StrategyDriven Podcast Episode 10 – Core Performance Measures
StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.
Episode 10 – Core Performance Measures elaborates on Organizational Performance Measure Best Practice 4 – Core Performance Measures. This discussion…
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- defines what core performance measures are
- identifies the benefits of employing a performance measurement lattice
- describes the guiding principles used to create an organizationally aligning measurement system
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Decision-Making Warning Flag 1 – Logic Fallacies Introduction
Complex decisions require executives and managers to synthesize a multitude of variables into meaningful information from which they must choose a course of action. Some executives and managers combine clarity of thought and depth of knowledge and experience with a true understanding of the organization’s goals to identify and select a well founded decision option. Others find their perspective clouded by personal bias, self interest, misinformation, inexperience, and/or a lack of decision-making fundamentals knowledge; falling prey to logic fallacies, the misapplication of logic during problem solving. While a lack of knowledge and/or experience with problem solving may contribute to logic errors, they are typically the product of decision-makers’ underlying desires.[wcm_restrict plans=”25541, 25542, 25653″]
Logic fallacies can be difficult to recognize; appearing as reasonable, common sense deductions. Therefore, to prevent such errors from diminishing decision-making effectiveness, leaders must continually challenge their reasoning and that of their peers. While each logic fallacy has its own drivers, the four lists below, Process-Based Warning Flags, Process Execution Warning Flags – Behaviors, Potential, Observable Results, and Potential Causes, provide executives and managers with some of the common signs that indicate logic errors are impacting their decision-making.
Process-Based Warning Flags
- multidiscipline teams infrequently used to resolve complex problems
- lack of an actual or designated contrarian, a devil’s advocate
- lack of or insufficiently defined decision-making methodology
- absence of process, risk, financial, or other modeling
- lack of a decision follow-up assessment and lessons learned process
- little or no decision-making and/or logical reasoning training provided to executives and managers
Process Execution Warning Flags – Behaviors
- over reliance on experience and intuition in decision-making
- lack of demand for fact-based data collection and analysis
- lack of decision-making and data collection and analysis methodology questioning
- acceptance of a position without significant challenge; commonly referred to as group think
- decision support based on benefit to one’s position, business unit, or workgroup
Potential, Observable Results
- increased organizational risk exposure and a subsequent rise in failure rates
- selection of projects and initiatives not aligned with the organization’s mission goals
- selection of alternatives that are or appear to be inconsistent with the organization’s values
- inability to effectively communicate decision selections to stakeholders; diminishing buy-in and commitment
Potential Causes
- misapplication of logical reasoning often the result of a lack of decision-making and, in particular, logic application training and experience
- organizational bias that favors an individual’s perspective based on position and/or tenure
- inappropriate transfer of past experience often resulting from a lack of assessment and subsequently understanding of past decision successes and failures
- over confidence resulting in an undue, unchallenged expectation of success by decision-makers
- organizational bias toward a particular desired outcome
- rushed decision-making resulting from real or perceived time pressure
- lack of factual data collection and analysis
- rewards based primarily on individual achievement within one’s functional area
Each fallacy has an additional, unique set of drivers. The fallacies most often challenging decision-makers which will be presented in subsequent articles include:
- Gamblers Fallacy
- Weak Analogy
- ad hominem – Personal, Not Issue Attack
- ad hominem corollary – The Person Makes the Decision Right
- Appeal to Ignorance
- Straw Man
- False Dichotomy
- Begging the Question
- Argument from Adverse Consequences
- Special Pleading: stacking the deck
- Burden of Proof
- Over Simplification
- Genetic Fallacy
- Poisoning the Wells
- False Cause
- Causal Reductionism
- Argument by Select Observation
- Misunderstanding the Nature of Statistics
- Lies
- Failure to State
- Outdated Information
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[/wcm_nonmember]Additional Information
The following StrategyDriven recommended best practices are designed to reduce the likelihood of erroneous logic being applied during the decision-making process including:
- Decision-Making Best Practice 2 – Multidiscipline Teams
- Strategic Analysis Best Practice 1 – Integrity Without Excuses
- Strategic Analysis Best Practice 2 – advocates diaboli, The Devil’s Advocate
- Strategic Analysis Best Practice 3 – Identify the Hidden Drivers
- Strategic Analysis Best Practice 3 – Identify the Hidden Drivers (Continued)
- Strategic Analysis Best Practice 4 – Independent Assessors
- Strategic Analysis Best Practice 5 – The Use of Models
Organizational Accountability – Performance = Results + Behaviors
Organizational accountability is built on the premise that individuals are equitably rewarded based on their contribution to the accomplishment of the organization’s goals consistent with its ethical values. Performance, therefore, becomes more than just ‘making the numbers.’ Performance in the accountable organization is an assessment of an individual’s achievement against mission-based performance measures while living up to the organization’s values.
Performance = Results + Behaviors
Breaking down the performance equation reveals the importance of both results and behaviors to the assessment of an individual’s performance:
Results: measure of an individual’s contribution to the overall achievement of organization goals and therefore its success
Behaviors: assessment of how an individual performs work against defined values, policies, standards, and procedures; contributing to the organization’s ongoing value generation ability, risk mitigation, and external goodwill valuation
From these definitions, we see that results reflect what an individual contributed whereas behaviors represent how the contribution was made. Results enable valuation of past performance; behaviors of present performance and its influence on future outcomes. Combining results and behaviors, therefore, provides a picture of an individual’s total value contribution, past, present, and future.
StrategyDriven Podcast Episode 9 – Horizontally Shared Organizational Performance Measures
StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.
Episode 9 – Horizontally Shared Organizational Performance Measures elaborates on Organizational Performance Measure Best Practice 2 – Horizontally Shared. This discussion…
- defines what horizontally shared performance measures are
- identifies the benefits of employing shared measures
- describes the steps taken to create comparative measures
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Recommended Resource – The Welch Way
The Welch Way
a weekly BusinessWeek column and podcast
by Jack and Suzy Welch
About the Reference
The Welch Way is a weekly BusinessWeek column and podcast authored by former GE CEO Jack Welch and his wife, the former editor of the Harvard Business Review, Suzy Welch. These articles cover a wide range of business and career topics offering readers the insights of one of America’s most respected Chief Executives.
Benefits of Using this Reference
Mr. and Mrs. Welch have both achieved unparalleled personal and business success and share their life’s lessons in an actionable way each week within their column. StrategyDriven contributors find great value in The Welch Way not only because it contains step-by-step methods to deal with today’s business and career challenges but because the topics addressed often focus on those areas important to organization’s aspiring to become more strategy driven.
Many of the best practice recommendations found on the StrategyDriven website compliment the actions prescribed in The Welch Way, making this column a StrategyDriven recommended read.