Apply System Thinking To Boost Business Performance

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Business performance. We all think we know what it means, but try to define it and there will be many disagreements. This is because a business involves many stakeholders, including customers, employees, shareholders, partners, suppliers and others.

Performance means different things to each of these groups and, in practice, their interests often conflict. How do you handle these conflicts in your company? Are you meeting one target while causing more serious damage elsewhere? What is required is a fresh approach to business management and measurement.

Enter the "line of sight" concept. "Line of sight" is a systemic approach to business and business measurement that is underpinned by a fundamental belief that:

  • Sustainable business performance is achieved through gaining commitment and sales from customers who are, or can become, heavy spenders.

  • Commitment is gained through delivering a distinct and appropriate customer experience (the right blend of functional, rational, sensory and emotional elements) to these customers.

  • This is done most effectively through engaged and motivated employees or partners.

  • Employees and partners work within the context that the company sets, one which encourages the appropriate customer management approach (e.g. budgets, policies, products, pricing, clear proposition, environment, processes, IT infrastructure, measures).

  • The "system" must work in harmony so that the organization is aligned to deliver sustainable business performance.

While many companies may agree in principle to this, few see all these elements as part of a "system" that needs to be actively managed.

"Line of sight" is a very different business philosophy and measurement approach in which everyone can understand and align with the overall purpose and aspirations of the business.

Although each element of "line of sight" correlates with business performance independently, the broad effect is to focus on optimizing the system as a whole—aligning the organization behind business performance optimization and changing "the way we do things around here." It reduces or even removes the conflict and confrontation common between pseudo-independent organizational functions.

The measurement approach has an emphasis on forward-looking prediction and insight to help people understand and improve performance (that is, to improve customer commitment) and their role in delivering it. It is not designed to provide a rear view mirror to what happened in the past—although it must not ignore the lessons from the past.

Do it with them, not to them!
"Line of sight" links in the critical "people" angle, one omitted from most measurement systems. It applies the same principles to employee measurement, measuring commitment and behavior and trying to keep those that are most valuable now and in the future.

The process of developing "line of sight" builds engagement and encourages self-motivation, again contrary to the top-down management "command and control" philosophy of "tell them what to do and they’ll do it." It provides the opportunity to continuously improve, based on customer and employee feedback, and creates improved business performance, rather than simply reacting to circumstances. Those who have to deliver the changes become directly involved in shaping them.

Like any measurement system, "line of sight" needs to be used carefully, and it will work only if managers use the measures intelligently. As an example, a call center manager will need to look at average call time to answer questions such as, "How many people are required to manage the call center?" An agent will also need to be measured on this but in the context of other measures, such as revenue-generated and customer satisfaction. A good supervisor or coach will recognize the balance of measures and coach people to improve appropriately. A focus on any one of these measures to the exclusion of others will break the system.

"Line of sight" highlights the enablers of business performance and positions profit as an output of the system—not as its sole focus—as this may destroy the process of achieving it. This will require a leap of faith for many, but when the linkages are developed, the argument for systemic management becomes pervasive.

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