More recently, research data from a variety of industries has demonstrated that many customers are not profitable for organizations. The reaction has increased interest in the notion of customer profitability. Sometimes the data produces surprises for the organization, indicating that a group of customers thought to be quite profitable are in fact loss-makers and that other customer groups are far more profitable than generally believed by executives. It has been suggested that in retail banking, for example, 20 percent of customers generate 130 percent of profits.

The important point, and where the subtle twist comes into play, is that customers do not necessarily want to be loyal or profitable. Customers want great products and services at a reasonable cost. They just want satisfaction, which can have many different dimensions, from the organizations with whom they choose to spend their money. It is the organizations that want loyal and profitable customers.

It is the same for employees. Generally, employees seek work that interests them and has some clear purpose. They want an employer that provides a decent and safe working condition and treats them fairly. They also want opportunities to grow and learn portable skills and a competitive compensation package. Organizations, on the other hand, generally need loyal employees -- high attrition rates are expensive -- and they want their workforce to do their jobs with high levels of productivity, flexibility, and increasingly, creativity while being ambassadors for their employer in the outside world. In other words, they need their employees' hands, hearts, minds, and voices.

The key message here is that for every stakeholder there is a reciprocal quid pro quo: what the organization wants and needs from them (stakeholder contribution), as well as what the stakeholder wants and needs from the organization (stakeholder satisfaction).

It is easy to lose sight of this distinction. Gaining a clear understanding of the dynamic tension that exists between the organization and its various stakeholders' expectations can be a valuable learning exercise.

Strategies. The key question underlying this facet is what strategies should the organization adopt to ensure that the wants and needs of its stakeholders are satisfied, while ensuring that its own requirements are satisfied too? In this context, the role of measurement is four-fold. First, managers must track whether or not the strategies they have chosen are actually being implemented. Second, measures should communicate these strategies within the organization. Third, measures should encourage and provide incentives for implementation of strategy. Last, once available, the measurement data should be analyzed and used to challenge whether strategic assumptions are working as planned and, if not, why not?

Strategies can be applied at different levels within an organization. Typically, corporate strategies will deal with questions such as: What businesses do we want to be in and how shall we be successful building them? Business unit strategies will usually consider: What markets do we want to be in and how shall we be successful serving them? Brands, products, and services strategies address: What brands, products, and services shall we offer to these markets and how shall we be successful providing them? Finally, operating strategies tend to look at: Which processes and capabilities must we develop in order to serve these markets and provide these products or services effectively and efficiently, and how shall we successfully implement them?

The old adage "you get what you measure" contains an important truth. People in organizations respond to measures. Measures send people messages about what matters and how they should behave. When the measures are consistent with the organization's strategies, they encourage behaviors that are consistent with strategy. The right measures not only offer a means of tracking whether strategy is being implemented, but also a means of communicating strategy and encouraging implementation. Alignment is essential.

Astonishingly, studies suggest that some 90 percent of managers fail to implement and deliver their organization's strategies. Furthermore, our own research at Cranfield School of Management's Centre for Business Performance indicates that 96 percent of respondents are dissatisfied with their performance measurement systems and believe they need to be improved.

Processes. Processes enable an organization to perform well or ineptly. They run horizontally across an enterprise's functional organization and are the blueprints for how work is completed.