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Why Traditional Measurement Approaches Do Not Change A Culture

By John Knotts Updated on May 13th, 2022

If you are a student of business, then you have probably heard all the quotes around measuring what you do. The bottom line is if you are not measuring what you are doing, you cannot improve it. Trust me…many organizations that I have worked with do not measure much of anything. And what they are measuring is not creating a culture of continuous improvement.

If you hope to create a culture of continuous improvement, then start measuring what you do if you are not measuring anything. However, what I often find, when things are being measured, is that what is being measured and how it is being measured do not drive any cultural change in behavior.

The first major area in Building a Culture of Continuous Improvement is to be able to effectively measure your work in a way that leads to improving your work.

In my blog on my Continuous Improvement Culture Model, I gave a brief highlight of Measure in the model. With every change effort, first, you must recognize what you are currently doing and stop doing what is not right. Traditionally, companies are doing one of three things wrong when it comes to measurement:

  1. Not measuring what they do.
  2. Measuring what they do at the wrong level.
  3. Not measuring at the right frequency.

This is just not right!

Not Measuring Anything

If you are not measuring anything in your organization, then you need to start today. By not measuring, you are simply on the road to ruin. You would be surprised at the number of prominent companies that operate day-to-day without a clue as to how they are doing. Solve point number one right now — make a list of everything you think you should be measuring and start.  However, before you start measuring anything, there are a few basic things to understand — the difference between a Key Performance Indicator (KPI), a Metric, and a Performance Measure.

Let us start by discussing the difference between a KPI and a Metric.  An indicator is just that — it is telling you that you should look a little deeper at what is happening. When you peel back the onion on the indicator, you start to realize what might be happening and what might be causing issues with the indicator.

In this example to the right, we have a KPI called Service for our company.  It is an overall customer service indicator that tells us how satisfied our customers are with our products and services.  This indicator, by itself, is not very helpful in pinpointing what is going on in the company.  If we tried to manage to this indicator, we would probably make a lot of mistakes. But Service can be broken down into three areas: Quality, Speed, and Cost.  These are major Metrics.  They give us a little more detail as to where we might have an issue.  Because these metrics are still at a rather high level, we can further break them down to more specific metrics.  The deeper you go into your organization’s performance, the better you will understand the problems you are facing.

A Performance Measure is much more specific.  It is a very specific metric that represents a very specific activity in the company.  Typically, a measure of this type has a possible range, such as 50 to 100 as an example.  This means that you will never have measures under 50 and never over 100 and the range of the measure is 50 (100 – 50).  Performance measures typically have a Standard.  This is a point where the amount being measured should never fall below, or something is going to go wrong.  In the picture below, if our range was 50 to 100, our standard would be 75.  Everything above the standard is good and everything below the standard is bad.  Even though the standard is 75, we might still have a Goal to operate above the standard.  A goal should represent what the item being measured is normally capable of achieving.  The space between the standard and the goal would be the Target of what we shoot for on a regular basis.  To push a team to strive for excellence, you might even set a Stretch Goal, which is higher than the normal goal.  In this example, our goal is 90 and our stretch goal is 96.  Regardless of what these items are set at, we have reality identified as the Actual Performance.  This is where the current item is operating.  In this case, our actual performance is below the standard at about 65 and we definitely need to figure out what is happening.

With this in mind, you can start to not only think about what to measure, but how you might structure your measurement system.  Here are some business areas to start to consider as to what to measure:

  • Financial performance
  • Customer activities
  • Process performance
  • Employee measures

Levels

When it comes to measuring at the right level, what do you think is the right level?  If you answered, “All levels,” then you are on the right track.  Too often leaders will say, “I don’t need to see lower-level measures — I just need these high-level KPIs.”  And they are not wrong.  However, if you do not have data collected and reported at all levels, then when something goes wrong, you will not know what is happening.  This does not mean that leaders of the company need to see process performance measures, but the process owner definitely does.  By aligning process performance all the way up to KPIs, everyone has a better idea as to how what they do every day impacts the organization.  Creating this alignment is not always the easiest thing to do in a company, but once it is built, everything will become so much easier.

Frequency

What else might be going wrong with your measurement system?  Frequency!  Frequency represents how often you look at data to make decisions.  Many times in business, data is reviewed on a monthly basis, occasionally weekly, and seldomly daily.  Only once in a while, you will find real-time (or near-real-time) data management occurring.  However, the faster you can review data, the faster you can make data-driven changes in your organization.

There are a lot of rules of thumb when it comes to data collection and trends.  Basically, you want to collect enough data to demonstrate a trend.  Officially, two data points are considered a trend, but we really need more than that.  I recommend at least six data points, but a good rule is to have an entire cycle of data.  This means, that if you are looking at data monthly, you need at least six months of data to highlight a trend and in reality, you really should have an entire year because that represents a full cycle.  If you are looking at something weekly, you need a month of data or at most six weeks to show a trend.  If you are looking at something daily, then a week is a cycle and six days makes a good trend.

If you make a slight change to a process, if you are looking at data on a shorter frequency, you will know the impact of that change faster.  This is how your business can become more and more agile.  Unfortunately, there are some things that only happen once a month, once a quarter, or even once a year (like end-of-year financial processes).  In these cases, you just have to work with what you have.  In Gemba Academy’s Lean Six Sigma training and certification programs, this is a key point that we stress when developing your process improvement project charter.

If you expect to install a culture of continuous improvement, then you need to take the effort to start measuring what you do.  You need to also measure your company’s activities at all levels, not just at the highest KPIs or even the lowest process performance measures.  Lastly, if you are only looking at your measurement data once a month, you will take a long time to adjust your operations and respond to the next challenge your company might face.  Consider looking for ways to turn monthly data into weekly measures and weekly data into daily measures.  You will become much more agile and effective as a result.


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