By Mia Horrigan and Andrew Auld (co-authors)
Within an organisation, decisions are made and executed every day from simple process decisions to far reaching strategic decisions by senior executives that affect the entire enterprise. So how do senior leadership and executives gain the confidence
that these executed decisions are actually moving the business in the right strategic direction?
In the VUCA (volatility, uncertainty, complexity, and ambiguity), environment we now live in, work is complex, change is constant and failing to act in a timely manner could mean the different between business survival or decline. Rather than relying on “gut” instincts, executives need evidence to make informed data driven decisions showing return on investment (ROI) and value delivery in order to take advantage of opportunities before their competitors do.
Executives need to ensure they are clear on the problem and objectives they are seeking and utilise consistent iterative feedback loops that measure outcomes and draw on actual data to inform and drive decision making on what to do next.
Just as a pilot will constantly scan an aeroplane’s instrument panel ensuring the data being returned is in alignment with their outcome and expectations, an executive should also be ensuring the information they are receiving is based on infield data allowing enough runway for timely corrections and to pivot if the leading indicators are suggesting a course correction is needed to achieve the desired outcome.
Rather than relying on “gut” instincts, executives need evidence to make informed data driven decisions showing ROI and value delivery in order to take advantage of opportunities before their competitors do Agile organisations utilise feedback loops to allow for timely and frequent inspection of results as well as limiting risk and improving the ability to adapt the plan as needed to optimise and deliver value to customers. The framework under which this iterative feedback loop sits is Scrum and it’s Evidence Based Management (EBM) model.
EBM is a critical tool to assist executives and senior management, to measure, manage and increase the value they derive from their product delivery. EBM measures are focused on improving outcome rather than activity based and using data from the measures to steer the direction of the business and optimise investment. The key organisational measure are:
Ability To Innovate (A2I)
Measures the ability to deliver a new capability that might better serve a customer or user need
Time To Market (T2M)
- Measures the ability to quickly deliver new capability, service, or product
For example, if the organisation is looking to decrease their time to market in order to deliver a product quicker than a competitor, then focusing T2M and understanding which measure can be used to prove their hypothesis regarding the variables they have used to decrease the time to develop and deliver value to end users. Some of the ones that we have used with our executives are leading indicators such as reducing handovers, reducing batch sizes and eliminating non-value added tasks can significantly improve lagging indicators such as cycle time and lead time. Focusing on the outcome is the key.
Other the other hand if the need is for innovation, them focusing on A2I measures such as ratio of revenue driven by new technology, velocity trends and downtime trends are leading indicators that innovation is a developing capability and focusing on these measures will allow executives to develop new ideas and tap into an unrealised value opportunity.
Ultimately, focusing on outcome measures, using evidence and data to drive decision making, will help executives adapt to changing environments and not only survive, but thrive.