Lord Kelvin submitted: “If you do not measure you do not really know”. Both people and organizations need to know how well they have performed, and they need to correct defects and dysfunctions. As our business environment has become more volatile, more complex, and much more abstruse. So, to manage it we now have more, more accurate, and more frequent performance-measures. Yet, Jack Welch, the former CEO of GE, questioned the effectiveness of our performance-measures, and he said: “Too often we measure everything and understand nothing”. What went wrong, the execution or the plan or both ? Beyond reviewing the past, maybe we also need to renew our management system in order to bring it up to speed with a business environment that is charging full speed ahead.
In the first section of this paper, I will mention the shortcomings of some performance-measures. But, beyond eliminating some shortcomings, we really needed to align more effectively the review with the other management processes.
In the second section, I will discuss – albeit very briefly – the 3 building blocks of an integrated framework of management. Then I outline the self-assessment model of the European Foundation for Quality Management, the Balanced Scorecard, and the S.P.I.D.E.R., the framework of management that I have recently introduced.
In the last section of this paper, I will lay out the 6 management processes under the acronym S.P.I.D.E.R. and I will show how they drive the performances of the enterprise as it interacts with other stakeholders to optimize the creation of <shared business value>.
The shortcomings of some performance reviews
Periodic measures of past performances are a standard management practice. But, let us not forget that plans and reviews and all the other tools and techniques are only means to drive the rational, the result-oriented, the relational, the emotional, and the creative thinking and behaviors of the people. And so, to better understand the review as a sub-system of the management, we need to take into account the mind-set of those who designed its method, of those who implement it, and of those who are being reviewed.
Let us now discuss some of the shortcomings of the conventional performance reviews.
First, conventional performance reviews are based on accounting, which merely provides results that cannot be changed. The reported financial figures are clear, concise, and easy to consolidate. But, they do not report the intangible resources simply because they cannot be counted like tangible assets. That is most unfortunate because the intangible resources are the ones that can make or break a streak of success. Albert Einstein noted: “Sometimes what counts cannot be counted, and what can be counted does not count”.
Second, many companies use a fairly large number of key performance indicators. But, most
of them show data concerning the hard side of enterprise such as the production and logistics.
Conversely, the soft side of enterprise – often the most dynamic and profitable part of the business – is difficult to apprehend with data and, as a result, it gets short shrift. Gottlieb von Guntern submitted: ”Traditional managers tend to focus on facts and figures, the hard issues, while the leaders emphasize information that is qualitative in nature, the soft issues, which cannot be precisely measured”.
Third, the traditional approach has people focus on getting the results, not on managing their
enablers. Paraphrasing the late Prof. Kaoru Ishikawa, we could say “Manage the enablers,
and the results will take care of themselves”. Dr. Deming observed: “Managers get results
any old way, mind not necessary”. Occasionally managers get results any old way just to get
their bonus. Recently the press reported that the country-manager of a prestigious brand of
cars got fired because he granted generous discounts to fleets and super deals on leasing.
Probably his bonus was based on the top-line, i.e. the sales rather than on the bottom line i.e.
Fourth, some of the traditional organizations have a huge gap between the planners and the doers. That gap is further widened by hierarchical levels and by organizational disconnects. The budget might have been well thought out and, at the outset, it may have looked ambitious but achievable. Yet, the market may have changed further and faster than anticipated, and a rigid budget may frustrate rather than foment the best possible adaptations. Jeff Bezos submitted “ If you are good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure”. Many business leaders realize they need strategic and organizational agility, and the S.P.I.D.E.R. may help them to get there.
Last but not least, conventional reviews look back and they fixate past performances, and they focus on correcting what did not work out. On top of that, formal reviews are infrequent and, as we just showed, they may have some limitations. We advocate that the review should also react to new and emerging situations, that they should be fairly frequent, and the reviewers should be keenly attentive to the adequacy of the shared critical capabilities, particularly as they concern the strategic and organizational agility. The reviews should also serve to renew.
Teams working on agile projects have very frequent but brief team-reviews that look back at the progress made, and the progress that remains to be made. As will be seen, we apply this practice to the <review>, that last of the management processes of the S.P.I.D.E.R. that will be discussed later.
About 50 years ago Prof. emeritus Jay Forrester pointed out that management is a dynamically complex system. Since, the dynamics of complexity has grown exponentially and organizations have gotten more complicated and more cumbersome, synergies get lost, and strategies fail fast. The leaders respond to these challenges by reforming structures and/or strategies. Yet a majority of these transformation programs fail or only beget marginal and short lived benefits because, as applies to some performance reviews, they are imperfect, inadequate, and cannot cope with the dynamic complexity.
What enterprises really need is an integrated framework of management that is systemic & strategic, stimulating & synergistic, and systematic & swift. Such a framework will help establish the linkage between people-plans-processes, between the enterprise and its other stakeholders, between the past and the future. The ensuing connectivity will enable the leadership decentralize, to delayer, and to delegate to teams the power of self-management.
Hereafter, I will discuss albeit briefly 3 integrated frameworks of management, namely: The European Foundation of Quality Management, the Balanced Scorecard, and the S.P.I.D.E.R. that I propose and that I have recently published. (1)
The 3 integrated framework of management
An integrated framework of management includes the following factors and fosters their interactions.
- The 5 stakeholders – the enterprise, the personnel, the customers/consumers, the suppliers/allies/communities, and the shareholders
- Their corporate capitals – I propose my model of the 5 <corporate capitals> 4 of which are intangible resources. Most importantly, each of the <corporate capitals> features 5 <capital components>, some of which power the critical success factors (2)
- The management processes, the combination of strategic and business processes forms a web that drives the relations and the transactions of the enterprise with its significant stakeholders.
To create value for itself, the enterprise must create value with other and for other. In the process, the enterprise invests its capitals and its processes and it works with stakeholders who also invest their capitals and processes in order to generate business-value from the relations and from the transactions that take place in the relevant micro-ecosystem. The relations and transactions of the enterprise with other stakeholders have become of capital importance. So, while the different stakeholders pursue different goals and invest different means, they all expect to benefit from the value created in the relevant micro-ecosystem. Thus, we speak of <shared business value>.
Let us now take a look at following 3 holistic frameworks of management.
The European Foundation of Quality Management (EFQM) published in 1993 its the self-assessment model for the progress made over the past period, paying particular attention to the management of the processes that satisfy the customers and the personnel. Applicants to the European Quality Award are examined by EFQM assessors who follow the list of criteria that has been set by the Foundation for each of the 9 points of their Total Quality Management model, the steps of the assessment process, and the levels of their rating system. The EFQM assessment program is prescriptive.
Kaplan & Norton published their Balanced Scorecard (BSC) in 1996. The 5 elements of this model feature the strategy and vision that drive both tangible and intangible resources as well as the internal processes. The BSC is a more complete management model than the previously mentioned one; it is not prescriptive and its model and its performance-measures can be widely applied. BSC’s 5 elements are not very detailed, but companies have adapted the model to their needs also with the help of consultants.
Well after publishing “The Platform of Agile Management and the Program to Implement It”, I developed a holistic framework of management, the S.P.I.D.E.R., which is the acronym for a string of the following management processes,<study>-<plan>-<invest>-<deploy>-<execute>-<review>. (1)
The S.P.I.D.E.R. integrates in a participative mode the aforementioned 3 factors that drive this framework of management. The fact that it is integrative optimizes synergies and minimizes disconnects and the ensuing dysfunctions. The fact that it is participative gets many people to contribute their ideation and their initiative to the alertness, adaptability, and agility of the whole organization. The fact that the S.P.I.D.E.R. is holistic opens up the view on strategic and organizational innovations.
The S.P.I.D.E.R. follows the precepts of the Agile Manifesto and top-down things are broken down, and bottom-up things get consolidated. The self-managed teams who need to run their assignments smartly and swiftly split the work in easy-to-manage bits, simplify the tasks, and by synergistically connect their work with the work of other teams so as to achieve together outstanding results on the creation of <shared business value>.
Like the Balanced Scorecard the S.P.I.D.E.R. is not prescriptive. While the EFQM leans on the processes, and the Balanced Scorecard on the strategic resources, the S.P.I.D.E.R. seeks to implement effective interactions of the 3 factors that drive a holistic frame of management.
Let us now compare the S.P.I.D.E.R. to Deming’s well known <plan-do-check-act>. Deming’s <plan> does not tell much about where the plans come from. Conversely, in my model the vision comes out of the <study>, which must be a continuous and collective effort. Deming’s <plan> does not get into the resource allocation process, yet consultants have shown the inertia and rigidity of this process stymie adaptation and innovation. In Deming’s time, the notion of the intangible resources had not yet been developed. Conversely, my <invest> allocates the 5 <corporate capitals>, 4 of which are intangible resources, and their <capital components>. That is critical to endow projects with the necessary critical success factors.
Maybe the most important factor that is missing in Deming’s <plan-do-check-act> is the process of strategic and organizational deployment. Many companies do not implement such a process, and some that used to implement the Hoshin Planning – a very sophisticated process of strategic and organizational deployment - no longer do because they found it too cumbersome. As a result, as noted by Kaplan & Norton, “ Nine out of ten organizations fail to execute their strategies”.
Deming’s model seems to focus on the operations and his <check> is followed by <act>, i.e. repair and restore. The <review>, the last of my 6 management processes, engenders remedial actions, but in addition it also reviews all the preceding management processes of the S.P.I.D.E.R. In the process, it may show up some fundamental dysfunctions that would not surface in the conventional reviews.
As already mentioned, S.P.I.D.E.R. is an acronym, but I must say that l like the image of the spider web. It is flexible, very resistant, and all its nodes connect horizontally as well as vertically. Spiders build their web in a strategic location so as to catch suitable preys that come into their reach. Spiders do not build their web in places where bigger insects or animals would easily destroy their web. All in all, I think that the S.P.I.D.E.R. is a comprehensive, connective, and congenial model that supports Agile Management, and that can help the leadership to optimize the strategic and organizational agility of the enterprise by avoiding the complexities engendered by the misalignment of elements of the management system.
The 6 elements of the S.P.I.D.E.R.
In the previous section, we saw the important role played by the management processes, which interact in the framework of the S.P.I.D.E.R.
The principles of self-assessment can easily be applied to each and all of these management processes. For each of these management processes, the leadership of the enterprise sets up a catalog of criteria or <issues> to enable the different functions and level to evaluate the progress that has been made as well as the progress that will have to be made in order to sustain superior performances. Per se, the participative process of setting up the catalog of <issues> should be an interesting practice of collective communication and of disseminated learning about the management framework, about how best to manage it, about how best to innovate it.
The <issues> tend to focus on processes, but what really drives these processes and what really makes the difference between the best and the rest are the unique or superior core capabilities that underpin the critical success factors. And so, for all strategic projects, the project-leader and his/her team should identify the critical success factors they will need to deploy. While different projects may call for a somewhat different configuration of core capabilities, most likely they all fit in a set of intellectual assets that should be widely shared, i.e. the <shared critical capabilities>.
Please note that the <shared critical capabilities> interact with the other <s> of the <organizational capital>, namely: the strategy fundamentals, the style of the leadership, the systems of the management, the structures of the organization.
The strategic planning strives for optimal balance between what we can, i.e. the present or the possible future <shared critical capabilities>, and what we want, i.e. the vision. In one of my next papers on S.P.I.D.E.R.
Hereafter a quick overview of each of the 6 elements of the S.P.I.D.E.R., and a very tentative catalog of <issues>. Each enterprise should develop its own catalog of <issues> taking into account the nature of its business, its current and planned position in that business, and – last but not least – its corporate identity and culture. However, the structure of this model can be universally applied.
-1- Check past results
-2- Challenge the effectiveness of the remedial actions and of the recognitions given
-3-Check the strengths of the critical success factors that have been used
-4-Challenge the effectiveness of the plans to strengthen the critical success factors
-5- Assemble and analyze the inputs from the executive committee, from the alert &
innovation commission, from the networks and from the self-managed teams on emerging
opportunities and threats.
Hereafter, the 5 types of strategic missions.
-1- special projects and new ventures
-2- business breakthroughs initiatives
-3- continuous business improvements programs in the operations
-4- continuous business improvements programs in the administration
-5 continuous business improvements programs in the maintenance.
The synergies between the different strategic missions should be clearly mentioned. Within each mission the major projects should be articulated.
The strategic plans are decided by the senior management after consultation with the operations management. The strategic plans should feature the responsible unit; the targets-means-time; the <shared critical capabilities>; the alertness and the check-points; the frequency of the reviews and the performance evaluation system. The strategic plans should be ranked by priority, and the synergies the pertinent performance evaluation system spelled out.
My new book referenced below provide the advocated structure for an agile organization. (2) The strategic plans are deployed down from the CEO and his/her executive committee to the leadership of the 3 internal value-chains, to the leadership of the networks, and to the leadership of the self-managed teams.
The main purpose of separating the <invest> from the <plan> is to pay special attention to the investment of the strategic resources and to the returns on the strategic resources invested. Occasionally, the focus on the financial resources and on the hard-side of enterprise has overshadowed the soft-side of enterprise. First, our model of the 5 <corporate capitals> and of their <capital components> broadens the perspective on the strategic resources. Second, we want a well-balanced view, and do not want to exagerate the focus to the processes. So, by separating the <invest> we call for the CFO and his/her staff to monitor and to review the <return on total resources> for which I show the advocated method in my book. (2)
The resource allocation process should follow the priority and timing of the strategic plans and of their synergies. I refer to the “zero budgeting” method formerly applied by Texas Instruments whereby the resource allocation process is based on new proposals rather than being carried forward from the previous year.
The resource allocation process should take into account the investments that are expected from external stakeholders.
The targets, the means, the timing, and the reporting must be deployed down from the executive committee to the value-chains, then to the networks, and finally to the self-managed teams. The process of strategic and organizational deployment should point out where and when different self-managed teams need to cooperate. In my aforementioned book I propose a process of strategic and organizational deployment built on the principles of the Hoshin Planning, but that is substantially simplified. (2)
In line with the strategic plans, the strategic processes and the business processes implement the allocated resources in order to create <shared business value> on the <corporate capitals> and their <capital components> invested by the enterprise but also as appropriate by some of the external stakeholders.
More effective reviews lead to better plans, and better plans should be easier to review.
The formal <review> of past performances should start with the <shared business value> that has been created first by the enterprise, and then also by the other stakeholders. Then, the enablers of the performances of the enterprise should be analyzed. This may involve the analysis of the effectiveness of the <corporate capitals> and of their <capital components> and of the processes that deployed them. The analysis should also focus on the efficiencies of the organization and of the internal and external interactions.
The performances should be evaluated according to the system decided by the leadership of the enterprise, however the progress made should be compared to the general economic situation and the results reported by the peers.
The formal review of past performances is supplemented by the frequent and informal reviews by the self-managed teams and by their networks.
In addition to the review of past performances, the S.P.I.D.E.R. enables the application of the review-process to each and all of its management processes. Remember in the opening remarks we asked: “What went wrong, the execution or the plan or both ?” A participative and a systemic and highly stimulating process should review and renew the <study>, the <plan>, the <invest>, the <deploy>, the <execute>, and the <review> not merely with a view of the past so as to correct what went wrong but to renew these management processes with a view of the future.
The informal but frequent reviews of the self-managed teams and of their networks and the formal review of past performances can be inputted on the management information system and recorded on a dashboard.
This paper builds on the models and methods that I have published in “Innovate out of Crisis” and on “The Platform of Agile Management and the Program to Implement It”, however it obsoletes my <The Model of the Two Rings>.
“From Review to Renew” expands on my preceding paper on the S.P.I.D.E.R., and it introduces the following concepts.
- The notion of the <shared business value>
- The integrated framework of management
- The self-assessment of the critical success factors that have powered past progress
and an outlook on the critical success factors that need to be further reinforced in order to meet future challenges
Should these concepts have sparked questions or comments, be sure to input them on my LinkedIn discussion group <Agile Management Innovation>. Many thanks.
- Willy A. Sussland “The S.P.I.D.E.R. Web of the Management Processes”
paper published by this author on LinkedIn on May 14, 2918
- Willy A. Sussland “The Platform of Agile Management and the Program to Implement It” Routledge 09/2017
The amplitude and the acceleration of changes are like a centrifugal force that rips organizations apart. Instead of tightening up as might be a logical reaction, companies have to decentralize, delayer, and they delegate the power to self-managed teams. However, they really need an integrated framework of management such as Sussland's SPIDER to provide a common base for thinking, for behaving, and for acting. Think about your company, how would SPIDER fit ?
- Log in to post comments
You need to register in order to submit a comment.