Page 94 - Performance Leadership

Chapter 6 One Version of the Truth • 83

number of customers. There are also industry-specific terms that have
many different definitions, such as flight for an airline, mile, or kilo-
meter, for a taxi company, student for a university, transaction for a
bank, and hour for a consultancy company. Using a process-oriented
approach to create horizontal alignment, multiple versions of the truth
actually make sense. To put it bluntly, if a business department does
not have a unique view, what value is it adding to the organization? In
short, there is an important rule here:

The more a business term is connected to the core business, the more defini-
tions of it will be around.

This doesn’t mean that every single definition is valid and should be
preserved—in fact, many definitions may be redundant. The real ques-
tion is how does an organization decide which definitions are valid and
which are not. Valid definitions, placed in the right order, constitute
1
“one context of the truth.” I will discuss a few examples from the fol-
lowing industries:

• A software company dealing with revenue definitions
• A European railway company managing multiple definitions of
the term train
• E-plus, a mobile telecom operator, dealing with average
revenue per user (ARPU)
• A retail bank counting the number of money transfers

Case Study 1: Software Company
In contrast to the manufacturing industry, the price of the product—a
software license—is only indirectly linked to the development cost.
This usually leaves a good amount of negotiation room between the
company and prospective customers. Usually the amount of discount
allowed is connected to the seniority and management position of the
sales executives in the company. For instance, account managers are
allowed to discount up to 10 percent, senior account managers up to
15 percent, sales managers up to 25 percent, and the regional vice pres-
ident above 25 percent. In most software companies, on the other hand,