Let's do a thought experiment.Suppose you are an American CEO or government agency head. You observe the enterprise performance management framework of a similar organization from another country and then compare it to your organization's stage of maturity in adopting performance management. Your predicted reaction might respectively be: a) "They sure are behind the times" and b) "We are really far along."
Now a) might be a correct observation, whereas b) is not really an explanation. How does anyone know which nations or continents are ahead or behind in adopting and integrating the various components (e.g., customer/citizen relationship management systems, strategy maps, balanced scorecards, Six Sigma quality systems) that constitute the full vision of performance management?
The Race of Nations to Improve Organizational Performance
I am not sure there is anyone who can objectively evaluate which nation's organizations are more or less advanced in applying and integrating performance management, but allow me to offer my opinion. Over the last three years, I have visited an average of 30 foreign cities annually, so I can share my comparisons - even though my assessments are quite unscientific.
§ Western Europe - Customer-focused. It appears as if the Western European countries are relatively more progressive with customer relationship management systems. My pet theory to explain it is the Cold War led to increases in social services to confront threatening socialist regimes, and this prepared organizations to become more aware of the value of customers. Don't misinterpret any poor service you may have experienced in a Paris restaurant as contradicting this explanation. Look to their railways, banks and phone companies. With those organizations you will find very insightful ways employed to understand which types of customers are more valuable to retain, to grow and to acquire - and which are not. The spend efficiency and precision targeting of their marketing campaigns are enviable. KLM Airlines is noted for its passenger loyalty program. Barclays Bank of France has reorganized, transforming from being structured hierarchically by product manager to a customer account manager responsibility and accountability.
Asia-Pacific - Quality is non-negotiable. Japan is not the only country that transformed itself from a maker of cheap goods to the producer of luxury automobiles and high-end consumer electronics. The semiconductor components in Taiwan and South Korea are leading models of high-quality manufacturing. Taiwan Semiconductor has proof that implementing their quality systems positively contributed to a permanent profit lift. S
Scandinavia - Accounting-based decision-making. Denmark is arguably the world's most progressive country in managerial accounting. Maybe it is because the Scandinavian countries have been short on natural resources (excluding Norway's oil reserves), so their economies have been built on trade. The Copenhagen Business School is legendary as a leader in managerial accounting. Nokia of Finland understands its cost structure behavior as well as any organization.
India - Innovation incubator. Don't automatically conclude that every creative invention comes from Silicon Valley. India suppressed foreign competitors following its national independence in 1949. Its intent was to build competency in its own national industries, with companies such as Tata and Reliance Industries. India is now poised to unleash its tremendous engineering talent on the world stage and introduce innovative products and services.
Russia and Central Europe - Advanced planning and budgeting. The former Communist countries' practice of central planning may have ended with the fall of the Iron Curtain, but their organizations' competencies at resource capacity planning and financial budgeting are a residual from their heritage of tight social control. The rise of modern factories and high economic growth in countries like Slovakia and Poland are not mainly due to lower labor wages but are driven by advanced planning and budgeting systems. LEGO of Denmark has recently outsourced the production of their blocks, loved by children globally, to Flextronics factories located outside of Prague.
Central and South America - A growing consumer base for manufacturers. Brazil, Argentina, Peru, Colombia and Mexico are countries where a middle class is rising from poverty. Their growing needs are not only for consumer hard goods, like dishwashers and refrigerators, but also consumables. Natura is one of Brazil's fastest growing cosmetics companies, with over a 50 percent market share, and the sophistication of their forecasting and production planning system rivals that of any manufacturer in the world.
South Africa - Being government friendly. The end of Apartheid made government services for citizens a high priority; the region's rich natural resources provide the funding. Public sector agencies in Johannesburg and Capetown have modernized their information technologies for database management that is so citizen-centric, other nations are envious of it.
Australia and New Zealand - Overcoming the "tyranny of distance." Being "down under" means being far away from all the other continents. The Aussies and Kiwis call it their "tyranny of distance." However they have had a century to turn their disadvantage to an advantage. Their air and sea logistics companies have learned to squeeze profit margin from every cubic meter of space and excel at maximizing route profitability of their transportation fleets.
North America - Supply chain management mania. Did President Eisenhower's 1950s construction of the interstate highway system coupled with the expansive freight railway system create product-anywhere consumerism? Or did North America's already enviably high standard of living culminate in the investment in the world's best distribution infrastrucure? Regardless of the correct answer, North America's large and sophisticated grocery and retail store inventory systems are amazing in how they can replenish store shelves with rarely a stock-out. Ever not find something you were looking for at Staples?
The United Kingdom - Good strategy trumps excellent processes. Admiral Hornblower's defeat of the Spanish Armada despite having a fraction of Spain's fleet was an early indicator of the UK's competency in strategic thinking and execution. Organizations in London, Edinburgh and Dublin as well as the UK's smaller cities have deployed strategy map and balanced scorecard methodologies to align the behavior and priorities of their managers and employee teams with the strategic intent of their executive leaders. Large retailer Marks and Spencer not only formulates winning strategies, but by selecting the correct key performance indicators (KPIs), it also successfully executes its ever-dynamic strategic objectives.
What do all these observations have in common? Each group of countries is excelling in one particular component of performance management. Performance management is not a narrow, financially oriented view of better budgeting and control. It is the integration of multiple methodologies, including all the examples mentioned, that when integrated and spiced with supporting technologies and analytical capabilities helps an organization improve and excel.
Completing the Full Vision of Performance Management
Which of the performance management capabilities that various countries appear to excel in are essential? Which are optional?
I have asked this question numerous times, and I believe the answer is: They are all essential! The mark of a good executive team, however, is where and when it should direct their organization's attention for emphasis. But the main message is this: Eventually any organization that wishes to drive increasing and long-term sustained value, whether for shareholders in capital markets or citizens/stakeholders/warfighters in the public sector, must implement a comprehensive portfolio of performance management methodologies and solutions. That is the way they will achieve the full vision of performance management.
Some countries and organizations may be a little ahead or behind in their adoption of and competency with various components of performance management, but those who fully integrate them, ideally by organizing their source data on a single common platform (sometimes called a data warehouse) and leveraging analytics will be the winners.
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