Shelley: Today we are privileged to have with us Stacey Barr, the business performance measurement specialist. Stacey and I have known each other for about nine years now. And I was privileged enough to be Stacey's coach for about four years.
She's just so very, very passionate about performance measurement, that you are in for an enlightening and entertaining half hour. Stacey had an interest and natural ability in math, which led her into a career as a research statistician. While that gave her a great foundation in how decision makers use or even mis-use quantitative information like survey results, business matrix and statistics, being a statistician wasn't people oriented enough for her.
She has this warm, bubbly personality which you'll get to know as we go through the call. Stacey wanted to have more influence on the quality of decision-making in business, and to help people use information to reach their goals faster, easier and more wisely.
Now for the past ten years, Stacey is a specialist in organizational performance measurement helping corporate planners, improvement officers, business analysts and performance measurement officers to confidently facilitate their organization to create and use meaningful performance measures with lots of buy-in from all levels in the organization.
Stacey has a fantastic website and she has several thousand people visit there each month to pick up the free tips and practical resources along with her free email and newsletter which currently has over 8,000 subscribers worldwide. She's had wide recognition as a expert in the field.
So it's a real honor to have Stacey with us today.
Hi there, Stacey.
Shelley: How are you?
Stacey: Nice to be with you. I'm fabulous. It's so awesome to be able to talk to you again.
Shelley : Yeah, it is. We haven't caught up for a couple years so it's really nice to be able to connect before the call. Of course we had a chat being girls. [Laughs]
Today, Stacey is going to help you discover why your performance reports sometimes misinform, and she'll provide you with some tips to help you make sure they provide high quality valuable information that you can make better decisions.
So, Stacey most organizations have some of measuring if they are on track to achieving their goals. Can you talk to your experience of some of the systems you have seen organizations and leaders use and, I know you are really protective of your clients privacy, so I'm not expecting any names.
But, what I was thinking is that maybe if you could provide us some examples of the most sophisticated systems that you have seen, that maybe didn't provide the information that they wanted to make good decisions.
And, maybe contrast it with, say, a simple system or some simple systems that you have seen that really enabled great decisions.
Stacey: Absolutely, Shelley.
The first example that comes to my mind, about a really sophisticated system, is one that I was involved in helping people in the organization, (a utility company), helping them to develop more meaningful performance measures.
But, in parallel to my doing that there was already in place an IT team that had been contracted in to create this dashboard system. The dashboard system was technically very impressive. It had little tentacles that would reach down, into all of the business' databases, and pull all this data out and report dozens, actually it was probably more in the line of hundreds, of metrics.
They spent $2 million to develop this system and within two weeks the managers refused to use it. It was the most horrible example of waste, I have ever come across in performance reporting.
Shelley: Why were they refusing to use it?
Stacey: It wasn't giving them the information that they needed. It was too complex for them to sift through and look at hundreds of performance measures. They had originally gotten carried away with the whiz bang, flashing lights, ticks and crosses, smiley faces, whatever of typical dashboard software applications and hadn't thought about the most important thing, which is "What do we need to know?"
Shelley: I often say to people one, two, three, too many. If you get more than five to seven indicators, people just can't get their head around them. And, I remember when I was a leader at Colgate, the first year we got into really measuring, we put something like 17 indicators and people were just confused. It was ridiculous.
Stacey : It is. It's crazy. I love the one, two, three, too many. I might use that if it's all right with you,
Shelley. [Laughs]: Of course.
Stacey: I usually guide people and say, look, in general you don't want managers having more than five to seven measures, and when you are just starting, you don't want them having more than around two or three.
Shelley: Yeah. So how about contrasting that with one that you saw that worked very well, but was quite simple.
Stacey: One of my small business clients he was so passionate. He runs a health club in Sydney. And he really wanted better measures for his business and we have set up a little Excel spreadsheet that has one worksheet in there that has captured all of his fortnightly data.
He had delegated that, to a couple of his staff, to collect that data for him. And, every fortnight he goes in and looks at the graphs that are automatically updated in that Excel application. That's what he needs. He prints them out. Hangs them on the walls, has weekly meetings with his team about them and they are so much more focused.
On things like customer retention and the number of sessions that their clients are coming to for their training and stuff like that. Just really, really simple and obviously very cheap.
Shelley: Yeah, great. And so does that enable him then to turn his business into more profit through leading his people and inspiring them? Is that how it's working?
Stacey: He really has. He's got his team very, very focused now on what the drivers are for the success of the business. The example I gave you, there was about retaining customers, but he's got his salespeople now thinking about not just attracting lots more customers, but attracting the right customers, profitable customers, the ones that he is really targeting.
So it's been a real turn around to how even the sales team think about what the business is for and, therefore, what their contribution to that is, through the sales activity.
Shelley: OK. I'm picking up from that then, Stacey, that it probably all starts at the beginning, doesn't it? You've got to know what it is you are trying to achieve, and your performance reports are really just a by-product of having articulated clearly what it is you want to achieve.
I know that you are a big fan of Steven Covey's principle of begin with the end in mind.
That's the first step in your five steps that guide your measure design technique and your PUMP® approach.
Stacey: This technique is really just one of the measurement techniques that, like you say Shelley, it's the one that you are going to use very early in the process.
So, if you are unsure about what you should be measuring or not sure what the measure should be, this is the technique that you can play with.
Like you say, Step One is begin with the end in mind.
And, that means don't, think about the measure yet. Think about what is the result we are trying to achieve in our business or a corporation ... that we know we are going to get benefits from measuring.
So the result for my small business of gym, health club client was: I want to keep my customers. That's the end in mind. I want to keep them. I want them coming back. I want them staying with me for along time.
Shelley: OK. Great. So what was step two, then? Step One was to keep the customers. Step two is...
Stacey: I call it make it sensory specific. So often when we articulate our result we don't really use language that's very concrete. It's usually quite vague. So what this second step does is unpack that and say, "Well if this result was happening, what would we be seeing around us that would convince us the result was happening?"
What does it look like for this guy to keep his customers?
It means the same people are coming in regularly every week.
It means that they're renewing their memberships and those sorts of things.
So it's being able to write those kinds of things down.
Shelley: So is that any different though from knowing the end, like keeping customers, you'd say, well I need to have a retention rate of 70%. How is that different from being sensory specific?
Stacey: You need to be really clear about what the evidence is you are going to go and look for. You can't go and look for a retained customer. You can't recognize them when they walk in. "Is that a retained customer? "I mean, you probably could if you knew all of your customers, but if you've got hundreds of them, you can't.
So it's about getting to the evidence. This is actually step three, Shelley.
Where do I find that evidence?
Where do you find the evidence that a customer is retained? Well, you can go into your books and you look for customers that are constantly renewing. You can look in... well, that would be in your financial reports or systems.
But you can also look at the sign-in register on the desk, when people come back for next session, and the next session ... are they turning up regularly?
So, it's about getting specific enough that you can find where am I going to get the data. That's really why you are making it that specific. Step Three is to list what are the different options to how we can track these?
Is it a percentage of people that have renewed this month?
Or is it the percentage of customers that have turned up this week for their session?
So there are a few different ways to measure customer retention and this really helps you get a list of the options that you have.
Shelley: So Step one, know the end in mind. Have the end in mind. Know where you are going.
Step two. Make it sensory specific.
Step three is know where you get the evidence.
What's Step four?
Stacey: Step Four is really taking a step back more than a step forward.
I'll explain why. [Laughs]
Step Four is called check the bigger picture. So often it's not until you have gotten down to being able to look at some options for measures right in front of you that you start realizing; "Hang on. Measuring that might not be the most intelligent thing I could do for my business". It would be easier to illustrate with a slightly different example.
One of the larger clients that I had is a good example.
One of the things they wanted to measure was customers: 'Were we our customers first choice'.
When they came down to figuring out that they would, 'just measure proportion of people that said this TAFE institute was the first place they came to look for their course', they realized that's not really what they wanted.
They wanted the customers actually to be the final choice, not the first choice. We want customers to say, 'We are the place that you have chosen to do your study or your course'.
So, checking the bigger picture for them was really saying, by measuring the ideas that we've got here, what could be some unintended consequences of that?
For this organization it was, "Yeah, we're always customer's first choice but they never up choosing us in the end."
Shelley: Oh, gosh. That's enlightening isn't it?
Stacey: Yeah, it is. [Laughs] It really is.
It makes sure you put your attention on what really matters.
Shelley: Yeah. And so did that change all their marketing materials and things like that?
Stacey: I think it did actually.
First, it changed the message that they shared internally about what mattered. And that almost set up this: 'We're our customer's first choice' as a motto internally and that could have really caused some problems.
I don't know what they changed it to, but that was one of the strategies they were going to do as a result of this little session that we had together.
Shelley: Great. So what's Step five?
Stacey: Step Five is name the measure. I know that sounds so trivial, but it's just incredible. It's like a full stop at the end of the process.
We have chosen this measure, out of all those ideas we had, because we really do believe it's the best evidence of the result that we want to achieve. And we're going to give it a name. It could be a little ceremony.
It's not usually more than just that - coming up with a fun five, up to five-word, name for a measure.
Writing a sentence to describe what it means and that's really what you need before you can go and start implementing the measure. In other words getting the data, starting to report it, that sort of thing.
Shelley: OK. Cool. So where does your performance reports fall into the process? Is it in Step Five?
Stacey: No, it's further down. Designing performance reports is actually another technique in the PUMP® methodology that I use.
But, the one that we just talked about, that Shelley is so important, because people don't do it. They jump straight to performance reports. Straight to: Oh, what's all the data we've got? What are all the things we could track?
Let's stick them all in this performance report. And you end up with the situation very much like the first utility organization I gave as an example.
Where you get carried away with reporting, but you haven't reported anything that matters.
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