Today, managers know a lot more about performance indicators. This does not mean that they have any idea how to get their teams to produce and sell more or serve their customers better. Companies are overwhelmed with metrics. The speed at which new metrics are created and adopted is greater than that of screening out those that have nothing to do with future financial results.
The truth is that, using the popular methods and systems, measurement has become an end in itself and is causing more headaches than solving the issues of efficiency. Furthermore, too much focus on the indicators themselves, and not on the underlying behaviors, often leads to foolish actions and no change in the organization at all.
Some of the common failures in company measurement, such as lack of alignment between KPIs and strategy, measuring what is easy to measure, or measuring everything that moves, lack of analysis to find out what indicators are prompting us to do, and inaction despite the prompting, can be resolved with better organization, learning, and more frequent appeals to common sense.
But apparently the problem is deeper and often buried in the construction of the measurement systems we are using. Through examples and case studies, this course explores the foundational cracks in measurement, the paradoxes and trade-offs that accompany the process. The purpose of the course is to trace the shape and features of the ideal measurement, including - frugal use, ability to predict, stability, applicability throughout the organization, as well as for staff compensation.
After a reasoned analysis of the current landscape of performance measurement, the course logically focuses on a novelty in business measurement – Activity Based Customer Profitability Analysis (CPA). CPA is a system that removes the obstacles and barriers to effective measurement. It allows for tying up compensation to measured performance in an elegant way, without the drama of weighted formulas and summed up non-financial indicators. CPA can be of great benefit to businesses whose financial performance depends on how well they manage their complex customer relationships.