How are we doing? Reporting on progress and performance

A recent post on this blog looked at how lessons analysis can help organisations identify some of the high-impact issues affecting their performance.  We recently examined ‘cultural friction’ and discussed some of the problems that excessive inter-team rivalry can cause.

We now turn to the issue of reporting progress and performance.

What is the problem? 

The effective management of any organisation involves some degree of planning, which will include an estimate or forecast of how long a specific scope of work will take, how much it will cost, the level of quality expected etc.  Assessing performance against this requires the measurement of work done (and budget spent, quality achieved etc.) and comparison with the planning forecasts, with the results of these calculations often known nowadays as ‘metrics’.

Well-defined and designed metrics allow management to add, remove or otherwise adjust resources in order to achieve the desired outcome.  Poor metrics obscure the true state of progress, thereby preventing effective remedial action.  Often, poor reporting stems from the organic, uncontrolled growth of metrics (as opposed to a deliberate strategy) and a failure to ensure their continued relevance.

How does it manifest itself?

Organisations that do not report on progress and performance effectively may be unclear on ‘what good looks like’, leading to unambitious or unrealistic targets alike; there may be aspects of performance that simply don’t get measured at all, leaving management blind to issues until they become unwieldy and have an impact far greater than at inception (e.g. sickness and absence); confusing comparisons between work done and work planned (as opposed to actual work needed) may lead to false feelings of confidence; finally, irrelevant or out-of-date reporting can lead to reports that are far too long, within which it is no longer possible to find key information without excessive effort.

What is its impact?

Poor progress or performance reporting leave management with limited situational awareness, thereby unaware of what is actually going on; this may mean certain risks do undetected, let alone managed. Remedial actions are often inefficient and expensive, pushing up overall costs and are taken too late to have the desired effect within the timeframe of any original plan. Furthermore, opportunities (such as replicating good practice throughout the wider organisation) may be missed, as the better performance derived from such innovations goes unreported for too long.

Ultimately, inadequate reporting mechanisms lead to a loss of credibility for all concerned, negatively influencing employees, partners, investors and regulators alike.

What recommendations are made to address it?

Unsurprisingly, companies that learn, through lessons capture sessions, how inadequate reporting mechanisms have compounded poor performance, often decide to conduct a performance management review, to examine which areas require metrics and what kind of information will be needed and at what frequency.

Linked to this, some organisations review governance and accountability, offering those doing the work (i.e. team or individuals) an input into how it is monitored, since they will know which aspects they use to gauge their own performance.

A further recommendation is for the encouragement of greater sharing of good practice from those teams whose performance is above average to those whose performance is below average.  This requires a revision of incentives and, above all, the use of a KM framework, about which more information can be found at the Knoco website.

Cultural friction - Please play together nicely, boys and girls...

A recent post on this blog looked at how lessons analysis can help organisations identify some of the high-impact issues affecting their performance.  Yesterday we examined ‘supply chain management’ and discussed some of the problems that a blanket approach in this area can cause.

We now turn to the delicate issue of cultural friction.

What is the problem? 

Nations have cultures, as do organisations, departments and the teams within them.  Defining a ‘culture’ as the collective expression of people’s thoughts, feelings, prejudices and priorities, no-one should be surprised that where cultures rub up against one another, things happen – for good or bad. 

The smaller and simpler an organisation, the less scope there is for cultural differences to appear; however, as companies grow, specialisms develop, teams are formed, departments are created…and white space appears between them on the organisation chart[1] within which misunderstandings can grow.   

The problem for any organisation - which is an artificial creation, engineered for a specific purpose (e.g. lending money, playing football, curing disease etc.) – with competing cultures is how to manage these clashes for positive ends and not let them harm the purpose towards which they should all be working.  Some of the bonds that sustain teams can prevent effective cooperation with ‘outsiders’ and lead to inefficiency.

How does it manifest itself?

Companies that have become multinational through merger and acquisition may discover tensions between people used to doing things a certain way; some cultures encourage long lunch breaks and embrace a so-called ‘work/life balance’ whilst others consider ‘lunch is for wimps’.

Some organisations have developed hierarchies by function as opposed to rank, whereby information is judged not on merit but on the role of its originator (in the military, the ‘combat arms’ (i.e. infantry etc.) have a sense of their own importance compared to those in combat service support (i.e. logistics and administration); in banking, such delineation occurs between the revenue-generators (i.e. sales and trading) and those that measure, manage and consume said revenue (i.e. operations staff in the ‘back office’) – in either case, this is prejudice at work.

Other organisations have tensions between project and operations teams, with the former enjoying the variety and ‘expeditionary mind-set’ inherent in large-scale projects whilst the latter seek the relative stability and repetition of day-to-day operations.  Tensions occur when the competing priorities become obvious through working in close proximity (i.e. project people need systems to be shut down to enable enhancements to take place whilst operations staff need minimal interruption, if any, to day-to-day processes).

What is its impact?

Cultural frictions can lead to inefficient ways of working and poor knowledge transfer between teams and departments, as healthy rivalry descends into tribalism, back-biting and the protection of knowledge for internal political purposes; morale suffers and each party blames the other(s); retention becomes a problem, with experienced staff leaving (taking most, if not all, of their knowledge with them) and new-joiners are overloaded and indoctrinated into the internecine warfare as early as possible.

What recommendations are made to address it?

Organisations that, through lessons capture sessions, have identified cultural frictions as a problem have reviewed career structures with a view to promoting those that have broad experience across several functions, to encourage transfer between departments and discourage the ‘stove-pipe’ mentality that comes with over-specialisation.

Others have provided mentoring and coaching to leaders to help them ‘walk the walk’ of cooperation instead of relying on merely ‘talking the talk’ of ‘One Team’ etc.

To address the problem of knowledge loss upon the departure of experienced personnel, some organisations have introduced knowledge retention interviews, personal wikis and communities of practice (CoP). For information about these services and for news of our learning cultural audit, please visit the Knoco website.

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[1] Geary A. Rummler and Alan P. Brache Improving Performance – How to Manage the White Space on the Organization Chart; San Francisco: Jossey-Bass, 1995

Supply chain management

A recent post on this blog looked at how lessons analysis can help organisations identify some of the high-impact issues affecting their performance.  Last week we examined ‘contracts and incentive mechanisms’ and discussed how some companies suffer unintended consequences from their contractual arrangements with suppliers.

We now turn to the related issue of supply chain management.

What is the problem? 

Problems relating to supply chain management appear at opposite ends of the same spectrum: at one end are those companies with complete freedom to choose any supplier for any service or product; at the other end are those companies that have chosen to restrict their choices to a handful of suppliers.

At both ends of this spectrum, companies have encountered problems, forcing them to consider a different approach.  Despite the positions being exact opposites, the issue is the same; namely, that a blanket, one-size-fits-all approach does not work for every kind of operation, project or commercial undertaking.

How does it manifest itself?

The ‘free’ companies have to deal with many different points of contact, order/billing/payment processes and currencies, whilst the ‘restricted’ companies have limited choice and their chosen supplier may become a single point of failure if they are unable to meet their client’s requirements.

Other issues include perceived intransigence on the part of a ‘preferred’ supplier and an insistence that the terms contained in the ‘Master Service Agreement’ are applied at all times, regardless of relevance to changed circumstances.

Examples from the news include:

·       The British Army fitted its bases in Afghanistan with air conditioning (ac) under a contract derived from one in the UK. Under the contract’s terms, broken ac units had to be repaired or replaced within 30 days – a reasonable clause in the UK’s moderate climate, less appropriate for the 50 degrees heat of the Helmand desert.

·    Another military example: the UK Ministry of Defence (MOD) was revealed to have paid £22 for light bulbs that could be bought for just £0.65 each; screws that sold for £2.61 were purchased by the MOD for £103.

What is its impact?

The ‘free’ companies incur greater costs through having to manage a large number of interfaces and, whilst their flexibility means they are able to switch supply to exploit market conditions, they are unlikely to enjoy the discounts that the ‘restricted’ companies are likely to have negotiated in return for restricting themselves to a limited supply.

Conversely, the benefit of the ‘restricted’ companies reduced interfaces may not be sufficient to off-set the risk inherent in a limited supply (i.e. a supplier unable to fulfil its client’s requirements on time or, in the worst case, going out of business and ‘leaving them in the lurch’).

What recommendations are made to address it?

Companies that have identified these problems often implement the same solution, regardless of the bracket into which they fall; namely, they conduct a review of their supply strategy to identify where more choice is needed and where the benefits of fewer suppliers are warranted.  This may vary according to the maturity of the market for each product or service. 

Another course of action has been for client companies to seek to develop close and collaborative relationships with suppliers, in order to maximise their understanding of the client’s requirements and minimise excessive restrictions.

For more information on how lessons capture sessions and analysis can help identify the big issues faced by companies today, please visit the Knoco website.

Read the small print - contracts and incentive mechanisms

A recent post on this blog looked at how lessons analysis can help organisations identify some of the high-impact issues affecting their performance.  Yesterday we examined ‘interface management and communication’ and discussed how some companies suffer blockages in the flow of knowledge and information throughout their organisation and beyond.

We now turn to the related issue of contracts and incentive mechanisms.

What is the problem? 

Most organisations recognise the need to take time when negotiating contracts and will often pay significant sums of money for expert oversight and advice in this area.  However, when time is short, clauses or their precise meaning (as intended by the drafter) can be missed. This can expose both clients and their ‘contractors’ to unforeseen risk regardless of the contract type.

Two common types are the fixed or ‘lump’ sum contract for a defined scope of work or a ‘reimbursable’ one where a daily rate is applied to a forecast of how long the work will take.  Under the first model, the contractor is exposed to risk and thereby incentivised to work as quickly as possible to maximise profit; under the second model, the contractor is less exposed and may actually be unintentionally incentivised to take as long as possible.

Both contract types may use additional ‘key performance indicators’ (KPIs) that incentivise contractor performance through rewards and penalties but unless these are directly relevant to the specific scope of work, these can have unintended consequences.

How does it manifest itself?

Companies come to realise that they have incentivised behaviour that is unhelpful, detrimental or even potentially risky.  Under a fixed-sum model, short-cuts may be taken as a contractor seeks to ‘finish early’; conversely, with reimbursement, work may be prolonged unnecessarily as the contractor seeks to extract as much revenue as possible.

Examples from the news include:

·        The Domino’s Pizza chain’s guarantee to deliver within 30 minutes (customers whose deliveries were made after 30 minutes were fully reimbursed) was amended following high-profile traffic accidents involving Domino’s drivers.

·        Since the ‘credit crunch’, some bank bonus schemes have been revised to incentivise long-term performance since pre-2008 bonuses appeared to encourage excessive risk-taking in the pursuit of short-term gains.

What is its impact?

The skewed risk/reward balance in poorly negotiated contracts and clumsy KPIs can result in either work being performed too quickly (thereby adversely affecting quality and safety) or too slowly (thereby increasing costs and resulting in late delivery).  Failure to recognise the implications of the changed situation reduces management credibility and overall morale suffers.  Excessively punitive penalty clauses can force one side out of business, which often leave the remaining party out of pocket, without the goods or services it sought but now with the additional burden of finding a new supplier in even less time than originally.

Relations between client and contractor can become frayed as one side perceives the other to be ‘gaming’ and taking unfair advantage of clauses in the contract that are having unforeseen consequences.  In such circumstances, the long-term continuation of such business relationships is unlikely.

What recommendations are made to address it?

Client organisations that have ‘learned things the hard way’ through poor contracts and KPIs often subsequently seek to establish long-term relationships with their suppliers and contractors, dedicating time and resources to ensure they have a shared understanding over those clauses that contain rewards or penalties.  Another lesson identified from this is the need for rewards and penalties to be specific to the work in question and the avoidance of ‘one-size-fits-all’ KPIs.

These lessons were identified by clients in facilitated lessons capture sessions run by Knoco.  To learn more about these and other KM services, please visit the Knoco website.

What is a Knowledge-Driven Culture? New ARK publication hot off the press!

ARK have just published a new journal, "Establishing a Successful Knowledge-Driven Culture", copies of which can be purchased here.

It includes an article by Nick Milton, entitled, "The Ten Dimensions of a Learning Culture" and one by me, entitled, "What is a learning culture and, using the British Army as an example, what can help or hinder its development?"

For more information on how Knoco can help in the audit and development of a learning culture, please visit this page on the Knoco website.

Interface management and communication

A recent post on this blog looked at how lessons analysis can help organisations identify some of the high-impact issues affecting their performance.  Yesterday we examined ‘scope definition and the lack of shared understanding of requirements’ and discussed how contracting parties fail to achieve sufficient clarity over work requirements and their execution.

We now turn to the related issue of interface management and the absence of effective communication.

What is the problem? 

‘Interface management’ describes the processes, tools and behaviours used to communicate between a large project’s many components, teams and disciplines.  Companies that manage interfaces well ensure that knowledge is accessible to all who need it and changes are communicated swiftly and effectively.

Companies that manage interfaces poorly suffer blockages in the transmission of knowledge (to use the ‘stock and flow’ analogy explored by Nick Milton here) and communications are haphazard and sporadic instead of regular and deliberate.

How does it manifest itself?

Manufactured connecting components, software features or even 'ways of working' are found to be incompatible without significant effort; teams that are meant to co-operate suffer poor relations as the boundaries between them become increasingly rigid; only a privileged ‘elite’ seem to know what is going on; rumours are rife; plans are soon shown to be unrealistic as delays build up; even minor events have a major impact and control is lost, with everyone ‘reacting’ and ‘fire-fighting’. 

What is its impact?

Work proves more difficult than expected and solutions of ever-increasing complexity are required to resolve problems.  This results in late delivery which, in turn, results in short-cuts as formal processes are skipped; this adversely affects quality and costs exceed original estimates as corrective measures are needed to address the shortfall.  Morale suffers and all teams agree on one thing at least – that this is all someone else’s fault.

What recommendations are made to address it?

Some organisations that have endured poor communications, either internally or with partners, suppliers or clients, have introduced formal interface management systems and created teams to enable (and enforce) good communications.  Others have considered that a KM assessment may be appropriate, in order to identify and locate any blockages or weaknesses in the system through which knowledge should flow.

A cultural audit can help organisations understand the actual values that underpin their teams’ behaviour (as opposed to the professed values).

Finally, some companies have responded to these problems by seeking to develop long-term relationships between internal teams and with external suppliers, partners and clients; this has included examining and revising the incentives (both explicit and implicit) in place.

For further information about KM assessments and cultural audits, please visit the Knoco website.

A failure to listen - scope definition and the lack of shared understanding of requirements

A recent post on this blog looked at how lessons analysis can help organisations identify some of the high-impact issues affecting their performance.  Last week, we examined ‘strategy alignment and implementation’, looking at how companies can become over-extended through uncontrolled, uneven growth, thereby exposing themselves to greater risk through problems of quality or delay.

We now turn to the issue of scope definition and the failure to achieve a shared understanding over requirements. 

What is the problem?

Organisations fail to define a scope of work with sufficient clarity to enable third-parties (i.e. contractors, partners, suppliers) to meet their expectations.  Whilst a contract for work may be agreed and signed, unspoken assumptions about it only become apparent once work begins and both sides realise that there was a lack of shared understanding of the work requirements - for example, ordering ‘beef’ when you want steak results in disappointment when a burger turns up.  Failure to establish the requisite mutual understanding results in more being asked of one party than originally expected, perceived by them as ‘scope creep’.

How does it manifest itself?

Work may take longer than expected, as one side realises it is more complex than anticipated. Quality may suffer as short-cuts are used to try to make up time.  Costs escalate far beyond initial estimates and contractual arrangements may have to be reviewed as one party realises it may incur significant losses. Examples from the news might include:

·         The late delivery of aircraft such as Concorde, the Airbus A380 and the Joint Strike Fighter programme.

·         The over-budget delivery of infrastructure projects such as the Suez Canal and the Sydney Opera House.

What is its impact?

As work increases in both quantity and complexity, one party may find it lacks sufficient resources to execute the work, forcing it to recruit or sub-contract additional capability, usually at significantly increased cost. Original plans are found to be unworkable and become meaningless. Failure to recognise the implications of the changed situation reduces management credibility and overall morale suffers as relations between client and contractor deteriorate.  Delivery is delayed, over-budget and with increased risk.

What recommendations are made to address it?

Breaking down the adversarial model of projects (and associated contractual relationships) and moving towards a more collaborative, Agile approach (with smaller, faster iterative loops) is often recommended as a way of increasing mutual understanding. 

On the other hand, only project teams that have gone through the pain of a creeping scope or increasing complexity realise just how detailed requirements have to be in order to ensure that contracting parties achieve mutual understanding over scope. 

Good lessons capture and re-use help to inform and warn future teams of this necessity and a Peer Assist programme can help teams where planning is already underway.  For further information about these services, please visit the Knoco website.