I was talking to a client about KPIs and they passed me a large bound booklet. It must have been 200 pages. The booklet was their operations report; a compendium of KPIs. I was asked if I could assist to determine new KPIs to address performance issues within the business. I flicked through the booklet. It was filled with red and green status indicators. Mostly red. I handed the booklet back to the client and apologised – I could not help him. I pointed out that the book already held more KPIs than I could possibly think of, and that the problem was not the absence of a specific KPI, but rather the absence of response to the existing KPIs.

To elaborate this point I turned to a page at random. The three monthly trend showed three months of ‘red’. This was largely the same for all the indicators on the page. The KPI’s had been indicating an out of tolerance position for months and nothing had been done about it.

The conversation then moved to discussing the purpose of KPIs and how to make them effective in the business.

Frequently when first implementing KPI’s, the mindset is to measure everything that moves; if it doesn’t move, kick it until it does and then measure it. Unfortunately, within a couple of months, many KPIs will be found to offer so little value that they are ignored. This sends a message to managers – that it’s all talk and no action – and the slide to indifference starts.

There is only one reason to implement KPIs and that is to manage behaviour. Equally there is only one type of behaviour in an organisation and that is human behaviour. Companies don’t behave, technology does not behave, plant and equipment does not behave. People behave. But what do KPIs measure. They measure customer satisfaction, mileage on trucks, lost sales, revenues, costs, throughput, quality and productivity. The list is endless.

The underlying principle of a KPI is – if you are going to manage it, then measure it, otherwise ignore it. There is no point in measuring something you are not going to manage. To address an indicator that is out of tolerance somebody somewhere in the organisation has to do something differently. Different to what they did last time because last time they created an out of tolerance result.

The difficulty arises when the KPIs are too broad in their definition. For example; sales are down so salespeople are told to ‘get out there’ and work harder. But does the salesperson know what to do differently to improve their sales figures. Clearly their current approach is not working. They need to ask themselves – what must I do differently to ensure I get a different result – or in other words how must I change my behaviour.

The astute sales manager will know exactly what behaviours are required to make even an inept salesperson successful and they will implement KPIs that evaluate this behaviour at the micro level. The focus will be on things that the manager can actually change. This could be number of calls made, length of calls, number of times the salesperson gets through to the decision maker, appointments set and the number of times a salespersons telephone rings.

The misconception is that sales managers are in sales, or more broadly, that managers of a function are in that function. Truth is they are not. They are in a separate function called management and managers behave differently to workers (staff). Therefore the KPIs that measure a managers’ behaviour must be different to those that measure staff behaviour – even if they appear to be in the same function.

The seniority between managers introduces additional complexities.

Consider the following four relationships.

The first relationship is between first line management and staff. A key feature of this relationship is that the two roles are different. Broadly, staff deliver technical output while managers deliver an administrative output. This requires that the manager use KPIs that measure ‘technical behaviour‘.

Mgt to Staff

The second relationship is between a manager who manages workers and his/her manager. 

Mgt to Senior Mgt

 The next level is the relationship between two levels of management where neither level is managing workers.

Senior Mgt to Exec Mgt

The key feature of the previous two levels is that management is managing management. This requires the use of KPI’s that measure ‘management behaviour‘. The KPIs for each level can largely be the same, separated by the degree of aggregation applied to the more senior of the roles.

The fourth level is the relationship between directors and managers. In many respects this relationship is similar to the first level of management. From a directors point of view, business management is ‘technical delivery’ whilst directors take more of a deterministic/directive role in the organisation in that they determine strategy, the governance model, the organisational risk appetite etc.

Exec Mgt to Directors

For each relationship set, what is the role of the senior manager. This is a complex question and not easily answered in a short paragraph. But in the spirit of this article I will say; it is to ensure that direct reports are behaving in a manner that maximises the likelihood of them achieving their KPIs.

Based on this definition, for each relationship, it is mandatory that the senior of the two managers knows what behaviour is required to maximise the business benefit possible from the subordinate management function, and what behavioural changes are required when the expected business benefit is not realised.

If the relationship between the KPI and behaviour is not understood or if a KPI cannot be manipulated through changes in a managers behaviour then it is likely that the wrong KPI is been used.


Entrepreneurship – the act and art of being an entrepreneur  (Source:Wikipedia).

When I was growing up my dad told me a lot of things. Most of it passed me by as I already ‘knew’ everything there was to know on the subject or because it was father telling me. There were however, two messages that stuck and have remained front of mind throughout my professional life.

The first was the story of how he came to run his own business. Basically it went like this….

I used to come home at night and lie in the bath and think about the problems I was dealing with at work. One day I  realised that it was my bath and if I was to worry about anyone’s problems while I was in my own bath, then they should be mine. While I am worrying about my company’s problems I am not worrying about my own”.

Based on this realisation he quit his job.

He went on to say

“Nothing gets you focused on your own problems like having two young kids and no income. Now when I lie in my bath at night I worry about my problems and how I am building a life for my family”

He tried real estate sales and a couple of other ventures. Then he met a chap who had some great software but no sales. Together they built a successful software services business and he retired with peace of mind that he had looked after his family.

Over the years, there were a few variations of the story and each time he would conclude with the assertion – when you lie in your bath at night, make sure you know whose problems you are thinking of.

The second message he left me with was that the word “creative” lacked a second “C”. That it really should be called creaCtive – a mix between the words ‘active’ and creative. There is no point in being creative if you do not act on your thoughts.

I consider these two bits of wisdom to be some of the best I have ever received.

The message is simple for would be self employed entrepreneurs – worry about your own problems and do something about them.

For the internal entrepreneur it gets a bit more complex. Bath time becomes the time when the manager steps back from the desk and actively considers how the function they are managing contributes to the overall business. Bath time is the time needed to reflect and look for the insights that other people are not seeing.  Looking at problems from different angles.

It is very easy and somewhat lazy to let the routine of day to day business suck you in and to allow yourself to be controlled by your diary. When I ask managers to show me the documents they use to manage their business process, they frequently refer me to their dairy. A dairy manages time, not the business. How often do you say or hear – “I don’t have time to think”. Does this mean that you don’t have time to actively evaluate your contribution to the business?

Without making time to work on the business a manager can find themselves moving from meeting to meeting, having significant discussions but not necessarily achieving much. This is where creactivity must meet entrepreneurialism. You cannot be entrepreneurial without action. You cannot be entrepreneurial and stay in the crowd.

 As an employee, acting on your ideas is difficult.  It is likely that a manager does not have the mandate to implement big ideas (as opposed to incremental change) and ‘making it happen’ will require an enormous amount of creactivity. Change management becomes vital for success. In this instance I define change management as the internal socialisation and lobbying of the idea. As a self-employed manager, you are entitled to implement whatever decision you choose. As an employed manager, you need the support of the senior executives or directors.

To be successful as an internal entrepreneur requires that the manager is very clear on the answer to the question – ‘am I addressing a symptom or a primary issue’?

But how do you know. If you are not part of the senior leadership team you may not be privy to the more fundamental issues facing the company.  In this case you need to be equally clear on the following change management questions:

  • who will support the idea for implementation
  • will take responsibility for the activity
  • what does success look like
  • who will gain from the experience
  • who will own the risk?

Being clear on the answers to these questions will significantly improve the way you communicate and market the idea within the company. You may ask yourself – why should I bother; I have a good idea and if the company is not interested then that’s the company’s problem, not mine.

Being and entrepreneur is not easy. If you are happy being a good employee, then turn up every day and do a professional job. Write your ideas down on an email and move on. If you want more, if you want to make a big contribution to the growth of the company,  then you need to look at the business as if it were your own and take time to think about the big picture. Bath time is a good time to do this. So is mowing lawn or any other time when you can be alone with your thoughts.

How do you start – draw a picture, write up a mock marketing brochure. Not a PowerPoint slide pack, but a proper A4 brochure that describes your idea. Keep it to one page. It is not a technical document. It’s a marketing document. If you can express your idea on one page and include a picture, then you are well on your way to making a great start to commercialising your idea.


Recently I spent a morning with a colleague discussing ideas for a new business. He is working on a number of excellent business models and if he can commercialise them, he should do very well.

He asked if I could assist him to “clear his head.” He was too close to the detail and the ideas and concepts were beginning to blur.

My immediate suggestions were:

1.   Draw the business.

2.   Follow the money.

We spent the next two hours on  exactly these two points. What  he initially thought  was a simple question, and one that  he already had straight in his head, proved to be quite complex. It is amazing how a person can jump large chasms in a single bound in his/her head.

Our conversation produced a new and annotated picture of the proposed business depicting how it would work and the flow of money. It was completely different to  the  picture he initially had  in  his head and it  substantially changed the  business case and  intended  architecture. Importantly it resolved a number of the mental blocks he had about the business. The blocks existed as subconsciously he knew there were issues; he just could not articulate where. Following the money is a sure way of resolving this problem.

This same difficulty constantly plays out on a large scale with my clients. As a consultant, I am frequently engaged to  prepare process models, maps and related material. The conversation generally  revolves around the relationship between people, process and technology and is often interlaced with the phrase “shared service.” 

What I battle to understand is this: why, despite engaging consultants to investigate the business, are managers so reluctant to engage with the detail? Businesses are complex, but managers just don’t seem to want to know.

To  further illustrate this point,  the next graphic is an example of a detailed process map. Call it “Process 1.” I do not expect managers to invest significant time at this level of detail. That is, managers other than the process owner.

process flow

Occasionally, an individual process map will include a reference to the next process in the sequence. More often than not, the process just ends with a box that says “post invoice” or “file letter” or “pay supplier.” That’s it. Process over.

This style of process mapping has little bearing on reality. Activity very seldom just stops in a business. Rather there is a handover to the next department or process. Everybody knows this and automatically accepts that this detail is just not included on individual process maps.

But, when that process map is placed in conjunction with other processes on the value chain, it offers limited insight. When the same process is shown inclusive of its relationships to other processes the value of the analysis goes up significantly. Consider the next two graphics.


The  first  graphic shows what processes sit where on  the  framework. The  second graphic  shows the relationships between them. The interconnecting lines represent the hand off between processes and the flow of information within the business.

The  top  row of each graphic represents the  functions and  processes that generate revenue. This row answers the question, “How do I make money?” The middle row comprises the processes that support revenue generation. These processes are not  customer facing and  exist only because revenue is flowing. The bottom row comprises the processes that must exist for the company to be in business, in other words, the true back office.

Rows 2 and 3 tend to be the areas where you spend money. In rough terms row 2 goes to gross contribution and row 3 to operating expenses.

The layout is a great way to “show me the money.” It tells you which processes result in revenue and how and where the invoice is generated. It also provides a foundation for determining which processes belong in the shared services group and the basic configuration of that group. By extension it supports the demarcation of service level agreements  and key performance indicators.

A simple critique of the graphic demonstrates that there is possibly a significant gap in the revenue flow.


Within the circle there is no output process for the third process. It is a revenue generating process but it is almost 100% independent of all other processes. This can’t be right. Equally getting to its trigger process seems somewhat convoluted.

This insight is enormously valuable, especially  if a company wants to implement or refine a shared services model.

If this reasonably simple diagram produces this type of value, why then are managers reluctant to engage in the detail? Without the detail the above issue would not be exposed. Yet it can easily be consulting suicide to put the graphic up for comment. There is a good chance you will hear, “It’s too complex, and I can’t understand it.” So you “dumb it down” to a point where it fits on a slide and uses large font.

I fully acknowledge there is a time and a place for getting into the detail and presentations should be tailored to the audience.

I  close with  the  comment  that  businesses are  complex places and managers should make the effort and take the time to understand them. At the very minimum they should understand the flow of money. Where is it generated? Where and when it is invoiced? And how is it spent? Not necessarily at the fine detail level, but most certainly at the building block level.