, analyzing, reporting, and improving organizational performance. Many of those in the consulting profession are, by trade, Engineers, Accountants, Economists, and Statisticians. And while all of these disciplines are essential to good business, it is often their very nature to opt for the more intellectually robust answers to even the most simple of business problems.

One of the areas most affected is (and what should be) the SIMPLE process of defining and reporting on Key Performance Indicators (KPI’s) within the enterprise. I’ve had the opportunity most recently to develop these types of frameworks in the Utility Sector- an industry which is most heavily dominated by very analytically sophisticated engineering. In a recent review of Utility Industry PM scorecards and KPI’s at over two dozen organizations, I saw numbers that ranged from a low of 12 KPI’s inside of a very tight architecture, to a high of over 400. After all, they are called KEY performance indicators for a reason, right?

Of course, it is important to look at the problem in the right context. If, in fact, the organization reporting 400 KPI’s had them all sitting inside of a tightly aligned “architecture”, I could be convinced that they were in fact on the right path. But reality shows companies with the highest volume/ # of indicators often have the weakest structures within which these measures are managed; and as a result have little ” line of sight” between what is important to the organization, and the metrics they manage to.

All of us have heard the adage of “analysis paralysis”; the process of getting so lost in the numbers that we lose sight of the forest by only seeing the trees. Sure, we have our 10 layered, drill down analyses and sophisticated multivariate regressions with super high predictive values, but does the guy in the bucket truck at the “work-face” really understand what it all means? We have the most sophisticated models but we’ve sacrificed the most important variable- the connection with the job that needs to get done on the front line.

To add insult to injury (and the core of my frustration), it is that the vast majority of business consultants often bring MORE complexity to a client who already has an overly complex way of managing their business. These clients don’t need more analytical models or more layers of analysis in their performance management system, they need less! Ironically, it is the simplest of frameworks that deliver the most insight.

So what can us consultants and executive advisors do to drive this type of simplicity into our client offerings and deliverables. Here is a short list of things we can do, particularly in PM space, to stop us from going down the proverbial slippery slope:

1. Focus on the enterprise outcome at hand and link everything to that- purge your client’s KPI list of all those random measures that would mean nothing to an executive of the business. In other words, make a distinction between KPI’s and what might just be random data elements or input variables.

2. Focus on PM insights and conclusions. Don’t overwhelm your client with overly complex analytic or economic models. Rather steer toward the answer with a handful (2-3) supporting justifications. Summarize the result of your analysis without bringing them through all of your analytic machinations.

3. Shoot for directional cues, not analytic precision. 90 % of the insights you generate for your client can likely be drawn from 20% of the effort you put you and your team through. For example where factors can be assessed using scales of hi-medium- and low, then opt for that rather than trying to develop more complex normalizers or coefficients to make the same point

4. Make your analysis approach simple enough that the client can follow your path, and replicate the analysis himself if he wants to. For example, design your models around 3-5 high impact variables versus 50 smaller ones.

5. Focus your PM framework on outcomes, not activities. If you look carefully at what your client calls key metrics or KPI’s, you’re likely to find that most of them are oriented around activities and project milestones, not result indicators or business outcomes. Keeping the two separate will allow you to assess causal impacts between initiatives and outcomes, rather than cluttering up your PM framework/ system with a mix of both.

6. And where you can, price your projects on value, not man-hours- The larger consulting firms will have the biggest problem with this since they are all focused on amassing huge amounts of billable hours, where complexity is your friend. Trust me, your client is waiting for someone to turn this model on its head. The faster you do that, the more competitive advantage you’ll have.

So, in the spirit of simplicity, all of this can be summed up by adopting the age old adage of K.I.S.S (keep it simple stupid), and using that as your guiding principle. Of course, the most pedantic, intellectually sophisticated, and complex thinkers among us will most certainly have a different view on this. But that’s the whole point isn’t it?

Get the fundamentals right, all the rest is “icing”- by the time you’re finished reading this, you’ll realize what a hokey pun this really is!

They say that some of the best business is done in hotel bars. And isn’t that the truth. I can’t tell you the number of times a friendly chat over “a Guinness” has led to a provocative new insight, business model, partnership, or just a different way of looking at the world of business.

This week was no different.

Earlier this week, while in Preston England on business, I ran into a chap who was struggling to connect to a wireless router in the hotel lounge. Having shared a similar experience the day before- to the same level of dissatisfaction- I introduced myself and began commiserating. Within 10 minutes, our laptops were closed, and the conversation ensued.

After concluding we had been bitten by the technology bug, and that our connection likelihood was approaching nill, we turned the conversation to travel, family, politics (wouldn’t recommend this, but if it comes up, you’ve gotta play), and ultimately business.

As it turns out, the guy on the other side of the table was quite the entrepreneur. 10 years ago, he had invented a technology called “multi ice” that had a significantly better cooling action on fishing boats. Suffice it to say that in the fishing industry, just a few additional hours of cooling, coupled with a natural additive in the “ice mixture” had a dramatic impact (as high as 10%) on what the fishing industry calls “yield”- the difference between “the catch” and the amount of “waste” generated as a result of inadequate cooling and its rapid impact on cell degradation (a fancy way of saying BAD FISH). Any improvements in yield impact the profits of fishermen, distributors, and stores, and restaurants- nearly every part of the food supply chain. Moreover, his “new” ice was not something he sold as an alternative to taking ice onboard boats, but rather it was an “ice making” machine that converted saltwater into the ice solution, eliminating the need to take large quantities of ice on board in the first place.

The conversation pressed on into some very interesting areas…how he applied the technology to other meats (nearly any you can imagine), his approach to customer satisfaction, marketing, partnering, governance, capital acquisition, and his “no risk value proposition” to his customers. So what’s this all got to do with performance management?

EVERY PART of his business involved some sort of measurement and tracking. From R&D (determining the size and performance of his machines) to manufacturing, product testing to marketing, sales to cash- he had applied measurement to nearly every stage of his process. His entire explanation of his product and market came down to something that was frequently and deliberately measured and managed.

In explaining his product, he didn’t go straight into a typical marketing or sales pitch…but instead gave measure by measure proof that his product was the best, if not only, product that could produce these results. His opening slide was not the typical “here’s how great we are”, but rather an “infrared” picture of two fish of the same weight- one frozen in his solution/ icing process, the other frozen in a more conventional manner. The weight differences (up to fourteen days later) were dramatic, as were the differences in cell degradation which was also evident from the photos. No explanation needed…the pictures spoke volumes about the product’s effectiveness. It’s hard to imagine a customer saying anything but “you had me at hello”. The measures told the story, everything else was just peripheral packaging.

I said earlier that the measures permeated all aspect of the food supply chain, up until and including the cash generation part of his business and customer satisfaction. Taking his quality measurement to the next level, one could calculate his average improvement in yield. For example a small (relatively speaking) fishing boat that generates 1 ton of catch daily would save roughly $150 per day. Extrapolating, then the annual savings would be upwards of $20k, just under the cost of the equipment, generating a payback of just over 10 months- virtually unheard of in that industry. And those numbers don’t even include the cost and storage of ice, which is also offset by the on-demand nature of his ice production equipment.

But he took the data even further. Because of his confidence in the data, and the degree to which he was able to harness and leverage it, he began instituting a “guaranteed savings” program, in which the customer absorbed little to no risk. If the customer didn’t realize the improvements in yield in the early phases of implementation, the customer didn’t pay.

To date, the value of the data has proven out. He has yet to have a dissatisfied customer, nor has he paid one penny against his guarantees. And with those kind of attractive economics, he was able to arrange financing for many of his customers, in which, (because of the rapid payback, low cost of the equipment, and attractive interest rates) generated an initial positive cash flow right out of the gate.

And there was so much more,…too much to go into here. It’s not everyday that these conversations are so rich in mutual “takeaways”- this one was one of those real “jackpots”, with many of the ideas discussed having direct implications in both of our disciplines. In the performance management business, you see a lot of ideas and no shortage of fancy dashboards, analytic models, statistical tools and techniques. And I’ve met a lot of companies who have invested millions in the latest and greatest- six sigma, ISO, LEAN, …the list goes on. But without the fundamentals in place, most will fail. This meeting was ALL about the fundamentals, and a real reminder for me of where it all has to start.

Good business starts with good data and good measurement…not the other way around. Without good data, I seriously doubt my new friend would have been nearly as successful as he has been to date. And I suspect he will find new data and new ways to harness and leverage it into the future.
Right now, I am at the airport, and soon my new friend will be back on his way home too. By the time we both arrive at our destinations, I suspect we’ll both have a new portfolio of insights from new introductions that we make in the airport, on the plane, and in the car ride home. Just another insight-rich travel day.

So go ahead mate, next time you find yourself with a little downtime- go have yourself a Pint and some good company.

Did I just wake up from a bad dream, or did the US actually just lose ANOTHER Ryder Cup by ANOTHER unthinkable margin? I know what you’re saying- “He writes his first column in months ,and right out of the box we have to endure yet another set of golf analogies! Just hang with me, because there’s a jewel of a message in this one.

There’s been a lot of “armchair quarterbacking” (to really mix metaphors) around this year’s Ryder Cup matches, as there has been for the last 6 years since we actually won one of those darn things. The losses have been blamed on everything from the weather, to the home team crowd, to individual personalities involved. But now, the focus of every pundit (and rightly so) has shifted to the concept, however abstract it may be, of TEAM. One look at any of the Euro’s after they’ve won a point, and it becomes clear to anyone that they possess a team spirit that the US athletes can only hope for.

There is a dimension of teamwork that, although ethereal in nature, is noticeably missing from the American team. Each of the American team members have won numerous times, and earned enough qualifying points to actually make it to that elite group, often year on year for many years. They have a competitive drive that is unmatched anywhere in the world. These guys are the best in their profession….INDIVIDUALLY that is. But watch them in team competition, and many of them indisputably fall to pieces.

And this should be no surprise, right? We’ve all seen it in other sports where a well known “Prima Donna”, because of there over-inflated ego takes an entire team down with them. Sometimes, they do it within a game or match where, individually they have far superior individual stats. And it’s often followed by the explanation that they did their part, it was just the rest of the team….which ironically is code for “ there was NO TEAM” .

So what can this teach us about performance management? Well for starters, teamwork beats individual performance every time, and often many times over. Here in the US, that dimension is not always clear. Just look at our incentive plans, hiring strategies, meeting dynamics, managerial approaches, and executive compensation- just about every part of American culture revolves around a strong individual presence. I once heard this referred to in Australian as the “tall poppy syndrome”, something the US Ryder team had apparently contracted “in spades” over the past six years. And it can kill your Performance Management process, jus as easily as it stole the life out of those 12 disappointed Americans last Sunday.

Here’s a short list of things that can be done to ensure you don’t get crushed by the “tall poppy”:

Have collective goals that people can identify with
Ok, this one is the no brainer of the list, but it is amazing how few companies do this well. Try this next time you run across a team of individuals from the same department, business unit, whatever- ask them what the single most important goal is, and how they can contribute to its achievement. Guaranteed- half of them will give you some pie in the sky corporate objective that they have only a small prayer of individually influencing, or you’ll get a blank stare. To be part of a real team, you need 20/20 line of sight between your role and the team objective you’re trying to reach.

Understand team dynamics (on and off the course)
one of the things I noticed in the European team dynamics was the comfort they had with each other…lots of conversations, few of them appeared to have anything to do with golf. And you just got the sense they knew, liked, and genuinely cared for each other, as could be seen by those emotional exchanges between Darren Clark and his teammates. Get to know your mates, what drives them (personally and professionally), and then apply that to the task at hand.

Relish in team success, even amidst personal failure
I heard and interview with one of the European players, and I could hardly believe what I was hearing (of course I’m an American listening like an American!). He said, to paraphrase, “When I started playing poorly, I just realized it wasn’t my day, and turned my attention to doing anything I could for my partner- from encouraging him to sharing advice or just pumping him up by telling him how great he was at such and such a shot.” Thinking as an individual, that’s a damn hard thing to do when you’re emotionally down, but as a team thinker, it’s essential.

Balance individual compensation approaches with team incentives
If you’re like most companies, you base your incentives on individual versus team compensation. Nothing wrong with strong individual rewards, but only if it is balanced by the same strength in team rewards. But keep in mind the “line of sight principle”. A team reward can’t be for 3000 employees because the line of sight connection between their actions (both individual actions and cross member impacts of those actions) is weak or non existent. Research has shown that programs like “gain-sharing” work best when the workgroup is less than 100”. Remember, the Euro Ryder Cup team was 12.

Penalize the overgrown “poppy”
So what do you do with a “tall poppy” when you see one. Well, if you have a high performing team in place, then the answer is nothing, as the other team members will take care of that for you. But if you’re just getting started and trying to transform toward a team environment from a strong individual one, then the answer is REMOVE IT FAST. The “individual ego” is an easy place to fall back to because it is too “comfortable” for many of us. It is a powerful enemy in your team building efforts, takes root far more quickly and easily than teamwork does, and spreads like a cancer throughout your business.

…And here’s one that may even save you some money- next time the Ryder Cup comes around, you might want to place your bet on the guys on the other side of the pond!

It’s been a very long time- nearly six months- since my last post. Like many of you, I have had a number of life changing events occur over the past several months. Some bad, most of them good, but the end result is that I’ve gotten out of my weekly writing habit. For those of you who find my column useful in navigating your performance management challenges, I can only say I’m sorry, and commit to making it up to you in the coming weeks.

As of Monday, September 25th, I will resume posting my weekly column on Performance Management issues and perspectives. As my regular readers know, I try to use everyday experiences- from job to family to sports- and all in-between, to share poignant themes about the challenges performance managers face everyday. You may agree or disagree with my conclusions, but my hope is that they will make you think “outside of the box” about ways to improve this performance management arena that so many of us find ourselves in today.

You’ll see a few changes in the readership, distribution, and content- as I am with a new consulting organization, and may from time to time need to work within certain restrictions. But my intent is to keep the themes and conclusions relevant to all of us whether we are in consulting, private industry, or the technology space in which I personally spent my last six years.

PM weekly will be posted on the same Blog site as before, as well as a number of different article distribution vehicles. The format will be similar, and I will be encouraging, and posting, reader feedback as well as bringing in guest authors from time to time.

I appreciate the loyalty of the readership, and look forward to seeing all of you online in the coming months.