Page 228 - Performance Leadership

Chapter 12 Performance Networks • 217

simply created on a per-project basis. Agreements for cobranding, code-
velopment, comarketing, or simply sourcing agreements may intensify
over time as relationships become tighter, or the opposite may happen.
As innovation continues and market demands change, new stakehold-
ers may enter the network and existing stakeholders may disengage and
seek collaboration with another network. And firms may be part of mul-
tiple networks at the same time.
Unfortunately, most performance management methodologies do not
reflect that new reality. They are aimed at optimizing the results per com-
pany in the network of stakeholders. Methodologies such as DuPont
analysis, economic value added, and balanced scorecard look at opti-
mizing the needs for the shareholders, which are typically connected to
a single entity in the network. Also, beyond budgeting and critical suc-
cess factors are rarely implemented in a networked way. In other words,
the focus is on the question “How do I optimize my own performance?”
In order for performance management to be effective in fueling
growth or supporting any other strategic imperative, it needs to support
the business trends instead of hinder them. With business operating as
a network, needing more horizontal alignment, how to optimize your
own performance is the wrong question, as it leads to suboptimal
results. Optimizing the results of a single stakeholder doesn’t neces-
sarily mean optimizing the results of all stakeholders involved in the
value creation process. Also, it doesn’t take into account how other
stakeholders contribute to the organization’s performance. Performance
management should start by focusing on the impact of the other stake-
holders on the organization: “What do my stakeholders contribute to
my success?” This question leads to a much higher leverage. This ques-
tion can only be asked if the opposite question is asked as well: “And
what do I contribute to the success of my stakeholders?” These ques-
tions are the key to the performance network.

A performance network recognizes all stakeholders in a value chain, and it aligns
their objectives in order to optimize the performance of the overall network,
not the performance of each stakeholder by itself.

The performance network is taking “measurement drives behavior”
to a whole new level—from collaboration between people within an