"In an increasingly crowded, noisy global marketplace, innovation is not optional." Tom Peters
WHAT GETS MEASURED GETS DONE
By Tom Peters
Both of my books, In Search of Excellence and A Passion for Excellence, are said to have placed renewed emphasis on the qualitative aspects of business -- for example, on people, customer satisfaction, nurturing of unruly champions and managing by wandering around.
While that comment is true, I retain strong vestiges of my engineering training from 25 years ago and admit to being a closet quantifier. I think the soundest management advice I've heard is the old saw; "What gets measured gets done."
My own organization applies this dictum rigorously. Our five-day executive seminars are organized around a series of "promises" which demand of our participants practical action in our areas: customers, innovation, people and leadership. We quantify wherever possible. Although some of the promises may seem wildly ambitious, each is thoroughly grounded in observed business practice, usually in the toughest markets.
In the customer arena, we believe that regular, quantitative measurement of customer satisfaction provides a much better lead indicator of future organizational health than does profitability or market share change. We suggest monthly measurement. Further, we urge participants to make the level of customer satisfaction the primary basis for incentive compensation and annual performance evaluation for virtually every person at every level in every function throughout the organization. We also urge every organizational unit in every function to develop key quality measures. Progress should be posted on charts in every work space, and a quantitative goal report should be the first item of business at every staff meeting, regardless of topic.
Next, we specify that all marketers should be out in the field, listening to customers, at least 50 percent of the time. Even manufacturing or operations managers should be out with customers, listening, at least 15 percent of the time. In a related vein, each senior manager should habitually call at least four customers (ultimate users, distributors or major franchisees) each week from a "top 100" customer list kept in his, or her, upper desk drawer or wallet.
To enhance competitiveness, companies should join in partnership, rather than in adversarial relationships, with suppliers and customers. We ask that 75 percent of important customer and supplier relations be covered, in the next 18 months, by joint problem-solving teams. The teams are given an immodest objective of 90 percent reduction in delivery time and inventory. Finally, we insist that all products and services be improved constantly by adding ten small "differentiators" to each product or service every 90 days; for instance, a minor new feature or new tool for the field service force.
Even innovation can be quantified. Following the lead of the constantly self-renewing 3M Company, we propose that each profit center in an organization establish a tough quantitative target for percentage of revenue stemming from new products and services introduced in the last 24 months. And we spur participants to aim for no less than a 75 percent across-the- board reduction in product development cycle-time in the course of the next 18 months.
People programs, too, are amenable to quantification. Far too few firms use profit sharing, gain sharing and other forms of quality- and productivity-based incentive compensation. We argue that at least 25 percent of the average, first-line employees' compensation should come from such a plan. All people, in all functions, at all levels should be part of the plan.
Celebrate small successes, we advise. There should be at least ten celebratory acts each month, no matter how small -- for example, coffee and danish for a project team that completed its work on schedule.
Minor irritants are major detriments to enhanced performance. Set the iron-clad objective of erasing at least one dozen "Mickey Mouse" rules and regulations each 60 days. Reduce the length of all manuals by 75 percent in the course of the coming calendar year.
Finally, quantify leadership , for instance, the time you spend managing by wandering around. First, allow yourself to be in the office no more than 35 percent of the time, regardless of your functional area. Hold all your fellow managers to a like target. Then, quantify your calendar. There is no alternative to spending at least 40 percent of your time on the single priority that you wish to be the cornerstone of any major organizational effort at change -- for instance, enhanced customer service.
To get started, modify your calendar at least 15 percent in the next six weeks. To lock the change into place, conduct a detailed, quantitative weekly review (perhaps with your peers) of your progress, as measured by the precise amount of time spent.
Why don't you plan to quantify ten key areas in the next 30 days? Even the process of quantification can be quantified.
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