Saturday, 8 December 2012

The Great Myths of Measurement: Start with Strategy

Pick up any text or article on performance measurement and chances are you'll find the phrase "start with strategy". The underlying message being that you should align your performance measures to your organisations strategy. How else can you be sure you are executing your strategy?

This oft heard cry "start with strategy" is the first of the great myths of measurement. Organisations don't exist to execute strategies. They exist to create value. Value for their shareholders (or funders). Value for their customers. Value for the wider group of stakeholders with which they engage. If you don't create value for your staff, attracting and retaining talent is challenging. If you don't create value for your suppliers, getting great service from them is not straightforward. If you don't create value for the community in which you operate, retaining their support and goodwill is difficult.

The point is that organisations exist for a purpose and that purpose is to create value for stakeholders, so surely the first questions we should ask ourselves - when considering what to measure - are: (i) which stakeholders matter to us; (ii) what do they value; and (iii) how can we measure whether we are delivering value to them. Strategy comes later. If I am clear about what my stakeholders value then I can think about what strategies I am going to purse to create this value. So let's stop the inane calls to start with strategy and focus instead on what really matters.

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