Vlog 1 - Performance Excellence Overview

Summary

Steve Ouellette, President of ROI Alliance, introduces a series on 'performance excellence'. He emphasizes the importance of establishing a clear vision, value proposition, core values, and guiding principles for an organization. Ouellette outlines the process of translating these into measurable metrics and cascading them throughout the organization to ensure alignment with long-term goals. He discusses the roles of management and leadership in achieving these objectives and the significance of strategic planning in bridging the gap between current performance and future aspirations.

Takeaways

• 📈 The primary goal is to achieve 'performance excellence' by setting a clear vision and cascading it through measurable metrics.
• 🌐 It's crucial to have a '10,000 foot view' to maintain perspective on the overall objective amidst the details.
• 🔍 The process starts by envisioning a successful future, then distilling that vision into actionable goals.
• 🔗 Deming's concept of 'constancy of purpose' is emphasized, ensuring a consistent direction despite operational detours.
• 💡 A clear 'value proposition' is necessary to understand why customers choose your offerings over competitors'.
• 🏢 'Core values' and 'guiding principles' are essential for aligning organizational culture and purpose.
• 📊 Metrics are derived from the vision to provide a measurable and objective definition of success.
• 📉 Cascading metrics from top-level objectives to individual responsibilities ensures everyone contributes to the overall goal.
• 🔄 A continuous feedback loop is vital for validating the relationship between metrics and adjusting strategies as needed.
• 🔧 Management and leadership are co-dependent; management handles day-to-day operations, while leadership drives breakthrough changes.
• 📋 Strategic planning is an outcome-based process that aligns the organization's efforts towards long-term objectives.

Q & A

What is the primary goal of the ROI Alliance's video blogs?

The primary goal is to describe questions people have as they move towards 'performance excellence' and to provide a clear map of the objectives they are trying to accomplish.

Why is it important to have a vision when striving for performance excellence?

A vision provides 'constancy of purpose', ensuring that despite changes in the path or details, the organization knows where it is heading, similar to knowing the destination while being flexible with the route.

How does defining a vision help in an organization's long-term success?

Defining a vision helps by creating a long-term description of where the organization is headed, which guides decision-making and provides a reference point to ensure all efforts align with the ultimate goal.

What is a value proposition and why is it essential in the early stages of an organization?

A value proposition is a description of the value that customers perceive from the products or services provided. It is essential because it helps align the organization's understanding of its value with what customers actually perceive, ensuring that the organization is meeting customer needs and differentiating itself from competitors.

Why is it important for an organization to measure its value proposition?

Measuring the value proposition ensures that the organization's perception of its value aligns with customer perceptions, allowing for adjustments if there is a mismatch and improving the ability to retain customers and attract new ones.

What role do core values play in an organization's culture?

Core values are essential and are called out specifically because they guide behavior and decision-making within the organization. They help in selecting candidates who fit the organizational culture and ensure that the organization's actions reflect its stated values.

How do guiding principles differ from core values, and why are they important?

Guiding principles are broader and may not be directly controlled by the organization but are reasons for its existence. They are important because they unite the organization and provide a sense of purpose and direction.

Why is it necessary to translate an organization's vision and values into metrics?

Translating vision and values into metrics provides a clear, objective way to measure progress and success. It ensures that everyone in the organization understands what success looks like and how their work contributes to achieving the organization's long-term goals.

How does cascading metrics from the top level of an organization to lower levels help in achieving organizational goals?

Cascading metrics ensures that every level of the organization has clear, measurable objectives that contribute to the top-level goals. This creates a logical structure where each level's performance supports the overall success of the organization.

What is the difference between management and leadership as described in the script?

Management involves the day-to-day handling of people and processes, ensuring continuous improvement and alignment across different areas. Leadership, on the other hand, is about taking the organization to new levels through strategic initiatives that go beyond incremental improvements.

Why is strategic planning considered an outcome of the process rather than a starting point?

Strategic planning is an outcome because it requires a clear understanding of where the organization wants to go (vision), where it currently stands, and how different activities support the achievement of objectives. This understanding is necessary to identify the right strategic initiatives to bridge the gap between current and desired states.

Outlines

00:00

📈 Introduction to Performance Excellence

Steve Ouellette, President of the ROI Alliance, introduces the concept of 'Performance Excellence' and the importance of having a clear vision for an organization. He emphasizes the need to periodically step back from the details to view the bigger picture and to maintain a 'constancy of purpose.' He discusses the process of defining an organization's long-term vision and how it should align with the value proposition offered to customers. The paragraph also touches on the significance of core values and guiding principles in shaping an organization's culture and direction.

05:01

📊 Translating Vision into Metrics

The paragraph delves into the necessity of converting the abstract concepts of vision and value proposition into concrete, measurable metrics. It explains the process of defining what success looks like through quantifiable objectives and how these metrics should be aligned with the organization's top-level goals. The importance of having a clear understanding of these metrics at all levels of the organization is highlighted, as well as the need for a cascading system that links individual contributions to the overall organizational success.

10:04

🔍 Establishing a Decision Support System

This section discusses the creation of a decision support system that enables managers at all levels to understand their responsibilities and how they contribute to the organization's top-level metrics. It emphasizes the importance of continuous validation and data analysis to ensure that the metrics are accurately reflecting the organization's progress towards its long-term goals. The paragraph also touches on the balance between management and leadership, and how strategic initiatives can bridge the gap between current performance and future objectives.

15:05

🚀 Strategic Planning and Long-Term Vision Alignment

The final paragraph focuses on the strategic planning process as an outcome of the previous steps. It underscores the importance of aligning strategic initiatives with the long-term vision and metrics that have been established. The paragraph also addresses the need for breakthrough improvements and how strategic planning can help organizations achieve their long-term goals. It concludes with an invitation for viewers to engage with the content by asking questions and subscribing for further discussions.

Keywords

💡Performance Excellence

Performance Excellence refers to the pursuit of exceptional outcomes in an organization's operations and processes. It is the overarching goal described in the video, aiming to guide the organization towards a state of continuous improvement and high achievement. The video discusses various paths and tools to reach this state, emphasizing the importance of having a clear vision and metrics to measure progress towards this excellence.

💡Constancy of Purpose

Constancy of Purpose is a concept attributed to W. Edwards Deming, emphasizing the importance of having a clear, consistent, and long-term aim for an organization. In the video, it is used to describe the need for a stable direction or vision that guides the organization's actions and decisions, regardless of immediate changes or obstacles, much like knowing the destination while being flexible with the route.

💡Vision

A Vision in the context of the video is a future-oriented statement that defines what an organization aims to become, often over a long-term perspective like 15 to 20 years. It serves as a North Star, providing direction and a sense of purpose. The video stresses creating a vision by asking individuals to describe the ideal future state of the organization, which then gets distilled into a concise statement.

💡Value Proposition

The Value Proposition is a term used in the video to describe the benefits or value that an organization provides to its customers. It is crucial for understanding why customers choose one's products or services over competitors. The video highlights the importance of aligning the organization's perception of its value proposition with what customers actually perceive as valuable.

💡Core Values

Core Values are the fundamental principles or beliefs that guide an organization's culture and decision-making. In the video, they are described as the essential characteristics that are so important they need to be explicitly stated and exemplified. They help in making hiring decisions and in ensuring that the organization's culture aligns with its stated values.

💡Guiding Principles

Guiding Principles are the underlying philosophies or reasons that an organization exists and operates in a certain way. The video suggests that these principles unite the organization and provide a rationale for its existence beyond just the pursuit of profit. They are the foundational beliefs that influence the organization's actions and strategies.

💡Metrics

Metrics in the video are the quantifiable measures used to assess the organization's performance against its goals. They provide a way to translate the abstract concepts of vision and value proposition into concrete, trackable objectives. The video emphasizes the importance of defining metrics clearly to ensure that everyone in the organization understands what success looks like and how to contribute to it.

💡Strategic Initiatives

Strategic Initiatives are significant, targeted actions or projects that an organization undertakes to achieve its long-term goals or to make transformative changes. The video discusses how these initiatives are necessary to bridge the gap between current performance and the ambitious targets set by the organization's vision and metrics.

💡Management and Leadership

The video distinguishes between Management and Leadership as two essential but distinct roles within an organization. Management is associated with the day-to-day operations, processes, and continuous improvement, ensuring the organization runs efficiently. Leadership, on the other hand, is about driving the organization towards breakthrough improvements and achieving the long-term vision, often requiring strategic initiatives and changes beyond the scope of routine management.

💡Decision Support System

A Decision Support System, as mentioned in the video, is a framework that helps managers at all levels understand their responsibilities and how they contribute to the organization's top-level metrics. It is a logical structure that cascades metrics down through the organization, ensuring that everyone's efforts are aligned with the overall goals and that decision-making is informed and strategic.

Highlights

Introduction of the ROI Alliance's monthly video blogs aimed at guiding organizations towards 'performance excellence'.

The importance of having a clear, high-level view of the organization's goals to avoid getting lost in details.

The concept of 'constancy of purpose' as described by Deming, emphasizing the need for a consistent vision.

The process of defining an organization's long-term vision by asking individuals to describe their future success.

The necessity of aligning an organization's value proposition with customer perceptions.

The role of core values in guiding organizational culture and decision-making.

The introduction of 'guiding principles' as a unifying factor within an organization.

The transition from abstract concepts to concrete metrics to measure organizational success.

The cascading of top-level metrics down through the organization to ensure everyone's role in achieving the CEO's goals.

The development of a decision support system through the logical structuring of metrics.

The continuous validation of metrics to ensure they accurately reflect the organization's objectives.

The dual roles of management and leadership in achieving organizational goals.

The definition of management as the day-to-day support of people and processes.

The role of leadership in driving breakthrough improvements and strategic initiatives.

The strategic planning process as an outcome of understanding the organization's vision, current state, and metrics.

The importance of aligning strategic plans with the metrics that define the organization's long-term success.

Invitation for viewers to subscribe for more in-depth discussions and to submit questions for future video blogs.

Transcripts

Hi I'm Steve Ouellette, President of the ROI Alliance. Our idea is to have monthly

video blogs describing some of the questions that people have as they are

moving towards the objective that we call "performance excellence" following

the various paths that we're going to lay out. However, before we get into some

of those details I thought it might be a good idea to take a step back and get

maybe a 10,000 foot view of a map of what it is we're trying to accomplish

with the concept of Performance Excellence so we can always refer back

to that. It's really easy to get lost in the details. Now the devil's in the

details so we need to get to those details but instead of getting super

focused on a particular tool or a particular question we always will have

this to kind of roll back and see where it is we're trying to go and what it is

we're trying to accomplish. Alright so having said that when I first

go into an organization we're probably going to spend some time talking about

where we want things to go in the long term, and so I'll often ask people to

write down in words something like this: it's 15 or 20 years in the future, you're

looking back you did a great job you accomplished what needs to be done and

you're feeling good about it. Describe for me in words what that looks like,

what that environment is like, how you feel about that, and from those words

we're going to define what it is we want this organization to be - and from

that we're then going to distill that down into something we might call a

vision or a long-term description of where we're taking this organization. Now

this provides what Deming used to talk about as "constancy of purpose" and so no

matter where we're going, we know that's what we're trying to head towards. So

imagine an analogy of we're driving to Florida - we know we're going to end up in

Florida but with along the way we may have to take some detours here and there.

A bridge might be out, something might change, some road is is clogged up so we

need to move to another one. So we can adjust as we're going along the path, but

we know we're going to end in Florida. And that's the purpose of a

vision. The purpose of a vision is to provide that constancy of purpose - it

says this is where we're heading, and so although there may be little fiddly bits

along the way we know that that's where we're going to end up. Okay that's the

vision: a short statement of where we want to be maybe 15 to 20 years from now.

Another thing that is required in these early phases is to discuss the value

that you provide to your customers your clients with whatever products or

services that you provide. Now a value proposition is that it's a word

description of what your customers perceive as the value that you provide.

You need to make sure that your value proposition from your perspective meets

what it is that your customers understand to be your value proposition.

And it's probably unlikely if you don't measure your value proposition, if you

don't understand your value proposition, that your customers probably don't

perceive it the same way that you do either. So a value proposition is a very

very important step here in the early days because we're trying to understand

why people give you the money the time the resources to accomplish what it is

that you propose to do as opposed to giving all that to somebody else. So we

better understand that pretty early on and that's our value proposition. There

are a couple of optional things that could show up in this phase as well one

is "core values." So core values are those things that are so important to us that

we need to call them out specifically. We don't need to call out every little

thing like "be honest" or "be nice to people" that type of thing

but there are certain things in many organizations that really rise above

kind of that expected level. Sometimes what I tell people this is helpful for

is in looking at maybe multiple candidates for a job. Maybe you've got a

couple of people that are completely equally qualified but one feels like a

better fit. Sometimes it's because they match those core values better, they

exemplify those core values or they've had a history of exemplifying those core

values, and so they feel like a better fit for your organization. And it's also

really good to have those written out because then you can look around your

organization and see do you actually have the corporate or organizational

culture that you purport to have. And so those core values kind of help

give everybody a touch point to know what it is we're trying to be together.

Another thing that can come up in these early days is something called

"guiding principles." Guiding principles are those things that bring us all together that

we may not actually have control over but that's why we are here in this

organization at this time. Okay so you'll notice in these early days where we talk

about a vision, a value proposition, core values as well as guiding principles, its

words at this point because that's how humans think - they think in terms of

words, and if we get the words out on paper, if we craft a particular statement,

that gets us somewhere, right? That gets us to the human scale, because business

and industry and organizations are all about humans. Humans doing things for

other humans. And we're going to have to communicate amongst ourselves and with

our clients or our customers what exactly it is we are there to be doing. So

we need the words to start with. We can't stop there and some of you may have

experience with those words that people put up on a wall: it's a vision it's a

mission it says they're going to be the number one of whatever it is that we do

and then that's where it stops.It's just a bunch of empty words these words can

be interpreted in different ways for example if it says something like "we're

going to be the biggest provider of widgets in our industry." Well okay

"biggest" defined how? Revenue, number of units sold, highest visibility... There's

all sorts of different ways to interpret the words that we've now put on our big

poster and if we stop there it's open to everybody how to interpret that and it's

open to everybody to interpolate whether it is we're actually making that a true

statement or whether it's just a crazy statement that the managers are talking

about. So what we really need to do for the next part is turn those words into

actual objective metrics. So what the metrics do is they define for us what we

mean when we say these words. And so we will spend some time turning these words

into metrics via a simple process to define what these words that we assert

that it is that we're trying to accomplish will become. Now those are

metrics that's what we measure right? So for example, if we're going to be number

one then I guess we'd better define how we're going to measure that. And so let's

say it's a revenue something simple that everybody understands. All right so let's

say revenue is the metric. That is the number that we're

going to be generating. Maybe there's different ways of generating that number.

Okay so we define what that actual metric is: it's going to be dollars or revenue

generated per year let's say. Okay if that's the case, then now we've got a

number that we all agree on but that's just the number. Now we need to generate

data to tell us where we are and so we'll get that will generate some of

those numbers will get their revenue and I'll be able to

figure out where we are, but we also have to say where we need to go. And so we go

back to that vision, back to that value proposition, and then we start defining

for ourselves in that 15 year vision where would those metrics be where are

our long-term targets for revenue, for safety, for whatever the metrics are that

would be important for your organization. Now it's really important to do this

because that tells us what we're working towards. Then you'll have a list of

metrics that are going to be the definition of success for the

organization and those are allocated directly to the person at the top of

that organization: a president a CEO, whatever that function is in your

organization. And that becomes that person's measures of success because now

it clearly defines the fact that that person at the top of the organization

exists for the sole purpose of enabling everybody else in the organization to

perform in a way that will achieve those long-term targets for the metrics that

you define from the very beginning step. So again, notice that the metrics are

linked back to the words, and the words are linked back to the whole point, the

purpose, the human reason why this organization exists. Okay? If you don't

have the metrics it's just too fuzzy, there's too many competing efforts in

terms of defining what it is we mean by these different measures of success all

the managers say that they're successful and nobody's actually accomplishing

anything that needs to be accomplished with the organization as a whole.

So we need to have these metrics defined at the top so that we know what success

looks like in an objective way. Okay? Now if we stop with a top-level metrics

that's pretty dangerous as well. Now we've got accountability for, let's say, a

CEO, but the problem is we don't know where all that's coming from. Because if

you think about it every metric that a CEO is responsible for is the outcome of

a whole bunch of other people's work. A CEO can promise something to an audience

but if they don't have the organization to bring that to fruition it's going to

fail. A CEO can go out and search for sources of revenue but if they don't

have the organization that is measuring those metrics of success throughout the

organization it won't matter, right? And so the whole point of a CEO or manager

is to support those people working for him or her in order to accomplish what

it is they need to do to achieve those top-level metrics. How do we do that? Well

that's a question that we have to answer. How does everyone contribute to

accomplishing these these metrics that are rolled up at the very top of the

organization? So we do that through a level of translation and so we cascade

these metrics from the top level of the organization down into the organization

step by step by step. So if the top level of the organization is looking at

revenue then probably somebody ought to be looking at where that revenue is

generated by area by product etc and how we link those from the top level to the

next level down to the next level down and down into the organization needs to

be a logical structure - an initial hypothesis of what it is that we think

that each level the organization - their role that they play in generating those top

level metrics. This eventually, once you complete this all the way down to your

last level of management, becomes a decision support system. And so what that

means is managers at each level now understand at least at a hypothetical

level what they're responsible for and how that relates all the way back up to

the organization to the CEO. Now that's a step along the way - it's a huge step and

sometimes in an organization this may be the first time that they've ever had

metrics that have actually related activities of multiple levels all the

way back up. We also know that these are hypotheses to start off with unless

you've got a lot of data initially. If you do that's great. If you don't you

tend to come up with your best guess. People have experienced they tend to be

pretty good at that they'll get about 80% of the metrics right in my

experience and we're far better off than we were before.

Key to this however is a continuing loop to make sure that we're validating that

the metrics actually do have the relationships that we that we theorized

going into this. And so there is kind of a data analysis option or a portion of

this as we go forward to make sure that the data actually continue to show that

these two things are related and these two things are not related etcetera. So

there's a data analysis piece of it as well. But overall what we want to have at

this point is all managers at all levels are measuring those things for which

they are responsible that actually relate to what it is we're trying to

accomplish at the top level of the organization. So

if we have such a decision support system what does that allow us to do?

Well, in my conception there are two main things that managers are trying to do:

manage and lead. Now these things are co-equal without management you can't

have leadership without leadership you can't have management and what do I mean

by that? Well management is the day-to-day management of people and

processes - this is the stuff that you need to do to get things done. This is

the you know 80 to 90% of what it is you should be doing on a day-to-day basis as

an organization to keep the lights on to keep people employed to keep making the

things that you're selling. There needs to be continuous improvement activities

associated with this management function as well, because if you just stay where

you are today somebody else is going to come along and steal your lunch and do

it a little bit better. So I need to continuous improvement activities the

mechanisms whereby this happens we call "daily management," which is the management

of the day-to-day processes making sure that things are as they have been and

that we're making continuous improvements over time. As well as

"cross-functional management," which is making sure that management in different

areas aren't working at cross-purposes. That we are all kind of aligned and

horizontally integrated in order to achieve those high-level metrics that

we've laid out. That's management - that's a manager supporting the people

that work for them in order to make sure that they are getting what they

need on a day to day basis. But that doesn't make big breakthrough changes.

It's like the Deming world there of continuous improvement but

times that improvement rate is not enough, and we need leadership as well. So for

leadership we might define that as taking an organization or part of an

organization someplace where wouldn't typically be able to go without that. And

so something that we wouldn't be able to achieve with just continuous improvement

we would need some sort of a breakthrough improvement or some sort of

a leadership in order to happen. And that's where the management of strategic

initiatives comes in. Because as you go back to the top, and as you look at that

10 to 15 to 20 year vision and you compare what those metrics would be if

you achieve that, and you compare that to where you are now you're likely to find

gaps. And some of those gaps could be quite big and some of those gaps could

be bigger than what you would expect to get through just by working harder,

faster, and smarter. That's where strategy comes in, and

that's where strategic initiatives enable the entire rest of the

organization to align behind achieving those metrics. Now unique about our

strategic planning process is it's an outcome of all of this. And you will notice

it's at the end of the process because until I've defined where I want to go

and I know where I am now and I know how all these different things support

achieving those objectives, it's going to be awful hard to figure out which thread to

pull on in order to make progress towards those 15 or 20 year goals. So

once I have that I can come up with some breakthrough improvement activities.

These are things that we need to change the rules on - we need to go from where we

are to where we've never been before in order to achieve these longer-term

objectives and that's called a strategic plan. We document that on a piece of

paper and all of the strategic plan also needs to roll up to affect those metrics.

If you've got a strategic plan with a bunch of things to do on it and you do

all those things and you don't notice any change then clearly there's a

problem. And so that's also characteristic of how we do a strategic

plan. Now as we explore these concepts in this blog going forward, of course we're

going to do a deep dive on different aspects of these and answer some

specific questions, but that's what we're trying to accomplish overall. So if you

roll it back up to the top, what we're thinking of is using words to define

where it is we're trying to go and what value it is that we're trying to provide

to our customers. Turning those words into top-level metrics of success that a CEO

or president would then have as their responsibility

that they are accountable for. But continuing to roll those metrics down

through the organization so that everybody knows their role in achieving

what the CEO or what the president is trying to accomplish. And as we start

tugging on things either with management or with leadership understanding where

we need to work in order to achieve that long term vision that we started off with

at the very beginning. So you notice it's all logically linked together: how we

manage, how we lead, how we measure and it's all in service of achieving that

long term vision that we start off with in the very first step. So that's the

plan, that's what we're going to explore. Send me your questions and of course if

you want to subscribe go ahead and subscribe if this is the kind of thing

that interests you and that you'd like to discuss. Feel free to keep coming on

back and we'll have some more discussions. So send your questions and I

will see you next month