In this edition of Random Thoughts, I’d like to discuss performance improvement. The term was popularized in the 1970’s by Thomas F. Gilbert, who published a pioneering book on the subject titled Human Competence: Engineering Worthy Performance. Gilbert’s systematic approach to improving performance at all levels of an organization gave birth to the discipline and profession of Human Performance Technology.
I first became aware of Gilbert and the field of performance improvement in the mid-1980’s, when as a rookie internal organization development consultant, I was given an opportunity to lead a project to accelerate the learning and performance of frontline teams in one area of a Cummins Engine Company manufacturing facility. I was reminded of the influence of Gilbert’s work near the end of my forty year career after attending a seminar from The Performance Thinking Network and learning about their Six Boxes Model, which is based on the approach first created by Dr. Gilbert.
In between these two points on my career timeline, I used the term PIO (for performance improvement opportunity) to help teams identify initiatives, projects, or investments that would “move the needle” on priority strategic, business, financial, and organizational strategies.
As an example, review the SWOT assessment methodology outlined on pages 216–224 of Business Model Generation. You utilized (or will soon utilize) a SWOT diagram to conduct an assessment of each of the nine building blocks of the Strategyzer business model canvas. I refer to the Strengths, Weaknesses, Opportunities, and Threats documented in the SWOT diagram as a set of priority Performance Improvement Opportunities. These PIOs can be translated by planning or design teams into short- and long-term strategic initiatives, projects, or investments and incorporated into a One Page Strategy Map and Plan (or balanced scorecard). You will become familiar with the One Page Strategy Map and Plan in Module Four of the Business Impact Accelerator© program.
One mid-size enterprise I consulted with in the defense industry from 2007–2011 internalized this concept of PIO to such a degree that one of the strategic measures and initiatives on their balanced scorecard focused on identifying, measuring, and tracking PIOs in every team of the enterprise, including the top management team. The aim of this initiative was to involve all 225 employees in building an enduring, high-performance enterprise. The second aim was to spark innovation as enterprise leaders anticipated (correctly) a downsizing in defense spending ahead of troop withdrawals from major conflict areas in the middle east. The goal was to tap into the creativity of the workforce and identify new products, services, or business opportunities that would offset projected cuts in spending by military and government customers. By the way, this goal was achieved with development and introduction of a successful new product and operating division.
I highly recommend the structured approach to business model SWOT assessment outlined by the team at Strategyzer. I’ve had too many experiences facilitating SWOT sessions where teams could not (or would not) describe the activating forces (strengths/opportunities) and restraining forces (weaknesses/threats) of their enterprise in sufficient detail. I often had to work with a small team later to clarify the wording on a SWOT diagram. The approach outlined in Business Model Generation is an antidote to the vagueness and lack of focus of many SWOT assessments.
There’s another reason why identifying and describing performance (and business) improvement opportunities is critical. It’s called business model expiration, which is a fancy way to say a business model is on its deathbed and ready to fail. Watch this short video from the Strategyzer Channel on YouTube about the four primary reasons for business model failure.
I keep this video close at hand to show coaching clients how easy it is to lose focus and start sliding toward business model expiration. Note the four major reasons for failure described in the video:
- Solving an irrelevant customer job
- Flawed business model
- External threats
- Poor execution
These four reasons are weaknesses, risks, and threats faced by every enterprise, regardless of age, size, or industry. They represent “performance improvement opportunities” and a good place for you and your team to start as you complete the business model SWOT assessment. However, the real question here is how your enterprise will address these and other PIOs and turn them into strengths or opportunities that improve business performance and business impact.
Do you know your top 10 PIOs? Do you have a plan to use these PIOs to make your enterprise and business model stronger, healthier, and more sustainable?