Of Myth and Metrics

Whether implementing a common portal solution for a group of trade associations or helping city government agencies pool resources to implement enterprise solutions, one thing is clear: there are myths that must be exposed and clarity needed around the drivers for “success” in the “not-for-profit” and government workplace. These issues must be resolved before such organizations can achieve their potential through the use of business-driven metrics.

Sure, there are business cases and project plans, milestones and deliverables. There have also been great leaps forward with balanced scorecards, Six Sigma, and FAST that produce impressive efficiencies for these sectors. But we must expose certain myths before we can move forward and develop more workable performance measurements for not-for-profit or government enterprises.

Individuals who abide by these myths are often not accustomed to working in teams with shared goals. Rather, in these environments it is often perfectly acceptable to merely individually perform work assignments–“good enough for government work” is a phrase that comes to mind. But in today’s environment of shrinking IT budgets, rising customer demands, and new competition for the services these not-for-profit and government entities provide, their employees must recall the reason for their existence: serving their members and citizens, respectively. So, a shift is underway in the not-for-profit and government business. With that shift what was once true may now be a myth.

So what are some of the other observed myths in the not-for-profit and government enterprises, and what actions or simple acknowledgments are necessary to reform behaviors and produce the desired efficiency and innovation?

Myth #1
It starts from the top–the organization must wait for the CEO to dictate goals

Some aspects of “it starts at the top,” are true. However, history proves that often an executive committee identifies key performance indicators without giving much thought to their implementation. What appears obvious from the corner office is not as apparent to the rank and file. If the goals are not sufficiently clear to suggest how we might measure them, e.g., “improve customer service,” they will most likely not be useful and therefore will be ignored. A recent McKinsey report showed that fewer than half of respondents are satisfied with their company’s approach to making strategic decisions; top-level executives are happier than others and that greater satisfaction could come from improving companies’ ability to align their people with their strategic plan and from monitoring progress against the plan. The solution lies in defining specific achievable goals, and stretch goals, on an annual basis, and to report on the progress made to attain these goals as often as possible.

Key IT staff with the necessary business acumen can meet with department business leaders and, through collaboration and negotiation, strike the balance and distinguish between volumes of information that is often “sexy” to report, but not necessarily “actionable.” Business experts can use “actionable data” to change business strategy and processes thereby improving business performance.

With this approach, we can raise goals and their corresponding measures to the executive level. In so doing, we create goals that are:

• Succinct (goals are easily understood by all)
• Realistic (departments have agreed upon the goals)
• Actionable (business processes can be manipulated to affect the direction and magnitude of measures)
• Reportable (measures can be captured and reported on a timely basis, perhaps real-time)
• Published (everyone knows the goals and their measures)
• Shared (compensation is partially tied to meeting these agreed upon goals)

Packaging measures in a dashboard that is presented in timely intervals to a government agency director or an association president can be the constant reminder that illustrates enterprise-wide progress toward its goals and keeps everyone aware if corrections in direction are needed.

Myth #2
We don’t need marketing in our organization–that is for the private sector–Our Members/Citizens already know what we do

Don’t build a better mousetrap or service alone at your desk and then complain that nobody uses it. For example, don’t try to increase awareness of a new service that you launched on your members’ web site without the marketing/outreach staff to develop and execute marketing plans that inform members of the service, and conduct periodic surveys that measure the members’ perception of the benefits of this new service.

We live in a society that relies less on “gut” decisions and more on statistical evidence to support business decision-making. While it is important to put the structure in place to establish goals, it is equally important to establish a repeatable mechanism that provides constant feedback on the progress made toward these goals. This mechanism enables employees to monitor changes being made to the service and to confirm that the marketing message is producing the intended effect of informing your audience of the new service. Once the outreach and feedback mechanisms are in place, employees are empowered to execute business decisions in a real-time manner based upon the feedback or “actionable data” that they have collected from customers. Please bear in mind that you are engaging your customer in a “conversation” and will reap the rich rewards of true insight into their needs. On the other hand, you may also suffer their wrath if you engage them and then do not respond to their feedback by tailoring your offerings to their needs.

Myth #3
We don’t care about profit or business growth–that is for the private sector and does not apply to us

Before “ubiquitous access to information” became the standard, membership organizations had insular customers for their products and services with little competition threatening their funding streams. This is no longer the case. If your are selling insurance to your association members without an awareness that you have hundreds of competitors, your sales results will likely plummet, thus shaking you into action. Although traditional profit motives are not front and center in the mission of not-for-profit businesses and government agencies, these enterprises must maintain their focus on important business measurement tools and statistics so that they can continue to provide services relevant to their customers. By anticipating and serving the needs of its customers, a not-for-profit will likely remain the leading provider of services to its members. The key to achieving this, however, is monitoring the pulse of your customers’ thoughts and desires. We may not wish to bother our customers with surveys, but these tools are still one of the few ways to capture customers’ wants. With this knowledge, you can tailor your products and services accordingly, thwart your competitors, and grow your enterprise.

Our not-for-profit and government enterprises are also concerned with their development spending on new products and services. As with for-profit businesses, they have limited funds and their business plans must report a return on investment, with return consisting of cost savings or increased sales of products and services.

Competition, funding, return on investment, cost savings, and revenue are common to not-for-profit, government and for-profit enterprises alike and business development goals are an important measurement tool for the health of the enterprise.

Myth #4
We can’t change things around here; that is the way we have always done it

The pace of society in general and business in particular has forced not-for profit and government enterprises to re-think the way they operate and provide their services. Some city governments are adopting an enterprise-wide view of their business processes and technology, as compared to the department-by-department approach of the past. They are adopting the citizen perspective; citizens want to work with one city government entity, not a multitude of departments or agencies.

Many of the “new breed” solutions, such as e-government initiatives, involve a rationalization of city government business processes and their supporting technology, wherein the organically grown businesses of the past are either eliminated, replaced or now shared. This enterprise-wide scope of change is best managed by adopting a balanced-scorecard approach that illuminates the necessary changes across the enterprise that must take place to attain agreed-upon goals. Individual goals are then aligned with enterprise goals rather than department goals, and enterprise-wide optimization now trumps department-level optimization. We are no longer doing it the way we have always done it. Now, delighted citizens are the yardstick to prove the worth of this goal-oriented approach.

Myth #5
We need a solution now; we can’t wait for the “next phase” to deliver services

Many not-for-profit and government businesses are driven by situations or important current events rather than a more structured business development strategy. How do we guide an organization to reach its potential goals if we must react to headlines on a daily basis? The answer is no different in the not-for-profit and government enterprise than it is in the for-profit enterprise.

The answer is that situation-based (or tactical) AND strategy-driven change is necessary. We can’t avoid the reality of a need to react to a situation. And, all businesses must have a strategy. Without it, there is nothing that guides change. Without guides, change is haphazard. The result is higher costs and longer times to innovate or respond to competition.

Strategy-driven change implies the existence of a known future state of the business. When we know where we want to be in the future, we can discover principles which will help to guide us there, like guardrails on a highway.

As we build the future state, we use the guides of the future state to assist us with how to implement our tactical change. Do we implement change on the current state of business processes and technology or the future state? To answer this question, we must then ask “How well does the current state conform with the guides to the future state?” And, “What is the condition of the current state?” The answer to these two questions may determine, for example, if we are to wait for the future state, modify the current state, or replace part of the current state with part of the future state.

As we implement the tactical change, we must concurrently implement strategic change, that is, the components of our future state. Ideally, we can discover ways to leverage the opportunity afforded by the tactical change requirement to implement parts of our future state. If not, we must consistently set aside resources toward development of that future state.

Once the tactical goals are acknowledged and the strategic goals are envisioned, measuring and reporting against the progress on these goals will foster enough “wiggle room” to react to immediate issues while still keeping all eyes on the long term goals that will ultimately shape the organization.

Myth #6
We can’t take the time to implement business-driven metrics–we are too busy. These are just more “buzz words” that will fade like all the other efforts

Many not-for-profit and government businesses have traditionally been slow to adapt to new strategies or ideas and to support organizational change needed to improve their services. That is no longer the case. The Federal Enterprise Architecture (FEA) model is being widely adapted at government installations, and systems are being developed that are based in its principals of reuse and portability. As these systems are updated and there is greater transparency, there is also increased opportunity to extract quantifiable measurements of the effectiveness of the systems and thus provide valuable information into the direction of the department or agency. When running a government agency, what greater guidepost can you use than to anticipate and react to citizen concerns, in a dialogue that allows leaders to continually tailor services to their customers’ needs? Not-for-profits can now proactively design services for their members that are unique to them and their interests/industry and are thus able to differentiate themselves in an increasingly crowded marketplace for commodity services.

So, when the myths are exposed, how do you foster the acceptance of business-driven metrics in an organization?

Once you have successfully exposed these myths and identified an executive champion and steering committee who understand the significant business implications that can occur by utilizing this strategy, it is time to get to work implementing the business-driven metrics that are the most meaningful for your organization. As much of the success of performance controls are based upon universal acceptance, implementing a well-thoughtout communications plan is the essential next step to take after thinking through the specific discovery process that will tap input from the best cross section of experts–and thus provide the most beneficial goals for your organization. This plan must announce the process that you will be conducting: to solicit input, publish draft findings, solicit feedback and finally, publish on a regular basis, the metrics that will drive decision making in the organization. This plan should also communicate that these metrics will be reviewed on a regular basis to make sure that they are adjusted to reflect the measurements and goals that are the top priorities for the organization. Thus, it becomes obvious, that although a business-driven metrics “project” has many of the same attributes of a traditional IT project, it is most successful if it never really “ends,” but continually evolves and helps drive (and is driven by) the organization and its citizens/members.

In conclusion, we must acknowledge that these myths do not reside within every not-for-profit or government agency, nor are they exclusive to them as private industry often exhibits similar characteristics. But experience reveals that by strategically utilizing business-driven metrics to drive out these myths, not-forprofit and government enterprises can retain their valuable leadership roles in our society.

Bob Linehan, after leadership positions in private industry, government and associations, is now principal Consultant with Coremax. He has won numerous awards for his groundbreaking multimedia work and now specializes in the areas of business intelligence, optimization of It organizations and performance measurements and goals. He is a sought-after speaker on topics such as media convergence and performance indicators at venues as large as Comdex and as focused as marriott hotels & resorts Franchise Conference. Mr. linehan can be reached at Bob.linehan@Coremax.com