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jonathan.becher

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I'm posting excerpts from a few of the most popular posts from my other blog called Manage By Walking Around.  In an extract from this post, I share a cautionary story of using surveys to measure employee satisfaction.

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Many years ago, the HR department in the company I worked for sent out a single-question survey that asked how satisfied we were with our jobs on a scale of 0 to 4, with 4 being the highest.  When the results came back, my department had the lowest average score (2.6) of any group in the company.   The HR VP solemnly explained that my group was in danger of mass exodus and that my annual bonus was going to be negatively affected. 

I was mystified because I had heard very few complaints from my group and no one had left in the last year.  Not one to leave such mysteries unsolved, I convinced HR to ask my group three other questions: “how likely are you to leave the company in the next 6 months”, “how does your job compare to other jobs that you’ve had”, and “how does your satisfaction with your job compare with how it was 3 months ago”.   The results made me feel much better.  On average, my group reported that they were very unlikely to leave the company in the next six months, that their current job was a little better than ones they’d had in the past, and that they felt the same about their job today as compared to 3 months ago. The evidence convinced HR that I didn’t have a major problem brewing. 

Despite this, I was still curious why my group responded so much lower than the company average.  In the following weeks, during my regular one-on-ones, I described the situation to each of my employees and asked them for their opinion.  The answers were striking.  Software engineers, it seems, are tough graders.  Even though the theoretical maximum was 4.0, many said that they would never give a higher score than 3.5 no matter how happy they were. And it irritated them that the company soda machines only carried Coke products and not Pepsi ones; enough that they lowered their grades.  So, a 2.6 average score for my group might indicate equivalent satisfaction to a 3.4 score for another group. 

All of this confusion might have been avoided if the HR group hadn’t chosen to benchmark my group against others in the company.  Instead, they would have been better served to ignore the raw number and to focus on the trend over time.   Are the results from this quarter’s survey result going up or down as compared to last quarter?   Since we only had one data point, I was trying to approximate this trend by asking, “how does your satisfaction with your job compare with how it was 3 months ago”.   

As with everything in performance management, understanding time is critical to interpreting results.  If there is seasonality in your business (like there is in retail), you might consider also comparing the results to the same period last year, as satisfaction is notoriously lower during the Christmas blitz than during other slower parts of the year.  For the software company I worked for, we needed to make we weren’t accidentally comparing the end of a release push to the relative calm of a planning period. 

As it turns out, no one ever left my group during my tenure as a manager despite the VP’s warning.  While interesting work or a soft job market might have been the primary reasons, I like to think that it had something to do with the fact that I stocked my office mini-fridge with free Pepsis.

Jonathan Becher

Show Me the Measures

Posted by Jonathan Becher Nov 10, 2009

I'm posting excerpts from a few of my most popular posts from my other blog called Manage By Walking Around.  In this post I encourage people to think about objectives (what you're trying to accomplish) before designing measures (showing progress towards the objectives).

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Although she’s too far away to hear me, I want to give a big shout-out to Stacey Barr from Australia who describes herself as a performance measure specialist.   In the Performance Measurement Association Discussion Forum, someone named “Eke, U” asks which parameters they should use to measure the performance of a marine terminal gate.  I don’t even know what a marine terminal gate is but Stacey gives an outstanding response to this poster and everyone else who has ever asked what measures they should use:

“These are not measurement questions. These are questions about strategy or direction. If you know what results your work should produce, then the measurement is almost obvious. Trouble is, most people struggling to decide what to measure are struggling because they really don’t have much idea about what results their work should produce.

How can this be? Why do so many people not realise that you first have to know the results you’re trying to create before the question of measures even becomes relevant?”

Exactly.

However you say it, the conclusion is the same. Measures are useless without associated objectives.  You shouldn’t just monitor activities using input and output measures.  Instead, you should monitor impacts using outcome measures.

However you say it, the conclusion is the same.  The next time someone shouts “Show me the measures!” take a page from Jerry Maguire and focus on the real problem instead: helping them achieve their goals.

I'm posting excerpts from a few of my most popular posts from my other blog called Manage By Walking Around.  This post tries to distinguish between strategy and planning. 
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For several years, I’ve argued that performance management is more than just budgeting. I’ve also pointed out that the term planning was often misused by software vendors whose products were mostly limited to financial planning (aka budgeting), rather than end-to-end resource allocation and management.  And finally I’ve advocated outcome-based budgeting, rather than activity-based budgeting, so that the financial plan was more explicitly aligned with the strategic plan.  After all, the budget isn’t really the plan; instead, it’s how you intend to invest to achieve your objectives.

 

A critical assessment of the current market suggests that things have improved.  Most people acknowledge that performance management extends beyond budgeting to strategy management, profitability management and other performance considerations outside of finance.   Most planning products support financial, headcount, and other forms of operational planning.  Unfortunately, outcome-based budgeting is still rare and many organizations still don’t tie planning and strategy.

 

In “How chief strategy officers think about their role” in The McKinsey Quarterly, Dan Simpson, vice president, office of the chairman, at Clorox and the head of strategy and planning for 16 years echoes my sentiment:

 

"People commonly confuse strategy and planning. Planning is primarily internal resource allocation and budgeting, which is clearly tied to finance.  Resource allocation has to be tied to strategy but isn’t strategy in and of itself.  Strategy should be focused on the marketplace and on customers and consumers."

 

Read the rest of the post.

I'm posting excerpts from a few of my most popular posts from my other blog called Manage By Walking Around.  This 2006 post tries to distinguish between dashboards and scorecards.  Interestingly, three years later there is still lots of confusion...

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So what is the difference between a scorecard and a dashboard?  The popular notion seems to be that there is no distinction; the words are used interchangeably in most performance management articles and marketing literature. And yet, if their traditional uses are any guides, a scorecard for a college semester feels like it’s addressing a different problem than a dashboard for an automobile so perhaps there should be a distinction. 

After doing a little research, I found that some people agree.  In an article titled Dashboards or Scorecards — What’s the difference?”, Ventana Research uses the words “manage”, “align”, “strategic” to describe a scorecard and “measure”, “understand”, “tactical” for a dashboard.  Wayne Eckerson makes a similar distinction when he writes, “In short, a dashboard is a performance monitoring system, whereas a scorecard is a performance management system.”  

This distinction between simply measuring or monitoring using metrics to actively managing towards defined goals is a concept that I think is often lost in performance management discussions.  Too often we publish carefully chosen metrics on a dashboard (or scorecard) and then assume performance will increase.  It usually doesn’t.  Managing performance requires integrating goals, programs, and metrics.  But that’s a soapbox for another day. 

Coming back to this main theme, Data Management Group echoes the need for more than measures with this definition, “Scorecards inherently measure against goals, dashboards need not; said another way, dashboards present raw news, while scorecards are editorials of sorts.”  They go on to point out that this is consistent with their real-world counterparts.  Automobile dashboards use lots of measures that give you data about how your car is operating but provide little insight into progress towards your goal of reaching your destination on time.  It’s measuring/monitoring, but not managing.  In a similar vein, your semester scorecard presents a quick picture of which course you need to concentrate on if you would like to graduate but lacks any detail as to why you are struggling in that particular course. Of course, once you’ve identified the troublesome course on the scorecard, you’d like to drill down into a course-specific dashboard that contained detailed measures like individual test scores and attendance rate. 

Which leads me to conclude that a dashboard should contain more operational details behind the strategic goals on a scorecard.  Tom Gonzalez seems to share this belief and provides what I find the most complete and useful definitions for scorecards and dashboards. In fact, he goes one forward and includes a definition for reports as well. I like them so much, I’ll repeat them here:

“The goal of a scorecard is to keep the business focused on a common strategic plan by monitoring real world execution and mapping the results of that execution back to a specific strategy.”

“A dashboard falls one level down in the business decision making process from a scorecard; as it is less focused on a strategic objective and more tied to specific operational goals.”

“Reports are best used when the user needs to look at raw data in an easy to read format.”

As much as I’d like to see us use common language, having a standard definition of scorecard and dashboards is only one small part of the process.  I worry even more about what we do than what we say.  Effective performance management goes well beyond deploying scorecards, dashboards, and reports.  It requires communication and collaboration between everyone involved in achieving in a goal.  It can’t be done in the privacy of our offices.  We have to get up and walk around.

For clarification, in 2008, SAP used the term "business intelligence" in two ways:

  • SAP BusinessObjects BI solutions
  • SAP NetWeaver BI

In order to remove confusion, the term business intelligence is now associated only with the solutions from the SAP BusinessObjects portfolio.

SAP NetWeaver Business Intelligence (BI) is no longer used and instead we refer to the following:

  • SAP NetWeaver Business Warehouse (BW)
  • SAP Business Explorer (SAP BEx)
  • SAP NetWeaver BW Accelerator (BWA)

We hope this helps clear up the confusion.

For me, the closing SAPPHIRE event was the Don Henley concert which took place on the same main stage as the keynotes. Given that Don is in his early 60's, I wondered if he could pull off the vocal range that he displayed early in his career. I was hesitant as to whether the touring band would have the proficiency of the Eagles.

I had no reason to worry. Don's range was amazing and the band was tremendous. Closing my eyes, I could almost imagine that this was the Eagles of 20 years ago.

I was particularly impressed by the rendition of one of my favorite Don Henley songs, "The Boys of Summer". For those that don't know this 1984 song, it became famous for the lyric "I saw a Deadhead sticker on a Cadillac."  The dichotomy between counter-cultural Deadheads driving symbols of the establishment was supposedly inspired by Henley seeing fellow ex-Eagle Joe Walsh driving a Cadillac Hearse with a Grateful Dead sticker on it.

I know the analogy is a stretch, but I couldn't help thinking about how counter-cultural Web 2.0 is now becoming mainstream, too. From SAP BusinessObjects Explorer, to the SAP Social Network Analyzer Prototype, to the new user interface of SAP CRM, Web 2.0 concepts are popping up all over SAP. Web 2.0 is the Deadhead sticker on SAP ERP.

Perhaps that is my most vivid memory from this SAPPHIRE. The world of making decisions and the world of executing them really do seem to have collided.

People are working very hard to help organizations ensure that what they say they want to do matches what they end up doing. And they are pursuing these opportunities in more sustainable ways.

In a difficult economy, the message was focused on delivering value. Nothing could be more clear.

Two notes: The Insights from SAPPHIRE platform closes on Fri but you can still access this content at SAPPHIRE Online. (If you return to the event link after 8 PM EDT you will be automatically redirected the the new destination.)  And for those that want to follow my normal blog, you can find it at http://alignment.wordpress.com/.

The traditional product demonstration takes advantage of the old adage "seeing is believing" by not just telling someone about a product with PowerPoint, but also showing them directly. Demos can be powerful but they also can be difficult to get right; many times demos devolve into showing a series of features rather than solving business problems.

This year at SAPPHIRE I noticed that some people were moving from demos to test drives. In a test drive, the potential customer uses the product themselves, potentially even without training or introduction.  While a test drive may not allow an individual to experience the breadth of the product, it does reinforce intuitiveness and is an emotional way to overcome barriers of adoption.

The microfinance demo is one such example which teaches users about microfinance and about SAP BusinessObjects Explorer.  This demo embeds a quiz with hints on how to use the product.

Over at the Small Businesses and Midsize Companies Village, attendees can go to the "SAP Business ByDesign Test-Drive and Networking Corner" within the village, watch a quick intro video, and then try out ByDesign running off of live systems physically located in Walldorf. Several analysts commented they were impressed which may help alleviate any current skepticism about the state of SAP Business ByDesign.

Maybe we need to update the adage to "using is believing".

Hasso used his now-familiar blackboard style to educate the audience on the revolutionary promise of in memory analytics. As an interesting contrast, he pointed out that the much hyped-advances cloud computing and virtualization are valuable, but are just fundamentally delivering existing solutions in a new way.

Hasso laid out a simple vision, even if the math makes it a bit complicated. He believes that an individual computing blade will soon have 8 CPUs with 16 cores each. Each of these blades will be able to hold up to 500GB of memory. With 10 blades, you would have 5 TBs and 1280 computing elements.

Using column store compression such as in BWA, raw transactions can be compressed by a fact of 10. This means that this 10 blade system can hold the equivalent of 50 TB of data. To put this in context, this is approximately the size of the printed collection of the U.S. Library of Congress. Or, if I followed Hasso's math, large enough to run the combined financials of 70 companies.

The column store compression makes querying the data fast, as well. Hasso re-demonstrated SAP BusinessObjects Explorer reinforcing accessing 1B records in less than a second. In a twist, he showed the analogous demo from within Microsoft Excel pointing out the limitation to the current non-accelerated version of Excel. 

Will everything change? Only time will tell.

While I'm not sure if it was entirely intended, I found the joint presentation between Jim, as head of products, and Bill, as head of sales, a nice parallel for closing the gap between strategy and execution.

In many organizations, there is a disconnect between what the organization builds and what customers want. Because this is largely a communication problem, the antidote to this disconnect is to be more clear.

Jim and Bill used a value-based cycle of discovery, realization, and optimization to show how an organization can extract true benefits from their SAP solutions. In the process, they were not only clear, they also demonstrated that sales and development are aligned at SAP. 

Ian popped in to show how SAP's offerings supported the cycle, demoing a benchmarking offering for value discovery, enhancement packs and the ecoHub for value realization, as well as business process management for value optimization.

One concept that I found particularly interesting was the distinction between best practices and own practices. Best practices represent the collective experience of SAP's vast customer base on how to design end-to-end processes.

While organizations should adopt these best practices for non-differentiating processes, they need to create so-called own practices by tailoring and extending best practices in areas where they require the most differentiation. Own practices can unlock growth opportunities and increase business agility.

Bill and Jim provided a clear call to action for everyone attending SAPPHIRE, both in person and on the virtual platform:

  • 1. Give SAP BusinessObjects Explorer a test drive on your own data (no charge!)
  • 2. Check out the Best Run Now packages to see how you can return high value quickly
  • 3. Leverage SAP's service offerings to help with system landscape optimization
  • 4. Use the EcoHub and Solution Manager to find other solutions that can be leveraged
  • 5. Take advantage of the value management discipline

The keynote was a good reminder of the breadth, depth, and value of the SAP portfolio. It was quite impressive and even managed to outshine the thunderstorm that raged on outside.

I was in the middle of a discussion with some bloggers about the collision between traditional enterprise software and social media tools. I had just remarked that Web 2.0 applications have as much to learn from SAP as SAP has to learn from them when there was a sudden explosion!

Luckily, no one had shot me for my heresy, but rather, it was a bolt of lightning. If I use the popular guide of 'number of seconds until the thunder clap' divided by 5, the lightning struck less than half a mile away.

While I don't want to invoke biblical memories of a flood, the heavens have seemingly opened up here in Orlando. It's raining harder than I've seen in 10 years. In fact, the national weather service has issued a severe thunderstorm warning for the next 30 mins.

This is going to be a tough act for Jim and Bill to follow. I can't wait to see how they work it into their keynote.

While there were a number of press releases this week at SAPPHIRE, today's press conference was dominated by the announcement of SAP BusinessObjects Explorer. SAP BusinessObjects Explorer is a "self-service, search-driven, and discovery-friendly solution" that allows business users (yes, even a CEO) to interact with enterprise data.  When combined with the in-memory technologies of SAP NetWeaver BW Accelerator (BWA), business users can explore very large volumes of data at the "speed of thought".

Perhaps the most powerful part of the press conference was the testimonials from Sara Lee and Molson Coors who have been using a Beta version of product. Both reported incredible response times; sub-second on 300 million records at Sara Lee and 2.3 seconds on 900 million records at Molson Coors.  End-users love the application, pleading with the executive sponsor not to take it away.

Not surprisingly, return on investment (ROI) came up. Here too, the praise was overwhelming. Molson Coors suggested that it had "changed their lives" by eliminating performance tuning of their Business Warehouse. Both companies cited weeks or small numbers of months to show the value.

For many things, seeing is believing, but I don't think watching a demo coveys the power of SAP BusinessObjects Explorer. I think you need to experience it for yourself. One way to do so is to try out the microfinance demo at http://microfinance.sap.com/. You can learn more about the product and how microfinance is helping reduce global poverty.

Léo Apotheker began his keynote with some sobering reminders of the economic crisis:

  • U.S. unemployment is at a 15 year high.
  • The U.S. stimulus package is nearly $800 billion, greater than the U.S. GDP 50 years ago.
  • The world will not be restored to "normal" when the crisis finally ends

However Léo was upbeat, stating that the best-run companies will not just survive, but thrive, regardless of the uncertainties ahead. The key to dealing with uncertainty is to be more clear. Clear about what you stand for, about what you say, and about how you act.

With that, Léo issued a new challenge for best-run companies to become clear enterprises. Clear enterprises should be:

  • Transparent and accountable
  • Lean and agile
  • Collaborative and customer-centric

As the keynote evolved, it became clear (pun intended) that clear wasn't a specific new product; it was a simpler way to describe SAP's value to organizations.

If you have insight into what's going on inside an organization's operations, you have the clarity to make more confident decisions. With clarity you can optimize your processes, reduce costs, and use resources more efficiently. And having everyone on the same page gives you the flexibility to respond more quickly to changing business conditions.

Not surprisingly, there were four demos that reinforced the concept of how technology can help an organization become clear.

An insurance industry application helped both the consumer and the insurance company react more efficiently to an auto accident (shown vividly between two toy cars).

A carbon emission solution provided consumers with more insight into which replacement navigation system was most environmentally sustainable.

And the newly-launched SAP BusinessObjects Explorer can be used by anyone to explore their business and make more confident decisions. (Léo himself did a brief demo to prove the point and earned the badge of "demo boy" from traditional chief demoer, Ian Kimbell.)

The fourth demo was a peak into the future, suggesting how decisions might be made more flexibly by combining insight from multiple people.

Beyond products, Léo tied two other topics to the notion of clear: Enterprise Support and Sustainability.  As a way of making the value of support transparent, SAP and SUGEN have agreed on a collection of key performance indicators that will be independently monitored and reported every year. These KPIs will show that organizations achieve 30% improvement over four years. This is indeed clear.

For sustainability, Léo provided a simple and clear definition:  the need to holistically manage economic, social and environmental risks and opportunities. SAP itself is becoming more sustainable and is committed to reduce its own carbon emissions by 70% by 2020.

SAP also announced a "sustainability map"; a set of capabilities for organizations to become end-to-end sustainable businesses.  Léo was clear that this was more than being green; being sustainability provides competitive and financial advantage.

In case all of that wasn't clear, there's a lot more on the web at http://www.clearnewworld.com/index.aspx

For those of you who may not have logged onto the Insight from SAPPHIRE virtual platform, I'm reproducing my blog posts from there onto SDN.  This is the inagural post:

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At last count, more than 5000 of you – customers, partners, employees and other influencers – have registered for INSIGHTS from SAPPHIRE to learn more about what’s happening this week at SAPPHIRE in Orlando.

 

As you know, the virtual platform provides highlights from SAPPHIRE focused on how organizations have updated the notion of what it means to be a best-run business. In today’s “new reality”, organizations can no longer afford to have a gap between what they say they want to do (strategy) and what they actually end up doing (execution).

 

Towards that end, you don’t want to miss Léo Apotheker’s Tuesday morning keynote during which he’ll provide us all with clear guidance on how we can help close the gap between strategy and execution.

 

Like the virtual platform itself, this blog will not attempt to cover everything that’s happening at SAPPHIRE. I will try to close the gap between those of you who could not attend and those that are attending by not just writing about the obvious highlights (i.e. keynotes and press conferences) but also by giving you a behind-the-scenes look at events you may not have noticed even if you had attended.

 

Feel free to add your comments about what you’d like to hear about most from SAPPHIRE. While I can’t be everywhere at the same time, I do have a couple of volunteers that have offered to help me scout other venues. And, of course, if you’re here in Orlando, feel free to add your own color commentary.

 

Although this event can help you experience SAPPHIRE remotely, not everything translates into the virtual environment. As it’s 90 degrees with 90 percent humidity this week in Orlando, many of us are quite uncomfortable in our business suits. I’ll be sure to spare you that detail of realism.

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