I’ve also been guilty of only measuring growth by hard KPIs, but there is more to it than that, and more at stake.
There is that old saying that you can’t manage what you can’t measure. Last week I was involved in a program at Case Western Reserve University in Cleveland Ohio where we demonstrated the flaws in this argument.
We tend to measure growth by reference to what have come to be known as “hard” key performance indicators (KPIs) such as sales, costs, return on investment (ROI) and so on. Generally speaking, this concentration on historic metrics tends at best to achieve incremental growth such as a 10% increase in sales, year-on-year.
Case Western pioneered research and practical implementation of a process called “appreciate inquiry”. Basically, it is built around the concept of positive thinking. If people are encouraged to think positively rather than negatively about their business or their work, they are more likely to be effective and the results better than if they are preoccupied with problems. “Don’t tell me your problems, lets look at the possibilities!”
Being preoccupied with problems is what is called “deficit-based” thinking and inhibits the ability to see the possibilities.
The program recognises that the main resource of a business is the intellectual and emotional energy of everyone in the business. If it is left to the CEO to constantly come up with the great ideas, then growth is constrained by the ability of the CEO to perform. If everyone is involved in bringing their intellectual and emotional energy to the table, with out fear of criticism or ridicule, then the real wealth of the organisation is unleashed.
This approach tends to treat the so called “hard” measurements, or KPIs, as records in history books. In fact, they are the “soft” factors because they are easy to access. The “hard” KPIs are those that can’t be measured with precision, but are by far and away the most important in an organisation as they represent the combined intellectual and emotional energy of that organisation.
People dismiss this theme as “baloney”. What they are missing are the results. With appreciative inquiry, the organisation is not interested in incremental growth, but growth that truly reflects the potential of the organisation.
We visited a mining company by the name of Fairmont Minerals. Twenty years ago, it was a small sand mining company in Ohio with a modest turn over measured in the millions of dollars. Its growth since taking on the AI program has been spectacular, and in a relatively short space of time its turn over has increased to the hundreds of millions. It has eight sites in the United States and has now taken positions with joint venture partners overseas.
A number of people in the company came along to make presentations, and you couldn’t but help recognised the energy, passion and commitment of these people because they believed they had been liberated to bring their own uniqueness to the business.
Whenever anyone asked them about results, they talked about the “philosophy”. When anyone asked about their problems, they talked about their “opportunities” and those opportunities rested in the hearts and minds of their work mates and other stake holders across the United States.
In 2005, being a mining company, it brought together most of the employees with a large number of people in their value chain, including suppliers, bankers, lawyers and customers to participate in a “summit”, which is the crowning piece of the AI program. This summit was designed to look at ideas whereby the company could become a better corporate citizen so that it could integrate the three key elements of its philosophy: “People, planet and prosperity.”
The summit cost nearly $US400,000, and just one idea of conservation resulted in an annual saving of the same amount while reducing the demands on the resources of the planet. The summit is constructed in such a way that even the most junior person in the value chain has an opportunity to contribute. The philosophy is such as to overcome any shyness on the part of participants. The philosophy of the company is: “Do good, do well.” Which means that if you do good for your people and the planet, you will do well.
So, the next time you are measuring growth or working through how to achieve growth by looking at the history books, just give a thought to the fact that the engine of growth in your organisation rests in the minds and hearts of the people in your value chain. If you haven’t worked out a way of accessing this energy, then your growth will be incremental at best.
For more Growth Doctor blogs, click here.