Introducing the Management Model Canvas© - Part 4: Results
In part 3 of this series, we’ve looked at purpose & direction as the foundation of any management model. Next, we are looking at how purpose manifests itself in the real world: how an organisation defines success in terms of the results in wants to achieve.
An organisation needs to be really clear about how it defines success - and how it measures whether it is actually successful. The measures of success are the tangible results for which an organisation and its management assume responsibility and are ready to be held accountable for. Two things are important to note when it comes to results. First, as Peter Drucker has taught us, that results only exist outside the organisation. You cannot define success as an internal measure (an organisation does not exist to serve itself). Second, that we really need to think hard about what metrics we want to use and why. Metrics have an enormous influence over what actually gets prioritised in an organisation, often in a not so obvious way (we will have a closer look at that when we discuss both innovation and execution capabilities later in this series).
What goes in
The organisation’s intended results (its measures of success), in four categories:
customer outcomes (satisfaction, loyalty, growth, …)
validated innovation (validated future value propositions, business models, …)
organisational health (culture, engagement, financial results, …)
social impact (jobs, community, environment, …)
Questions to ask
Do the intended results reflect our purpose? Do they indicate whether or not we’re moving in the right direction?
Which categories of results are most important to us? Why?
Which time frame do we have in mind when defining our intended results?
If it is a short time frame (6-24 months): what is our ambition beyond that? How do we make sure we don’t lose sight of that ambition?
If it is a longer time frame (>24 months): how do we know we are making progress? How do we hold each other accountable in the short term?
Are our intended results inspiring and ambitious enough?
How is our ambition different from every other player in our field?
Is bigger better or is better better?
Are these results always important or are they a reflection of current context and thus temporal in nature?
Do our intended results help us focus? Do they represent what really counts? Is their number small enough so we can actually remember them and track progress with ease?
Are the metrics we use consistent and conducive to good managerial decision making? What could be unintended consequences of trying to improve on these metrics? How do we mitigate them?
Apple is great example of a company that values customer outcomes over everything else. One important measure of success is customer satisfaction, which is consistent with its mission to create insanely great products. Another important measure is market share, which is consistent with the second part of its mission: to change the world and enrich lives (you don’t do that if only very few people buy your products, even if they are very satisfied with them). Interestingly, financial measures historically were never the focus. Still, Apple has become the most valuable company on the planet.
A very different example is Credit Suisse. During its recent strategy update meeting for investors, its CEO spoke for almost 60 minutes, using 80+ slides that were filled with all sorts of financial metrics. Many of which were actually internal measures such as cost targets or measures of capital efficiency (remember: results exist only outside the organisation). The word ‘customer’ appeared on none of the slides. This sounds and feels like an organisation that exists for itself. And it shows in how they define success.
Other organisations might yet again assign different priorities to how they define and measure success. For some, social impact might take center stage, for others, cultural and employee-related aspects might be very important (as was the case for HCL Technologies under the leadership of Vineet Nayar, who famously put “employees first”).
Every organisation will have to define for itself what it wants to achieve and what success looks like. Every organisation will also have to decide how they trade off between the short and long term, between execution and innovation, between pure performance and health. Great organisations reflect these choices very clearly in the kind of results they aim for. And of course these results must also be consistent with the organisation’s purpose. There’s a lot to think about here.
In the next part of our series, we’ll look at how an organisation’s Business Model and Execution Capabilities relate to these results.