04Feb2013

Targets and Metrics

Closed loop control is what that creates magical precision be it video recording of the trajectory of the ball in cricket, football, volleyball, etc., striking a target with a Tomahawk missile, grinding components in mass production to sub-micron tolerances, blood pressure in our bodies or position of the sunflowers against the sun.

Target fulfilment is the best with a closed loop control and this is precisely what we can do in organisations with people for achieving the targets consistently. However the process is far more complex that a video recording of a ball and at the same time is far simpler than the control of blood pressure. In the case of the video recording software can identify the ball and the track it by automatically moving the video camera.

On the other hand in the case of the human blood pressure control, there are multiple decentralised closed loop control happening in all our blood vessels and with the nerves giving this feedback constantly to the brain for any additional emergency measure that may be necessary. Of course the heart muscles are the most important to regulate based on the body's need. The closed loop control is so good here that we come to know of any problems through symptoms like pain, gasping for breath, etc. at times too late. We therefore have a system to check the condition through the annual health check-up, for example.
In organisations with people and quite a volatile environment the challenge for a closed loop control is not as simple as the video recording. However is easily doable.

Firstly the targets have to be clearly defined. When I mean target, it not necessarily need be an increase, like sales, profit, etc. or a reduction, like scrap, write-offs, etc. It can also be just to sustain the achieved levels of delivery, quality and cost. Having defined the targets there must be a system to measure these continuously appropriate to the clock speed. Clock speed is the speed at which the situation changes on its own without any intervention.

Now that we have the target and the actual situation, we can then with our experience and wisdom forecast actuals against the targets should we not change anything but proceed the way we are doing till now. Forecasted Actuals or Current Forecast will identify the gap to the target. Now comes out experience and wisdom once again to define and execute measures to bridge this gap. All these must be happening appropriate to the clock speed. As an example in the case of mass manufacturing all these must happen at least twice a shift of 8h. Whereas in a project industry with the duration is more than a year, all these must happen at least once a week.

Now comes the hierarchy as in the case of our bodies. Target, Accurate and traceable Actual Situation, Current Forecast, Measures for all KPIs/KRAs being checked at a frequency appropriate to the clock speed must then be reported to the higher hierarchy level in a cascaded manner with the frequency getting reduced as the hierarchy increases. I will explain this in my next blog. Similar to our annual health check-up, even in organisations, it is necessary to check and confirm that the closed loop control is happening at a frequency appropriate to the clock speed. In this case though, the confirmation must also be based on the clock speed.

Organisations with close loop control therefore perform with the same magical precision as the others depicted earlier do. All it takes is to understand the cause and effect and JUST DO IT.