Portfolio Performance Measurement #3: Build your own CIA
Many business school classrooms echo with lectures on the value of precise, analytic approaches to management. Yet when we look at what’s happening all around us, there is a big gap between what we are taught and what we do in our own organizations.
Measuring the value of we are delivering, and how we are delivering it, is not always obvious to leadership teams. A reason can be found in the varying opinions on measurement effectiveness in the first place. Some organizations are doing just fine without too much measurement. To others, these systems might seem more like a luxury than a necessity given their day-to-day worries. It is not seen as critical for survival, yet.
For product development organizations, it might be you are only measured – and judged – through the single lens of project metrics. Though these still matter to many, they only paint half the picture, if not less.
Moreover, they are far from actionable which makes looking at them every two weeks seem like watching a clock and expecting it to predict the weather. Agreeing to take a dual lens approach and aligning on a common set of leading indicators would be a big step. This still is not sufficient.
It is not a matter of not knowing or wanting to invest in performance metrics; it is just tough to get it right. It is an investment that requires your time, effort, budget, and a lot of perseverance. So, following the first four insights on portfolio performance measurement, we close this series with a final piece you can consider a call to action.
Insight 5: Invest in getting this right!
If implementing a new measurement system is an investment, what are the pay-offs? For the commercial organization, value metrics communicate the value customers can expect from purchasing a solution, and from any future improvements. It helps your customers evaluate your offers against others in a way that qualitative statements never could.
In a B2B or B2E relationship, it shows you think beyond the customer specs or requirements to the underlying needs and intended benefit to them. Applying these same metrics to the product engineering and development organization allows teams to focus on what really matters, avoiding gold plating and scope creep.
To the development organization, process & flow metrics connected to a continuous improvement cycle help run a complex machinery efficiently and effectively. Think about it in this way: what would a 10 per cent or 20 per cent increase in productivity be worth? What if measurements could reveal further quality gains reducing rework by the same percentage? What would be the value of reducing product development cycle time, releasing products, patches, or features to your customers a month earlier?
Such a holistic set of measurements, as we propose here, provides the cornerstone for a data driven organization. Its benefits are found (and should be measured, obviously) in decision making speed and decision-making quality. But it doesn’t come out of thin air. Though some can be copied regardless of context, many of the more interesting ones are specific to your organization, the solutions you deliver, the competitive advantage you seek and the phase you are in. As these change over time, your performance measurement system should follow - or perhaps even be there first to set the course, I’ll leave that for you to consider. To make sure it does, herewith five things to ensure:
A. Assign ownership. Each set of metrics should have its own go-to person, a role known as the Performance Area Owner. They are coordinators and assume the role as a natural extension of their functional responsibility. They are not necessarily accountable for the results, but they do need to ensure the measurements reflect the performance area correctly. They need to have a vested interest and understand how to get to the data.
B. Build a support team. We’ve heard some creative names for those teams tasked with maintaining and accelerating data adoption for decision-making purposes. CIA stands out for us; it refers both to its original meaning, but also doubles for Customer Insights and Analytics or a sort of Central Intelligence Office.
More officially though, they are often called ProductOps in product development organizations, SalesOps for sales organizations, and so forth. Regardless of the name, you’ll learn to lean on them as they build the dashboards, ensure timely access, and prep the insights portfolio leaders need to inform their decisions. These teams will also be your best evangelists, spreading the word and kindling the measure & learn fire.
C. Invest in the right tools. You need a solid base that pulls together and makes sense of all kinds of data, giving you quick, useful insights. It mandates a good look at your data infrastructure, from the capabilities to capture the right data, to processing storing and displaying them to the right audience.
D. Align reward systems. As we take a more holistic view of portfolio performance measurement, reward systems should equally reflect this approach. All too often, individuals within a natural, multi-disciplinary team are still measured against personal performance goals for competing stakes. This causes frustration at best, but often leads to the worse result of team inertia.
E. Just start. Perhaps the most important of all. The best teams we worked with, and probably most measurement-savvy today, have been those that adopted a just-start mentality. Bold enough to start with a select few metrics, acknowledging their flaws. Unafraid to hold them as a mirror to the organization and step by step, improve the imperfections (integrity, completeness, etc.). Unapologetic to visualize them in front of stakeholders and sharing the regular improvements that such exposure inevitably provokes. And unrelentless in reminding everyone ‘why’ their effort is well-spent.
So now what?
As the organization shifts its operating model from project oriented to product oriented one, the measurement system needs to evolve with it.
Project metrics (on-time, on-scope, and on-budget) aren’t dead yet, as we shared in our first blog of this short series. But they no longer take such a central position in evaluating performance in a development organization either.
Luckily, interest in performance measurement is no longer an isolated management concern. All frameworks promoting agility aim for increased initiative and ownership at every organizational level. Key trends like data democratization enable such teams to access data more easily to make data-informed decisions.
So why wouldn’t you invest a little of your time and effort?
Related Insights
