Spending Review 2010: Why targets should be ACED
The Spending Review 2010 was recently announced. Top down targets are out of fashion, but other targets are still playing a major role. Here’s my “ACED model” for successful performance targets.
Actionable?
Targets should be actionable and manageable. The point is to improve performance, not just measure it.
- A bank wanted to reduce customer losses and relied on a customer survey. But unhappy customers don’t fill in surveys.
- In a hospital, time to treatment targets did not take account of the patient insisting on going on holiday before treatment.
Coherent?
Targets should be coherent and meaningful. As Theodore Levitt in Marketing Myopia said: “Good work in pursuit of wrong purposes is more dangerous than bad work in pursuit of good purposes.”
- In a government department, forty staff produced performance data; yet it was too inconsistent for action to be undertaken.
- Patients may value the availability of a good and approachable clinician more than the colour scheme of the waiting room.
Effective?
Targets should be effective and measurable. Galileo said: “Measure what is measurable. And what is not measurable. Make measurable.” But they need to measure what matters.
- A Regulatory Agency targeted a group of middle managers to spend 80% of their time on quality improvement; I measured what actually happened – they actually spent 80% of their time on routine administration.
- A Motor Car Importer expected their sales team to spend 80% of their time promoting car sales to dealers; in actual fact they spent 80% of their time answering queries from Headquarters.
Development?
Targets should be forward looking. It’s important to:
- Look through the car window and anticipate the road ahead, rather than rely on the rear view window.
- Get the balance right between manageable, meaningful and measurable targets.
- Aim to be approximately right. It’s better than being precisely wrong.
Picture by Szlea
I liked the ACED note from Mike and this resonantes with some of my concerns about target setting and monitoring performance. The analogy of driving down a motorway looking out of the windscreen or watching the rear view mirror comes to mind. In other words there are those who select measures which contribute to learning and provide insights for improvements and there are those who choose performance measures to report on how well they have done. Prof Leslie de Chernatony
Prof Leslie de Chernatony
November 10, 2010 at 2:00 pm
Thanks Leslie for this very useful insight.
Mike Barnato
November 10, 2010 at 2:10 pm
On November 8 the Prime Minister was reported as saying that there will be no more targets. “Instead there are milestones.”
Mike Barnato
November 11, 2010 at 5:57 pm
Mike, like the ACED model. I remember being impressed by a major upstream gas co who took their boardroom vision and objectives and cascaded these into targets on each employee’s balanced scorecard, working from the top down.So perhaps the C could be for “Connected” as well as “Coherent”. Although I suppose you could say that “Connected” is an example of “Coherency”.
Peter Franklin
November 13, 2010 at 4:38 pm
Thanks Peter. That’s a useful reminder about the importance of linking boardroom to employees through personal objectives.
I take your point about “connected”. But on balance I think, like you, that “coherent” is wider than “connected”.
There is also a case for use “connected” instead of “actionable”; but that would lose me the “ACED” bit.
Mike Barnato
November 13, 2010 at 8:13 pm
The key thing about Peter’s example is that the targets were cascaded from the vision. The “E” in Mike’s ACED model is crucial but often ignored. Many orgnanisations and their management (and politicains) fall into the trap described by Professor Ackoff in his “a lttle book of f-Laws” (a build on Galileo’s insight)…..
“Managers who don’t know how to measure what they want settle for wanting what they can measure”. Often this results in measuring inputs (because they are easy) rather than outputs. An example is using training days delivered as a measure rather than skills developed in the workforce. As Sally Bibb comments… “How astomishing that such ‘input’ measures continue to be accepted as valid even though they are value-less.”
Gareth Bunn
November 14, 2010 at 4:37 pm
Thanks Gareth. I had forgotten about Ackoff’s work. There is a hierarchy of measures of training. Training days, as you say, tell us the quantity of what has been delivered but tell us nothing about the quality, satisfaction or impact or outcomes.
There has certainly been a drive to measure – think about “smart” targets. But sometimes regardless of whether the measure makes any sense.
Mike Barnato
November 14, 2010 at 5:38 pm
I especially like the Coherence aspect as is it too easy to develop targets/KPIs that are are developed independently and result in conflicting objectives. An insurance claims department focused on zealously focused on reducing claims leakage can have a detrimental impact on renewals. A good claims service is an opportunity to develop customer loyalty not antagonise claimants to the extent that they refuse to renew.
Jeff Herman
November 16, 2010 at 9:41 am
Thanks Jeff.This is a good point about coherence within an organisation.
Your example also got me thinking about the importance of linking bottom line (like costs and claims) and top line(revenue and renewals)as in your insurance example.
Mike Barnato
November 16, 2010 at 10:26 am
Like others, I like the ACED model. I would perhaps add one more element that is related to coherent. There are many public sector organisations that have targets / activity that affect others. The criminal justice system and health are two good examples. The law of unintended consequences often applies here. Is there a case for adding, say, L at the start for “Linked-up” (or something similar)?
Ian Barratt
November 17, 2010 at 3:33 pm
Thanks Ian. I think you make a good point. Coherence can be an issue between public sector organisations. Such as between as CJS and health, as you mention. Also between health and social services. And it can also be an issue between health authorities when they dispute responsibilties for a person who has changed location.
My inclination is to keep to “ACED” rather than add an “L”. But to include your point, and some of the other points, in the text.
Mike Barnato
November 17, 2010 at 3:41 pm
On 16 December 2010 targets for A & E Departments and Ambulance Services were dramatically changed revised.
For A & E Departments, from a simple four hour time target to eight new indicators.
The four hour target was simple and process based and was manageable and measurable.
However it was, it was argued, not meaningful and ignored outcomes.
Mike Barnato
December 20, 2010 at 6:45 pm
According to the Economist, in 2002 London Underground had a contract that included 3,000 performance goals in a 2,800 page manual.
Mike Barnato
December 25, 2010 at 12:59 pm
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January 18, 2011 at 12:13 pm
Marcelo Melgaço writes
Nice model, Mike. I’m adapting it for my work.
Mike Barnato
April 17, 2011 at 10:00 am