Page 111 - Performance Leadership

100 • Part II Operational and Analytical Dimensions

the common wisdom of assigning ownership to metrics is that it easily
leads to suboptimization of business performance. If target owners can
apply the means and resources to make their targets, most likely they
will do exactly that—measurement drives behavior. They will optimize
the use of the resources for their particular business domain, or a spe-
cific process or activity, but potentially at the expense of overall per-
formance optimization. It could very well be that by reallocating
resources by taking them away in business domain A and applying
them in business domain B, the overall output of the process crossing
these multiple domains increases dramatically. But due to the owner-
ship of the performance indicators, the various managers in the organ-
ization are not encouraged to explore solutions like this. The current
structure of ownership for targets doesn’t drive collaborative behavior;
more probable, it does the opposite. For instance, managers may even
overspend in their business domain to secure future budgets.
One of the goals of performance management is to create discussion
and a common understanding. As valuable as it is to visualize the con-
tribution of each domain to the overall results, horizontal alignment
shows it is equally valuable to visualize the contribution of each busi-
ness domain to the other business domains. Managers are responsible
for the performance of their own domain, but together they are respon-
sible for the overall performance of the organization.
Many organizations have tried to solve this problem and increase busi-
ness performance by reorganizing the business. They change the focus
of the organization, typically from a divisional focus to a process-driven
or a customer segment-driven focus, putting a complete process or cus-
tomer segment under the management of a single business domain. This
then, according to the single ownership structure, drives a new optimiza-
tion. The sad truth is that once the organization has changed its focus, a
lack of optimization between the new business domains appears: the dif-
ferent process managers or customer segment managers start to create
suboptimization. As a consequence, complex matrix structures are built,
having team leaders as well as process or customer segment managers
and lower management report into divisional management, leading to
excessive overhead.
If we let go of conventional wisdom and take a fresh approach, the
answer is obvious. Changing an organizational structure, but within