p.1 What if I were to tell you that one of the most important keys to your organization's success can be
found in a very unlikely place - a place many of you may consider to be complicated, inaccessible, and perhaps even downright
boring? What if I were to tell you that this key to success is already one of the most ubiquitous and impactful forces
in your organization? It's there, waiting for you to tap into it.
This key to success is MEASUREMENT.
Measurement done right can transform your organization. It can not only show you
where you are now, but can get you to wherever you want to go. [JLJ - Ok, I've have one of those. No, make it two.]
p.3 Measurement may use numbers, but it is not about numbers; it is about perception,
understanding, and insight. Measurement, when done well, can have an enormously positive and transformational
impact on your organization... on those occasions when measurement is used for the purpose of improvement
rather than to make judgments or place blame, and when it is focused on the right measures, its true power is revealed.
p.5 I wrote this book as a manifesto and a guide for helping you to at least begin the journey
toward transforming performance measurement in your organization.
p.13 You get what you measure... Measurement systems create the basis for effective management.
p.14 Most individuals and organizations don't get what they want because they don't measure
what they really want! ... no organization can be any better than its measurement system.
p.15 According to Elihu Goldratt, author of the business classic, The Goal, all
behavior can be predicted by what is being measured: "Tell me how you measure me, and I will tell you how I will behave."
p.29 it is very common for organizations to measure the wrong things... most of the time
it is due to lack of knowledge about the system that is being measured... coming up with the right measures of performance
is no easy task.
p.41 When you evaluate, you place a value on whatever you are evaluating.
p.42 Measurement should actually be a nonjudgmental process of collecting, analyzing, and, most importantly,
using information for understanding whatever is being measured. Measurement is inherently neutral. No matter what
the function of measurement, it should be based on a desire to better understand what is happening... In
order to be credible, evaluation should always be based on a solid foundation of measurement.
p.68-69 What gets measured gets managed and what gets managed gets done...Clearly it is critical
to focus measurement efforts on the right things. The right measures will provide laser focus and clarity to management.
As Napier and McDaniel say, "Much of the power of leadership is bound up in what leaders pay attention to. Measurement is
focused attention." ... Management needs to focus its attention on the measures that really drive the performance
of their particular organization.
p.71 Focused measurement is about being effective, getting the right things done.
p.72 So, when clients ask me, "What should we measure?" I usually respond by asking them, "What does success
look like for your organization?"
p.74 Strategy should be focused on making the best use of the value drivers to create optimal value
from resources for stakeholders... The failure to adequately measure any resource or asset is likely to retard
its development, impair its conversion into value, and allow waste, in the form of leakage or evaporation.
p.76 In order to thrive - not just survive - and move to a higher level of performance, organizations
need to focus on one or more critical measures that matter most, and companies need to focus everybody's
attention on those measures.
p.78 Value creation, business models, and strategy can be quite abstract until they are operationalized
through measurement. Only when you are able to measure the key drivers of value creation will you
be able to take appropriate actions to truly leverage the business model and strategy.
p.79 Admittedly intangible measurement is not perfect - far from it - but one of the key ideas presented
in this book is that "everything that should be measured can be measured in a way that is superior to not measuring them at
all."
p.79-80 The key to high-leverage measurement is finding the most crucial few measures that provide
the organization with the greatest insight into competitive advantage. It measures factors that clearly relate to
how value is created through the organization's business model... To a large extent, what we measure defines how we
see the world... When measurement does operationalize new paradigms, or mental models, they provide a new lens
through which people can view the world, or part of it. To change our perspective, we must change our measures.
p.81 Most transformational measures start off as what I call "emergent measures" - measures that
emerge through increased understanding of the major drivers of business success... Many
of the emergent measures will be measures of difficult-to-measure intangibles, because transforming organizations are realizing
that many of their key value drivers are intangible.
p.81 Information technology thought leader Marilyn Parker's advice is "We must prepare for both thinking
about and implementing new ways to measure and be measured."
p.81-81 Even though everything can be measured, it sometimes takes quite a bit of creativity, persistence,
and even courage, to do so. Some of the most important insight-generating measures are rarely the obvious ones...
But when we finally are able to "see" these things, we will probably wonder why we had previously been blind to something
that was "so obvious."
p.84-85 If we demand that measures be immediately objective, quantifiable, and statistically reliable, then
we are ruling out most emergent and potentially transformational measures... The key to creativity in measurement
is to never lose sight of the goal, why you are measuring.
It is important to measure directly what you can, and what you can't measure directly, estimate...
My best advice at this point is to diligently measure what is most important... Nobody in any organization
should be afraid to try out new measures
p.93 One of the most important assumptions encapsulated in the balanced scorecard [JLJ - a type of management
system] is that strategy is composed of a set of hypotheses of cause-and-effect relationships.
p.94 The key to successful integrated measurement is not to connect what people are currently doing, but
what they should be doing - executing the strategy... The key is to achieve continuously better (and deeper) understanding
of how the organization's strategy translates into outcomes and drivers of success, and then to find the best mix of measures
that conveys strategic intent and integrates the organization to execute that strategy. Understand first;
measure second. Performance measurement... is obtaining increasingly deeper understanding that
leads to progressively better actions that drive desired results
p.95 The performance we should care most about is in the future. Lebas and Euske define performance as "doing
today what will lead to measured valued outcomes tomorrow"15... measurement is being used to improve future performance.
p.97 Developing measurement frameworks is directly related to developing a deeper understanding of the value
creation process... A measurement framework is a model... measurement frameworks should reflect the organization's strategy
and the interconnectedness of the total system... Focus on the measures that are most important. Don't try to measure
everything... Measurement frameworks often start with hypotheses.
p.105-106 Data is essentially just isolated facts out of context... Information
is an organized selection of data presented in such a way that its meaning can be recognized by a user... When information
is combined internally with other information and personal experience into a form that can be useful it becomes knowledge.
Knowledge is... relevant information you can take action on... Wisdom is deep, rich understanding and insight
that usually develops through a combination of extensive knowledge (knowing) and personal experience (doing) over time.
p.107 One of the keys to success is identifying the most important things to measure and using measurement
to take the most appropriate actions... those who use measurement best tend to fare best.
p.116 In Executing, Bossidy and Charan say that "You measure your organizational capability by
asking the right questions."... The same is true for assessing performance measurement capabilities.
p.118 One of the major challenges of transformational measurement is to create an environment in which performance
measurement data can be efficiently and effectively converted into useful information, this information can be transformed
into knowledge, and this knowledge can be the basis for real wisdom.
p.130 Although measurement has a cost associated with it, if done right, it delivers enormous value.
p.132 Measure What Matters Most.
p.133 Examples of key questions you can ask to stimulate these discussions include: "From your perspective,
are we measuring what matters most?"... "What do you think is most important to measure about your work?"
p.133 Nothing creates clarity like agreeing on how to measure something.
p.134 Some of the most important levers of competitive advantage are either newly discovered or
yet undiscovered. We are learning more every day about how much potential organizational value is currently not being
measured, and therefore not being effectively managed... Encourage your workforce to be innovative about measurement and direct
those who know the most about key areas of your organization to figure out new ways of measuring internal and external sources
of value... Eventually, these embryonic innovative approaches might lead to the discovery of transformational measures that
will transform your function, you business, and maybe even your industry!
p.137 What are the critical few drivers of revenue growth [JLJ - we instead might be interested
in the critical few drivers of a promising position in a chess game] and how can we measure them?
p.154 Prediction is essential for effective management. In fact, as Deming said, "Management is prediction."
[JLJ - Deming, The New Economics, p.101] One of the most important functions of measurement is to enable
prediction.
Whether we are consciously aware of it, almost everything we do involves some form
of prediction, according to some "theory" of action. A theory is nothing more than a cause-and-effect prediction
about how planned actions lead to expected outcomes
p.167 It is very difficult, if not impossible, to automate emergent measures. They are usually quite tentative,
exploratory, and are often qualitative (rather than quantitative). Furthermore, newly identified measures, especially those
with transformational potential, take a considerable period of time before they can become adequately operationally defined
and standardized so that eventually they can become established "metrics."
p.197 According to Napier and McDaniel, the first step in developing new measures is "a clear understanding
of what you wish to measure and a willingness to ask the tough questions that may lay bare the underbelly
of the issue being explored."
p.204 True transformational change will not happen until organizations begin to think
much more creatively about the value of the assets, how to connect them with strategy, and how to link them to competitive
advantage... The key to competitive advantage going forward is primarily an issue of better measurement and management
of intangible sources of value... everything - no matter how intangible - can be measured!
p.206-207 Estimating
Arno Penzias points to estimating as a particularly difficult practice for traditionalists to accept. "A
high barrier stands between us and the habit of making rough estimates - the fear of getting the 'wrong' answer.
There is nothing wrong with educated guesses as long as the uncertainty is acknowledged and managed. Contrary to what most
of us have learned in school... an inexact answer is almost always good enough."... The key to estimating
is not just figuring out how to arrive at acceptable estimates, but how to determine the right constructs to estimate.
p.209 Predictive Measures
Today, most measurement still focuses on the past and the present, and it does not serve effectively as
a guide for the future. This is because traditional measurement can do nothing except collect data on what has already
happened. The winners in business must be able to see beyond the obvious, and be able to manage the future.
According to DiPiazza and Eccles, "Although measurement is inherently based on information about
events that have already happened, certain measures can be predictive in nature when the relationships among value
drivers are well understood." That is a major reason why measurement frameworks are so important.
p.226 Kaplan and Norton, of Balanced Scorecard fame, have recently started taking leadership in an [area]
they call the "strategic readiness of intangible assets," and how this readiness can be measured.20
Intangible assets are said to be "strategically ready" when they can be used to support a strategic objective (like "increased
new products"), which in turn is linked with measures of strategic success (like revenue, profit, or market share).
It is not enough just to have intangible assets. The competitive advantage of organizations
in the new economy is increasingly dependent on how "ready" their intangible assets are for deployment in supporting strategy.
Intangibles assets that are not ready are like unused inventory. If they cannot be effectively used to support strategic objectives,
their value is reduced, sometimes to zero.
