The Accountable Executive, Part 5 - Being Accountable for Predictable Management Performance

This is the fifth article in a six-part series based on the material from the book, The Accountable Executive, expected to be released in the Spring of 2012. In this series, Hal Johnson and Ed Street of LeadershipOne, address what they observe as major contributors to low accountability cultures — which they have observed as a meaningful area of struggle in many mid-market companies — and the antidote. Additional articles in this series can be found here: Part 1, Part 2, Part 3, Part 4, and Part 6.

We know management is in place when we have established predictability: predictable outcomes are systems based. This foundational truth is at the core of a well managed business. It takes well maintained systems to produce, and re-produce, high level performance. Systems take the randomness out of performance and offer sustainability and predictability. And that is what a business leader is accountable to produce.

Evaluating enterprise performance from the perspective of process management is receiving increasing executive attention. Delivering ultimate value to customers is dependent on advancing the effort to define, improve and manage the end-to-end, enterprise processes. The side benefits include gaining clarity on strategic direction, achieving better alignment and installing more operating discipline.

Process Driven Management
Business Process Management (BPM) is a systematic methodology that helps an organization make significant advances in the way its business processes operate. It provides a system that aids in simplifying and streamlining your operations, while ensuring that both your internal and external customers receive surprisingly good output. The main objective is to ensure that the organization has business processes that:

• Eliminate errors
• Minimize delays
• Maximize the use of assets
• Promote understanding
• Are easy to use
• Are customer friendly
• Are adaptable to customers' changing needs
• Provide the organization with a competitive advantage
• Reduce excess head count

The Balanced Scorecard And Business Process Management
We reach into the Balanced Scorecard Methodology to identify the four basic perspectives of corporate performance. The Balanced Scorecard brings together several dimensions of strategic management and measurement, articulating a practical approach to combining strategy, management, systems and measurement.

In 1996, Robert S. Kaplan and David P. Norton published the book The Balanced Scorecard: Translating Strategy into Action. Since the original concept was introduced, it has become a fertile field of theory, research and consulting practice. The Balanced Scorecard has evolved considerably from its roots as a framework for developing performance metrics. It has evolved into a strategic performance planning and measurement framework. The Balanced Scorecard addresses strategies for organizational performance across four balanced perspectives:

• Financial
• Customer
• Internal Systems and Quality
• The Growth/Development of the Human Resources

The perspective provided by a well-designed scorecard puts the focus on the blended activities that have the greatest impact on delivering the company's overall performance. Of the four perspectives, Internal Systems and Quality has the lowest visibility and focus in most organizations. It lacks a natural champion, such as the Vice President of Human Resources for People, Chief Financial Officer for Finance and Vice President of Marketing for Customers.

The astute business will do well to have a Systems Czar to champion the contribution from a strategic and highly refined systems focus. The following material is based on the premise that Business Process Management, integrated with the Balanced Scorecard, creates a very powerful combination.

Analytics — Drucker Meets The Balanced Scorecard
In his lifetime, management philosopher and guru Peter Drucker made monumental contributions to the practice of management. Heading the list is the identification of the five functions of management:

• Planning
• Organizing
• Communicating and motivating
• Measuring
• Developing people

We have developed a tool for manager-leaders to effectively evaluate how they are doing in their pursuit of systems effectiveness by combining the perspectives of the Balanced Scorecard and Drucker's five management functions.

We encourage our executive colleagues to evaluate where they are in deploying a robust systems strategy in their businesses. If you are truly driving for top level performance, this is a productive place to look. See if you can fill in each cell with your particular systems that support your delivery of superior performance. The optimal strategy is to know your systems and have them under continuous improvement.

Not there yet? This is an area for fertile improvement in most mid-market companies. By the way, we have filled in the grid with what we believe are the “best practice” systems for mid-market companies. If you would like a copy to compare, contact us, and we will send it to you. We have no doubt this exercise can put you onto several productivity improvements. Good hunting!

Authors
Hal Johnson collaborated with Ed Street in writing this article. Ed Street is a LeadershipOne Associate and has over forty years of professional and management experience in finance, strategic planning, general operating management and information systems design & implementation. He has a proven record of competence in achieving performance, productivity and cost improvements in team based environments while enhancing long term value creation. He has significant experience in facilitating and teaching finance, entrepreneurship and strategic planning in both academic and business environments.