Performance Management & Strategy Execution Blog: The Glue

“Navigating the Fiscal Crisis” - ICMA’s Definitive Paper

O.K. so I am human; I love when hard research supports my predispositions and life experience. The ICMA Alliance for Innovation, led by a team from Arizona State University, has published the seminal white paper on “Navigating the Fiscal Crisis: Tested Strategies for Local Leaders.” The authors report that qualities of well-run organizations that help them manage in good times “are important factors in why some organizations succeed and others decline” when cutbacks occur. Among the qualities listed: an early-warning system to discern which trends and factors will affect strategy and timing; and defined service delivery areas with performance indicators to measure results. “Rigorous analyses determine whether programs are working. If cuts are needed, the government can identify relative program and service effectiveness.”

With 35 years of government service, I have seen the good, the bad and the ugly and even a bit of excellent. ICMA got it right. Excellent is using data on community needs and priorities and program effectiveness to make difficult decisions on budget cuts. One excellent city thought a unit completely dedicated to answering residents’ complaints and inquiries was important to customer service. That was until three years into the program when, under fiscal pressure, they looked at the utilization data. Folks still preferred dealing directly with their contacts in the operating departments and the numbers just weren’t there to justify the unit. It was cut. Another “Center of Excellence” ran the numbers on a “records unit” that was part of sacrosanct Public Safety. With police reports being done by the officers on laptop computers, it was possible to cut this unit from the Police Department budget. Vacancies were not filed and the incumbent employees were reassigned to a Code Enforcement which was struggling to keep up with the Foreclosure epidemic.

So much for the good and the excellent; there was clear evidence in a county I worked with that departments “horded” budget authority to deal with inevitable January across-the-board cuts. Fiscal crises were pretty much an annual event based on inflated revenue projections that tamed the summer budget hearings. Victory went to the crafty and powerful; the impact on the public was known only to the elderly who lost home health services during cut backs. Lack of impact data meant lack of scrutiny, lack of visibility, and accountability only to organized interests.

However, in the ugliest of times I have seen some of the cleverest of savings come from organizations at all levels of “maturity.” As the ICMA paper points out, austerity can push creativity and efficiencies that are politically unacceptable in good time. However, the well-run outfit knows where those opportunities are and is ready with well-documented proposals when the climate is hospitable to cost savings.

Back to the ICMA opus. Figure 4 in the paper -- “Actions to Promote Constructive Change” -- provides the following checklist of best practices during hard times:

• Cut quickly, avoid delay
• Take a long-term view
• Focus on core mission, purpose, and highest priorities
• Invest in innovation and continuous improvement
• Manage revenues as carefully as expenditures
• Examine and improve organizational design and process
• Foster stewardship and cost containment
• Create a sense of inevitability, devise a workable schedule, and stick with it
• Commit to communicating with all stakeholders

Of these nine best practices, two cannot be done at all without performance measurement; and five cannot be done well without it. All, and I mean all, methodologies for continuous improvement and process management begin with knowing what measurable outputs and outcomes you are getting from the status quo. If you don’t know that, you can’t tell if you have improved.

Now imagine quick budget cuts, long range planning, establishing priorities, fostering cost containment and communication with stakeholders without measurement. What you get are arbitrary reductions with no knowledge of the impact -- what I call "government by war lords” -- the strongest get more money.

Enough of my rants and back to our academic advisors. The ICMA white paper concludes, “in economic downturn, lessons from past downturns, research, and practice show that we know what works and what does not to cope with crisis and position local government organizations for strong, long-term development and change. Local government should make cuts in strategic, programmed ways and look for ways to improve the organization while making changes forced by reduced resources.” “Right-on” to our academic brethren.

Governments Endorse Performance Measurement to Manage Hard Times

A recent article on Governing Magazine's website makes the point that government municipalities seem to be relying more heavily on good performance measurement now during the tough economic times. In previous downturns this was not observed, but "this economic malaise is so profound that a growing number of states, cities and counties are newly appreciative of the value results-based performance measures can offer," say authors Katherine Barrett & Richard Greene.

Could this be a bright spot in otherwise gloomy times?

If these (and indeed all) organizations truly change by building performance measurement into their daily practices, we will surely get out of this current mess much faster -- and be better for it in the long run.

Using Spreadsheets for Performance Management: Why They Work and Why They Don’t - Part 2

Note: This is a new series in which I'll be discussing the pros and cons of using spreadsheet tools for performance management. See the intro/background post.

Part 2: Pros – Excel is everywhere and it's easy.

The first thing Excel has got going for it is that it’s everywhere. Travel to five different countries and you probably can’t plug in your hair dryer without a set of adapters but most likely you can give an .xls file to a business person and they can open it. It's easy to share files containing data, analysis, and reporting with co-workers, clients, government, and the public.

And since it’s everywhere, most people have at least a basic understanding of how Excel works. If I need to collect some data and I email you a spreadsheet to fill out and return, you can probably quickly figure out what you need to do. If I need to search for historical data, there is likely a directory on some file server that has a lot of spreadsheets containing the data I need.

When I find the data I need, it is really easy to cut and paste it from one spreadsheet to another. It’s not all that much more difficult to link the data from one workbook to another either. It’s easy to format my spreadsheet and even to insert simple charts.

In fact, one person can set up a fairly sophisticated spreadsheet to monitor the performance of a large (or a small or medium) sized organization. I’ve seen lots of multi-billion dollar companies that have a top-level Excel spreadsheet that measures the overall (not just financial) performance of an organization. 

I’d say 80%-90% of performance management implementations rely on Excel for these very reasons: it’s easy to use, it’s everywhere, and it’s the standard. We’ll look at some more of Excel’s advantages next time.

Upcoming Webinar: What To Do When Your Scorecards Outgrow Excel

Almost all organizations create their first scorecards in Excel and PowerPoint, but most tend to outgrow manual tools like these once performance management becomes more pervasive in their organizations.  Keeping track of, updating, and publishing multiple levels of cascaded scorecards simply becomes too labor intensive to manage with tools that weren’t designed for this critical job.

In this free webinar on Wednesday, July 22nd at 2pm EDT (11am PDT), you'll see ActiveStrategy Enterprise -- software that was designed explicitly to enable performance management. We’ll show how it automates KPIs, scorecards, dashboards, initiatives, trend charts, strategy maps, briefing books, and more – allowing you to focus on performance, rather than on manually gathering and updating scorecards.

Wyeth Pharmaceuticals is one organization that made the transition from manual scorecards to automated performance management using ActiveStrategy Enterprise. During this webinar, we’ll be conducting a live Q&A session with Wyeth Pharmaceutical’s Jennifer Peck about her organization’s use of ActiveStrategy software, which extends back to 2001. As the Senior Director, Strategy Management & Initiatives for Wyeth’s Global Clinical Team, she will discuss how ActiveStrategy Enterprise changed the way her team manages performance, how her team and Wyeth’s leaders use the software, and what value it brings to Wyeth.

We’ll also include time at the end of the session to answer your questions.

We hope you can join us for the webinar. If you’re unable to attend it live but are interested in the topic, please register anyway. We’ll send you a link to view the recording after the webinar.

If you'd like to see any of our previously recorded webinars, visit www.activestrategy.com/webinar

Using Spreadsheets for Performance Management: Why They Work and Why They Don’t - Part I

Note: This is a new series in which I'll be discussing the pros and cons of using spreadsheet tools for performance management.

Part 1: Background & History of the Spreadsheet

It’s hard to believe that spreadsheets weren’t always synonymous with Microsoft Excel. Before the 1980s, financial models were hand drawn and calculated on blackboards or cranked out on ledgers by armies of clerks using calculators.

VisiCalc, the first personal computer spreadsheet program, was developed in 1979. It was THE first “killer-app” for personal computers (and responsible for selling hundreds of thousands of Apple II machines).

Through the mid-1980s there was a mad rush of spreadsheet programs: SuperCalc, Microsoft MultiPlan, Lotus 1-2-3, Borland Quattro, Resolver, and many others. As it seems wont to be, Microsoft ended up the last contender standing.

True, a few stragglers remain on the market and there are strong open-source alternatives, but for most of us “spreadsheet” means “Excel.”

Not that there is anything wrong with that. Excel is an extraordinarily powerful program. If you are reading this blog, chances are that you have at least moderate Excel skills and are aware of some of its power.

Looking back over the last decade working with clients to improve performance and implement performance management systems, it’s very clear that the most frequently used tool in this space is Excel. By a huge margin. People use Excel to build dashboards, scorecards, reports, charts, graphs, briefing documents, and just about anything else you can imagine one might need in a performance management or measurement situation.

In this series of posts, I’ll discuss the pros and cons of using Excel for performance management as I see it. I’ll discuss some best practices and traps to avoid. Hopefully I'll end up providing a good overview of when it’s appropriate to use spreadsheets and when they just aren’t up to the task when it comes to managing organizational performance.