The ways in which many business managers measure performance are irrelevant to what really is important to business performance in today’s marketplace.
If you look inside most businesses you’ll find common measures such as monthly profit and loss statements, departmental and product specific sales figures, employee productivity measures, process efficiency measures, out dated customer satisfaction surveys and the list of self-absorbed profit oriented internally focused production oriented measures go on and on.
Let’s call this the “measurement hangover of the 20th century” where the output of tangible data mattered more than the inputs that influenced the outputs. Obsessed with measuring tangible things “management by results” is still the dominant method in many organizations today. It is as if many of today’s managers haven’t been reading or learning anything over the last thirty years. Management methods have evolved. Buyers, employees and suppliers have gotten smarter, vocal, connected and what matters now to these relationships are all the meaningful things that no one previously cared to measure until now.
So What Is Relevant Now?
The achievement of results is an obvious objective for all businesses. However results cannot simply be achieved by measuring them after the fact or setting arbitrary tangible numeric targets using no basis for establishing the objectives. Many of today’s budgeting and objectives setting exercises are simply a waste of time and amount to pulling number out of a hat or some orifice of one’s body.
To truly impact results, (output of people, processes, profit) the 21st century smart business leaders understand that energy, effort and emphasis must be placed on the primary drivers of results, the intangibles.
The 21st century challenge of any business is to continuously discover ways to create more meaning and subsequent value for its entire stakeholder; employees, customers, suppliers, community and shareholders. While meaning and value can be created from an increase in equity and profitability a broader sense of value can be created from the exchange of human, relationship, structural and strategic capital between employees, customers, suppliers and community. By focusing on a broader sense of value creation enlightened organizations have demonstrated at least ten times the returns to all stakeholders than those who narrowly focused simply on optimizing profit.
A new business mindset is unfolding in the 21st century. The mindset looks at value creation holistically and understands that relevancy comes from things that matter to people and focusing on the things that create meaning for the all stakeholders not just the few.
Business reports that matter are those that measure the intangible influences that create the most tangible value for all stakeholders. That’s how the best results are achieved in the 21st century.