Now, I am increasingly raising the topic of leadership, because throughout my career I have seen examples of leadership styles that reflect individual desire for power more than a duty to improving organizational performance.
Muscle or brain? Strength or smarts? When it comes to leadership, I choose the latter in both cases. But how is this finessed to align employee behavior and priorities with the executive team’s strategic objectives?
Analytics-Based Enterprise Performance Management
The primary source for improvements in organizational effectiveness and decision-making is shifting toward the use of analytics of all flavors. Traditional approaches – like 1980s management by objectives, bullying employees and hollow wall banners of rhetoric (e.g., “quality comes first”) – are being superseded by deploying and integrating business analytics into accepted enterprise performance management methodologies. Examples of business analytics are: correlation analysis to understand causal relationships and regression for forecasting, as well as performance management methodologies that include a balanced scorecard, risk management and customer profitability reporting.
Applying business analytics from the CEO’s office to each employee’s desktop enables an organization to frame and solve complex business problems, manage performance to achieve measurable objectives with targets, drive sustainable growth through innovation, and anticipate and manage change.
Establishing a foundation for business analytics is important, too. My personal bias of converting insights into action often makes me forget that many organizations have issues with data quality and with disparate and nonstandard data sources. Organizations will continue to have problems with all of the data they are collecting. Even if their source data has high integrity and is accessible, it still takes time and effort to run reports and get them to the relevant people, and it takes additional time for those people to tell the relevant systems what to do - assuming the right systems are in place. Data integration and management – plus techniques like extract, transform and load – are often considered prerequisites for analytics-based performance management.
The Emergence of Predictive Analytics
One particularly powerful flavor of analytics is predictive analytics. Applying predictive analytics results in making proactive, forward-looking decisions that go beyond simple query and reporting questions about what happened, how many or how often, to answer high-impact questions regarding why it happened, what will happen next, and what is the best that can happen.
A recent survey by the consulting firm Accenture found that most companies are far from where they want and need to be when it comes to implementing analytics. They are still relying on gut feeling, rather than fact-based data, when making decisions. What is needed today is the seamless integration of managerial methodologies, such as balanced scorecards, strategy maps, budgets, activity-based costing, forecasts, customer relationship and value management and resource capacity planning. Each methodology should be embedded with business analytics, especially predictive analytics.
Overcoming Natural Resistance to Change
What major barriers continue to obstruct the adoption rate of performance management methodologies? The barriers are primarily social, behavioral and cultural. There are many examples of these obstacles, including people’s natural resistance to change, not wanting to be measured or held accountable, fear of knowing the truth (or of someone else knowing it), reluctance to share data or information, and attitudes of “we don’t do that here.”
The reality, though, is that few of us, if any, have training or experience as organizational change management specialists. We are not sociologists. We are not psychologists. And neither are many executives in leadership positions. However, we are learning to become change management practitioners.
I credit the New York Times op-ed columnist Maureen Dowd for my title. Her column “Less Spocky, More Rocky” described politicians; but when I applied this title to mission-directed organizations, like yours, I swapped the two names. I would prefer to have an organization with Star Trek’s Spock-like logic and analytical skills than one like Rocky Balboa, punching meat carcasses in the freezer.
Gary Cokins is the founder of Analytics-Based Performance Management LLC, an advisory firm. He is an internationally recognized expert, speaker and author in advanced cost management and performance improvement systems previously a principal consultant with SAS. You can contact him at email@example.com. For more of Cokins' unique look at the world, visit his website at www.garycokins.com.