Develop holistic performance measures
“We need new measurement systems that capture the things that really create value.”
A shortlist of the limitations of traditional measurement systems:
(1) they’re lopsided, in that they overweight the achievement of certain outcomes (e.g. short-term earnings), while under-weighting the achievement of others (e.g. building new growth platforms);
(2) they take insufficient account of critical externalities (e.g. the environmental and social costs of corporate policies);
(3) they give inadequate attention to the things that drive success in the “creative economy,” (e.g., the value of customer-authored innovation).
Organizations will need to create holistic measurement systems that capture the many, interrelated variables that drive success.