We began this blog series describing how reaching Operational Excellence involves first, developing strong capabilities in Strategy and Leadership, explaining how these elements focus on “doing the right things.” Next we addressed Execution, or “doing things right.” Now in the final part of this blog series we will concentrate on how to maintain the focus and efforts of the first parts of OE—the strategy, leadership and execution—to ensure organizational sustainment of those efforts.

Management initiatives come and go and fluctuate in their relative importance to leaders. One feature that has remained prominent in the past half century’s range of activities is the theme of performance measurement.

Measures enable an organization to keep score and monitor the effectiveness of strategies and plans. They are – or should be — the basis for management OE decision making. Unless done with rigor and careful thought, the implementation of metrics and measures can drive undesirable behaviors and produce cynical reactions from staff.

The old adage, “what gets measured gets done,” is not always true. What is true is that if a measure is important enough, it will be managed. Every day thousands of man hours are devoted to make reported measures acceptable to groups and steering committees. Employees are cognizant of these activities and may very well feel demotivated by creative accounting that often accompanies new program initiatives.

The relentless pursuit of the cost/benefit equation — where the energy of OE activities is outweighed by time-consuming collecting, documenting and reporting of ‘savings’— is often never reflected in the P&L because of flawed measurement design.

In the past five years we have noted numerous examples where metrics and measurements have negatively impacted the pursuit of Operational Excellence. This is evidenced by situations where organizations have chosen what is easy to measure rather than what is truly important: pursuing specific metrics at the expense of others which may be more important.

While not a direct source of competitive advantage on which to focus OE activity, the design and deployment of an optimal goal and measurement system is critical to the success and sustainability of an OE culture.

Part III:  The Path to Operational Excellence - Part III

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