The New Spectrum: How the Performance Prism Framework Helps
In essence, by applying the framework, success maps are a means of prioritizing where measurement efforts need to be focused so that managers can have access to the relevant data and analysis they require, which will allow them to answer the questions they most need to be able to address about managing their organization successfully, both in the short and long term.
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A means of validating the outputs from the success mapping process is to apply what we call a "failure map" or "risk map." Failure/risk mapping checks whether all the critical aspects of performance measurement have been properly addressed. In essence, this technique takes the reverse approach to a success map by identifying particular scenarios that describe the opposite of success -- failure. By examining each key failure exposure, a check can be made on the strategies, processes, and capabilities that relate to a particular risk and whether the measures already selected are sufficient to enable identification and, therefore, mitigation of the risk's occurrence or malevolence. To be forewarned should be to be forearmed.
Organizations have many opportunities, but they also face threats -- their measurement systems need to capture both so that executives can manage the business with a clear view of both scenarios. Strategy mapping alone is likely to be inadequate.
Users of the Performance Prism begin to think much more broadly about the wants and needs of all their stakeholders. The framework forces them to explore what strategies, processes, and capabilities they will need to have in order to deliver value to each of their stakeholders. Often they realize that some of their strategies are incomplete, their processes are inappropriate, or their capabilities are lacking. This forces them to think about how they will renew their organization to ensure it is in a better position to compete in the future.
The DHL Experience
The principles of the Performance Prism have been applied beneficially in several corporations in a broad range of industries, including nonprofit organizations. However, the first and probably the most rigorous operational application so far has been at DHL, the international express courier company.
DHL U.K. implemented the Performance Prism in late 1999, when sales for the division were around $500 million and the business employed almost 4,000 people across 50 locations. At that time, DHL U.K.'s managing director, David Coles, and the company's business process director, Drew Morris, were concerned that the division's performance reviews were in danger of becoming too tactical and unfocused in orientation. The executive team considered how it should structure revised format quarterly performance reviews (QPRs) and what it should discuss there. It was at this point that the authors introduced the Performance Prism framework to the company as a way of thinking through this issue.
During the design phase, the executive team at DHL U.K. participated in a series of workshops. In the first round, the executive team identified the wants and needs of its stakeholders (and their contribution to the business). The outputs from the first round were taken as the inputs to the second, where the executive team identified the strategies, processes, and capabilities the organization would need to have in place in order to satisfy the wants and needs of each of its stakeholders.
Take, for example, customers as stakeholders. DHL recognized that the organization had several different kinds of customers. Broadly, it categorized its customers into three types -- advantage, regular, and ad hoc -- based on customer needs. Specific strategies, processes, and capabilities relevant to each of these customer segments were then identified, giving rise to the success map shown in exhibit 4.
Once the separate success maps for each stakeholder had been developed and the links between them identified, it was relatively easy to integrate them into a summary success map for the business. However, given that it is impossible for an executive team to track every strand of activity in a typical success map, how can a company narrow down the strands to the most meaningful few? Our approach was to encourage the executive team to think about the questions that it wanted to be able to answer in the light of the material contained on the success map it had developed. Fundamentally, the executive team was being asked: What is it that you as an executive team need to know in order to decide whether the business is moving in the direction you want it to?
The launch point is not what should be measured but, instead, what questions should be asked? The third set of workshops focused on getting the executive team to think about which questions it would like to be able to answer at its QPRs, given the structure of the success map it had developed. The executive team debated this issue and in doing so developed a robust framework of questions structured around the Performance Prism but derived from its success map. See exhibit 5 on the next page for a sample of some of the questions identified. Once the right questions have been identified, it becomes relatively straightforward to derive what should be measured. The fourth and final set of workshops focused on what measures are required, and thus what data is needed to answer the questions identified by the executive team.
The next stage was to restructure the agenda for the business's QPRs, to ensure that future discussions could reflect the key questions that the executive team had decided it should address. The new structure was introduced during the June 2000 QPR and evolved over the next 12 months. The process for DHL did not end with the implementation of the Performance Prism and the new QPR meeting structure. DHL has continued to evolve its measurement system and review processes throughout, and will continue to do so in the future. It has since cascaded the performance review process down through the organization in a way that all operations and sales managers structure their local performance reviews in the same way. We should note, however, that some organizational factors contributed significantly to the success of this implementation. Data capture infrastructure was already relatively sophisticated, which is not always the case. DHL involved its business performance analysts extensively in the process. It also invested substantially in education and process facilitation -- both internal and external. Without these essential elements, progress would have been limited. The role of the Performance Prism in this journey has been a vital one in that it has provided a logical and coherent structure for the board to shape its performance measurement and management system. As David Coles says, "We could have reached that same state of measurement maturity without the structure provided by the Performance Prism, but we would never have got there so fast or so completely."
Conclusion
The Performance Prism is not a cure-all tool. It needs to be used intelligently to optimize its potential. However, we believe that it does provide a robust and comprehensive framework through which to view and address the real problems and practical challenges of managing organizational performance within the new spectrum of the stakeholder economy. This belief is born out of our experiences of successfully applying its principles within a variety of organizations, including DHL.
Andy Neely, Ph.D., is the associate director of AIM, the Advanced Institue for Management. He also serves as chairman of the Centre for Business Performance at Cranfield School of Management.
Chris Adams is a visiting fellow at Cranfield School of Management's Centre for Business Performance. He is also an independent consultant.
