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Yogi Berra, the famous NY Yankee catcher once said, “when you come to a fork in the road, take it.” Organizations today stand at a crossroads to sustained performance. One path is familiar, following the lead of financial return and efficiency metrics; it is about keeping “feet on the ground”. The other is tempting yet unfamiliar and intimidating: it marks a journey of learning and discovery; it is about keeping “eyes on the horizon”. To take the fork is not to choose the “right” path, but to recognise that both paths have to be travelled.
Such a dual performance paradigm is paramount precisely because – just like with the time it takes for new technologies to become mainstream – the period over which an operating landscape can be deemed stable is getting shorter and shorter. A shorter strategic horizon calls for fluidity of performance. Uncertainty – in the past a tiny white puff on a clear blue sky – is now a centrally moving and evolving cloud formation.
Even as instability abounds, far too many organizations remain wary of moving beyond traditional performance toward a wider spectrum, from the short-term results driven by keeping “feet on the ground” to learning and discovery outcomes arising from setting “eyes on the horizon”. Today´s discourse acknowledges uncertainty, yet the actual practice of management has remained stubbornly anchored to the notion of execution. What better evidence than calling top officers “executives”. What if we called them wayfinders?
Over the past decade alone novel approaches have expanded performance paradigms and infiltrated the managerial lexicon. The list includes agile´s product development, design thinking´s customer centricity, lean startup´s build, test and learn among others. Some have even had an impact, albeit subtle, toward a promising paradigmatic shift that include elements of discovery, learning and future value into performance conversations. The problem arises when these approaches are treated as something to be executed.
Let’s take the fork. What would a powerful performance framework look like where organizations focus on activities to pursue both short-term results and longer-term learning and discovery outcomes?
A New Performance Playbook
Let’s recognize performance as a multi-dimensional spectrum. When we speak of performance, we mean different things, each bringing a nuance to bear and different metrics. At one end, the performance spectrum is anchored by “efficiency”, focusing on productive outputs and on the opposing end by “discovery”, focusing on novel insights.
Efficiency metrics represent concrete, well known targets of performance, while discovery metrics need to reflect priorities of learning and new ideas. This foundational step sets the stage for a fuller range of performance outcomes that can be adapted to different contexts and circumstances. A robust performance spectrum needs to accommodate the diversity of strategic initiatives of an organization.
When speaking of performance, we have an implicit time horizon in mind (e.g. winning the battle vs winning the war). This time horizon is anchored on one end by “short-term” and on the other end by “long-term”, embracing the different time sensitivity of strategic initiatives. These general labels can be refined to reflect specific industry dynamics, and a concrete horizon can be established for each initiative.
Finally, someone performs when following a prescribed set of steps. This third dimension of performance is an activity spectrum that is anchored on one end by “checklist” and on the other end by “curiosity”. Here, familiar routines can be smartly shaped into a list of activity indicators to cover a portfolio of strategic initiatives, while novel and more experimental activities require the creation of bespoke indicators to be refined (into a checklist) over time. This three dimensional approach to building a performance playbook is presented in Figure 1.
A performance playbook can empower managers on a number of levels. First, it provides a robust and nuanced set of performance paradigms to consider where priorities can be explored and debated across a portfolio of strategic initiatives.
Second, a playbook can leverage established performance measures where appropriate while accommodating the need to craft new performance indicators. This inclusive principle can also be extended to the monitoring and reporting of performance results over the life of an initiative.
Third, a performance playbook can support a range of decision-making challenges, including dealing with risk and most importantly managing those newer initiatives which are more ambiguous and uncertain.
Finally, a playbook approach to setting, monitoring and managing organizational performance leverages the judgment of those on the frontline of each strategic initiative, while also providing a robust set of principles and practices to serve as a performance north star for the organization.
Organizational performance must now embrace new norms and habits anchored in a new performance narrative. Organizations must work their way toward a robust performance framework that can handle the complexities of the environment they face. While essential financial and efficiency metrics are here to stay, a performance playbook needs to develop novel guardrails for learning and discovery critical to sustained performance. In other words, when organizations come to performance forks in the road, they need to expand their playbook.
About the Authors:
Joseph Pistrui is co-founder of Kinetic Thinking, Professor of Entrepreneurship & Innovation at IE University in Madrid, and a Senior Research Fellow at the Center for the Future of Organization, Drucker School of Management.
Dimo Dimov is co-founder of Kinetic Thinking, Professor of Entrepreneurship & Innovation at University of Bath in the UK, and author of two books on entrepreneurship.