X

The KPI.org Blog

David Wilsey David Wilsey

David Wilsey is the Chief Operating Officer with the Balanced Scorecard Institute and co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard.

Garth Brooks and the Music Industry’s Performance Measurement Problem

By David Wilsey

Oct 11, 2013 9487 Views

guitarThe rock music industry in 1991 was in transition. The glam-rock and new wave music of the eighties was out and the industry had not yet settled on alternative rock and grunge as the iconic sound of the decade. And most shockingly, after almost forty years of fans preferring rock music to country music by a reliably constant percentage, sales figures were indicating that preferences were shifting from rock to country. 

The industry made what seemed like a very logical assumption: the shift was obviously caused by the incredible crossover appeal of Country superstar Garth Brooks, who had recently taken the music industry by storm. They also took very predictable actions in response: several promising rock bands were dumped while resources were shifted to other country acts.

In the short run, these actions seemed to reinforce the trend, with even more country music sales. But then something very strange happened: the sales numbers slowly drifted back to the exact pre-Garth Brooks percentages, with rock being preferred by the same percentage it had for decades. Industry analysts were left scratching their head. What just happened?

What they found after some analysis was surprising. In March 1991, the industry began counting record sales using the Nielsen SoundScan system. Before that, sales were counted by calling stores across the U.S. to collect sales data – an incredibly ineffective collection method. Unfortunately, not all record stores were able to implement the SoundScan system immediately and continued using the old method for months or even years. On the other hand, one behemoth was online immediately: Wal-Mart. In the early days of SoundScan, every single time a Wal-Mart sales associate scanned a CD, it was counted by SoundScan and reordered, whereas record store sales (and reorders) were hit-and-miss. 

Here’s the thing that nobody had thought about before: in 1991, country music fans primarily bought their music from Wal-Mart and rock music fans primarily bought their music from record stores.  Once all of the record stores were online, it became clear that the appearance of a shift in preference was nothing more than a measurement data collection problem.

The lesson to this story is that it is critical to resist the urge for a knee-jerk reaction to data such as dumping promising rock bands! There is a process discipline to performance analysis and improvement and the steps are simple. First, a Smart Chart should be used to make sure you are correctly interpreting the data. Then, a root-cause analysis is in order to understand why you are getting the results you are getting. This root cause analysis would have likely revealed the issue with the data in SoundScan being dominated by Wal-Mart sales. Finally, an improvement action plan is implemented and the results are monitored over time. 

To learn more about how to interpret, report and react to your performance data, see the PuMP Blueprint Certification Workshop, or see The Institute Way: Simplify Strategic Planning and Management Using the Balanced Scorecard.

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way with over 20 years of strategic planning and performance management consulting experience with corporate, nonprofit, and government organizations.

Skinny Jeans and the New Math

By Gail Stout Perry

Oct 9, 2013 12457 Views

I am an engineer by training and a math geek at heart.  So articles about girls and math catch my eye.  Did you know that researchers agree that one’s ability to excel at math and science is as much about attitude as it is about “natural gifts” or gender?  This affirms my own less-than-scientific research findings.  I have a daughter and from her earliest years, I showed her how to apply math to everyday activities (baking was our favorite hands-on lesson, of course).  And anytime friends of hers would complain about how hard math was, I’d make them all stand up and shout, “Girls ROCK at math!!!”   It’s all about the attitude.   Of course, I had a good role model for this. My father showed me how fun math was when I was a child as we built motors together and played around with electronics...scribbling equations and schematics as we went.  I never feared math and science...they were FUN!  

In my work life, I’ve discovered that dread of math, especially statistics, is widespread in the business community.   So let’s tackle something fun:  the concept of correlation.

When developing performance measures in business, we sometimes face a stumbling block in that the thing we desire most to measure is, unfortunately, impossible to measure directly.  So, we have to look for a “proxy” measure that is correlated.

Let me illustrate with an example from daily life.  Let’s say I want to know if I am maintaining my ideal weight versus gaining weight.  It’s easy to measure that directly - hop on the bathroom scale.  But, unfortunately, I can’t.  I travel constantly so I do not have a bathroom scale with me most days. 

So I have a correlate that I measure.  I always carry the same pair of skinny jeans with me.  As long as the jeans will button, I am fairly certain of what the bathroom scale might say, if I had one.  The fit of my jeans is correlated to my weight.   Now, a statistician will remind us that “correlation does not equal causation.”  This simply means is that I need to consider that other things may be causing my jeans not to fit – for example, maybe they shrunk in the wash.  But understanding this, I am reasonably certain that they are a good proxy measure while on the road.

See how easy it was to master two important concepts for measuring performance in business - Direct Measure and Correlated Measure?  It’s all about the attitude!!

To learn much, much more about how to develop meaningful performance measures, we invite you to explore The Institute Way or join us at an upcoming training course.

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way with over 20 years of strategic planning and performance management consulting experience with corporate, nonprofit, and government organizations.

PS: Our Balanced Scorecard Saved The U.S. Army $26 Million

By Gail Stout Perry

Sep 30, 2013 7304 Views

I was working with an Army command at Ft. Sam Houston this week and had invited a special guest - Scott Hencshel - to address the group regarding the organizational challenges of implementing a balanced scorecard system within Army.  (Scott’s command is also stationed at Ft. Sam Houston -  Army Medical Department Center & School (AMEDDC&S), an Institute “Award for Excellence” winner.)  

As Scott was wrapping up, someone asked a final question, “What was the biggest benefit that AMEDDC&S realized after implementing its strategic balanced scorecard?”  Scott talked about alignment, focus, and data-driven decision making.  Then as he was making his way to the door he turned back and said, “Oh yeah, we immediately saved the Army $26 million.” 

Say what?!?!

AMEDDC&S is where the U.S. Army educates and trains all of its medical personnel – over 27,000 soldiers. One of the strategic measures on AMEDD’s balanced scorecard is “attrition rates.”  Before the scorecard was implemented, it was commonly believed that discipline issues were the primary reason for soldiers not completing their training programs – because resolution of these discipline issues were what consumed everyone’s time.  Once the scorecard was implemented, attrition was measured more thoroughly and two discoveries were made:

  1. Attrition was MUCH higher than originally thought.  The traditional calculation was flawed and attrition was actually over 34%.  That means 1/3 of those entering the medical training programs would “drop-out” thereby wasting the Army’s investment in their training.
  2. Academic performance, not discipline, was discovered to be the primary reason for attrition.

So as the scorecard team delved further, they looked for root causes of poor academic performance resulting in attrition incidents.  They discovered that a major cause was a lack of communication between the Brigade leadership and the AMEDDC&S faculty.  Students in the medical training program were being assigned Brigade duties that prevented them from having proper opportunities to study and prepare for classes and exams.   A prime example was students falling asleep during final exams due to having served Brigade guard duty the night before. 

Once the communications issues were corrected, overall attrition rapidly dropped from 34% to below 20%...thereby saving the U.S. Army $26 million.

PS:  Did I mention that I have the best job in the world?!?  It is extremely rewarding to hear about results like this.

For more examples of break-through performance, we invite you to read “The Institute Way: Simply Strategic Planning & Management with the Balanced Scorecard. 



12