May 13, 2011, 11:01 AM — In a recent Harvard Business Review article titled Google, Don't Choose Micromanagement, author Nilofer Merchant uses Google as an example to illustrate a broader point about open information flow that drives innovation, which in turn drives performance. Her primary theme is a case against micromanagement and "building a culture that invites innovation through distributed decisions and ownership." However, the article highlights another key issue (perhaps unintentionally) that is applicable to performance management and business analytics. Merchant writes that "while we often measure and manage the latest "what" in business,the thing that creates high performance growth is the underlying "how". She goes on to say "focusing on the "how" will get you the "what," but just focusing on the "what" typically falls apart as soon as people change or products ship." What's the lesson for organizations implementing performance management methodologies and supporting software such as business intelligence tools, analytics applications, and data warehouses?
It's not enough to only measure outcomes expressed as key performance indicators (KPIs). It is just as important to measure the "how" - the processes by which people make decisions. This is also one of the messages coming out of IDC's research into Decision Management. The central piece of our research is IDC's decision management model, shown below, which depicts three different types of decisions; the interaction among the types of decisions; and the dimensions that characterize these decision types and the technology required to support or automate them.
After eleven years that I have been a market researcher, analyst, and advisor to dozens of vendor and end user organizations, I still come into contact with business intelligence and analytics vendors who pride themselves on the number of KPIs they have in their software. Yet, almost none of these KPIs are about the process of decision making. Although knowledge management (KM) went out of vogue a decade ago, many of the concepts of KM dealing with knowledge retention and decision process evaluation remain valid today. Some of these ideas have morphed into "social networking" with an intra-enterprise focus on collaboration among individuals. But that is not enough.