Chartered Accountants

Business Forum 2007

The number one business conference

TH10 – Unleash the

power of business
metrics

Michael Ford CA
Director
The Ford Consulting Group
 Disclaimer

These papers represent the opinion of the author(s) and not necessarily those of the Institute of Chartered Accountants in Australia or
its members.

The contents are for general information only. They are not intended as professional advice – for that you should consult a Chartered
Accountant or other suitably qualified professional.

The Institute of Chartered Accountants in Australia expressly disclaims all liability for any loss or damage arising from reliance upon
any information in these papers.
NSW Business Forum 2007

TH10 - Unleash the Power

of Business Metrics

Michael Ford, Chief Growth Architect,

Growth By Design
mford@growthbydesign.com.au
0408 249 064

charteredaccountants.com.au/training

The world according to Google!

> KPI/Key Performance Indicator ... 34m
> Effective KPIs ... 4m
> Bananas ... 42m
> Potato ... 61m

> Beer/Light beer ... 136m

> Wine ... 186m
> Banana beer ... 2m

> Sex ... 398m

> Book ... 812m

mford@growthbydesign.com.au
Mob: 0408 249 064

1
A brief history of time ...
> Ford The leap into industrial measurement

> TQM Measurement in detail

Early efforts to widen the base of PM

> Eccles (1991) “The Performance Measurement Manifesto”

The birth of a new era
Financial measures are just one factor

> K&N (1992) “The Balanced Scorecard”

4 perspectives
4-step process

mford@growthbydesign.com.au
Mob: 0408 249 064

A word from Einstein ...

Not everything that counts can be counted

Not everything that can be counted, counts

mford@growthbydesign.com.au
Mob: 0408 249 064

2
Alarm bells
1. Too many measures (even if they make an attractive dashboard)
2. The boilerplate template
3. ‘Not my fault’ & blame-shifting conversations
4. Measures drive ‘odd’ behaviours
5. Silos & fiefdoms are logical outcomes
6. Personal rewards work against strategy
7. People can’t explain how measures link to strategy
8. Cynicism & resignation
9. Unclear and inconsistent consequences
10. Responsibility doesn’t match accountability
11. Reporting systems aren’t up to the task
12. The field of dreams – measures live in isolation

mford@growthbydesign.com.au
Mob: 0408 249 064

The learning loop

Data

Information

Review,
learning Understanding

Insight

Action

mford@growthbydesign.com.au
Mob: 0408 249 064

3
Measurement myopia
Viewpoint Measure Logical Outcome

Investor Return on Equity Dividend demands,

cashflow pressure
CEO/Manager Profit, growth Short-termism, under-
investing in the future
Sales Revenue, growth Margin erosion,
cashflow impacts

Production Productivity Overproduction

Admin Costs Cost cutting,
underspending

mford@growthbydesign.com.au
Mob: 0408 249 064

Creating a commercial culture

1. Clearly define strategy& performance standards
2. Cascade the strategy & measures down to frontline operations
3. Align reporting systems to the strategy & measures
4. Tie responsibility with accountability
5. Educate staff at all levels about the drivers of business performance,
where they fit and the levers they can pull
6. Develop a performance culture based on coaching
7. Ensure measurement/feedback is consistent & accurate
8. Walk the talk

mford@growthbydesign.com.au
Mob: 0408 249 064

4
What makes a good measure?
1. KISS – less is more
2. Tie responsibility to accountability (CIA)
3. Alignment with strategy
4. Direct link with operations/activities
5. Measure what matters
6. Fit for purpose
7. Logical outcomes pass the sanity check

mford@growthbydesign.com.au
Mob: 0408 249 064

Developing good measures

1. Define the objectives for creating the measure
2. Start with the 5 things we need to get right
3. Define the cause & effect chain, drilling back until responsibility meets
accountability
4. Look for the Outcome-Output-Leverage-Activity model
5. Define what needs to be/can be measured
6. Decide whether the measure works best in past, present or future tense
7. Define the frequency of measurement
8. Design the reporting process
9. Apply the sanity check

mford@growthbydesign.com.au
Mob: 0408 249 064

5
Making good measures work
1. Approach it as a change process
2. Educate staff to create the ‘line of sight’
3. Make the measures matter
4. Support measures with ‘rules of thumb’
5. Allocate resources & make decisions based on the measures
6. Walk the talk
7. Timely & accurate reporting
8. Coaching conversations inside a commercial culture
9. Use the learning loop to drive continuous improvement

mford@growthbydesign.com.au
Mob: 0408 249 064

APQC Top Ten

1. Measure what matters to your organisation
2. Embed measurement systems into daily operations
3. Match the model to the maturity of the business
4. Build a flexible measurement system
5. Embrace simplicity
6. Manage change while developing the system
7. Use the measurement system as a communications tool
8. Link the system to culture
9. Define roles and activities for all measurement activity
10. Act

The American Productivity & Quality Council

mford@growthbydesign.com.au
Mob: 0408 249 064

6
For more information

Michael Ford
Growth by Design Pty Ltd
Mob: 0408 249 064
mord@growthbydesign.com.au

EVALUATION FORM

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Thankyou

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Buffet lunch

7
 BUSINESS FORUM EVALUATION FORM
TH10 - Unleash the power of business metrics

Thursday 17 May 2007, Michael Ford CA

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