By John Dillard
Strategic plans help businesses set priorities and maximize return on investments. It's an efficient way to focus on achieving a predetermined set of goals.
However, the strategic planning process needs support from a framework for performance measurement in order to report progress and ensure the company stays on track. Organizations should develop a performance measurement framework that streamlines the decision-making process and maximizes return on investment. They also should establish a baseline for current measurement practices and make improvements through a set of iterative cycles.
It's a four-step process: validate, design, deploy and iterate.
The first step in streamlining the decision-making process and improving performance measurement is to validate a company's existing measurement system. This is done through an inventory of current performance measures and available data, as well as ensuring all measurements are linked to specific organizational decisions.
The second step is to design a measurement framework by establishing links between the measurement system and performance goals. Then, the organization must define detailed performance measurement processes and a deployment plan.
Next step is deployment . Companies must collect initial data, create additional reports and establish baselines for targeted outcomes. In conjunction with the creation of baseline data, companies develop new data sources and deploy the newly defined data collection practices to support ongoing measurement.
The final step—iterate—is accomplished by reviewing results , identifying strengths and weaknesses in performance measurement and making improvements. The entire process is repeated beginning with the first step of validating the current state, and then defining a measurement process and deployment plan.
The decision-making process becomes more efficient with each new version, and the results are better aligned with a company's established goals. This method allows for rapid deployment and provides opportunities to add, revise or reject performance measures based on value, ease of collection and relevance to a company's strategy.
One example is NASA. The agency is developing a performance measurement framework in support of a new strategic plan within its Crosscutting Capability Demonstrations (CCD) division. The CCD division helps the agency develop new technology and ensure it is ready for future space flights through testing.
The CCD division's challenge is that demonstrating the readiness of a new technology is often too risky and expensive for the budget of a single mission. Therefore, the division works to bridge the gap between concept and deployment of various new technologies for use in multiple future missions.
For budgetary reasons, it is critical for the CCD division to develop priorities and align its programs around a cohesive set of goals. And, in order to maximize its return on investment, it is critical for the division to be able to measure performance and track the progress of its programs.
This concept can be applied to any business organization. It is important to measure the performance of a company's programs and initiatives to ensure that the organization is working toward a clearly defined business objective.
John Dillard is a co-founder of Big Sky Associates, and as president, he is responsible for the company's marketing, business development and recruiting efforts. He also leads consulting projects focused on improving the speed and effectiveness of decision making, as well as core processes and functions, for large government agencies and Fortune 500 companies. Big Sky Associates is a management consulting firm that specializes in creating thorough plans of action to help organizations solve their most complicated challenges.
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