Plumbed-In Performance Improvement

‘PLUMBED-IN PERFORMANCE IMPROVEMENT’:
AcceleratingIMPROVEMENT and adaptation in organisations

Alan Meekings and Simon Povey

Landmark Consulting, London, UK

Abstract

Past research in the field of performance measurement and management has tended to focus on what to measure. The reality, though, is that most of the value in performance measurement lies not in the measures selected, nor even in how the data is presented visually (using SPC whereapplicable) but in the decisions and actions that flow from insights provided. Deriving maximum value from performance measurement requires linking powerful insights from data to appropriate decision-making, action and feedback. This paper describes the impact of a new genre of performance improvement software implemented alongside novel concepts in performance planning and review.

Context

Continual improvement and rapid adaptation do not happen spontaneouslyin organisations. On the contrary, fundamental, sustainable change, whether resulting from incremental improvement or radical re-design, depends on deliberate decision-making and action.

One distinguishing feature of high performing organisations is their ability to adapt the waysin which they operate andare managed in response to changing circumstancesandto changing perceptions of customer value[1]. This creates a central role for effective performance measurement and management, not only in the optimisation of day-to-day performance and the delivery of fundamental improvement but also in the engagement of front-line staff, supervisors and managers in experimentation, adaptation and learning. This is especially important in situations where there is an abundance of fast-moving operational data, such as hospitals, ambulance services, supermarkets, call centres or websites serving thousands of patients or customers daily.

In the past, it has been difficult to putmeaningful data and useful analytical tools in the hands of staff at each and every level in an organisation in a way that delivers compelling insights and encourages action. Interestingly, a new genre of SPC-based, performance improvement software[2] has recently emerged that meets this need head-on. This software effectively ‘commoditises’, on a web-enabled, enterprise-wide basis, the universal provision of time-series performance data in SPC chart format, highlighting variation, cyclicality and seasonality. Charting data in this way can radically change how people see performance. Also, the interactive analytical capabilities[3] inbuilt inthe software offer powerful insights to inform and underpin decision-making and action at all levels. In particular, front-line staff and line managers are able to explore root causes of performance outcomes simply by ‘pointing and clicking’ on screen, instead of having to rely on trained analysts to interpret underlying data.

This new genre of software accelerates the implementation of effective performance measurement and management in a way that would previously have been inconceivable. Indeed, people who have not yet had personal experience of this software cansometimes find it difficult to envisage its full potential, as the impact it can have on management practice, staff engagement and organisational adaptation is profound.

Obviously, no performance improvement software can deliver sustainable gains on its own: only people can translate insights into action. Therefore, any new performance measurement and management framework needs to be properly ‘plumbed-in’ to deliver its full value. This paper explainswhat we mean by the concept of ‘plumbed-in performance improvement’.

A Plumbing Analogy

Imagine purchasing a new, state-of-the-art washing machine when previously you had no option but to wash everything by hand. The potential for thisnew machine to change your life is significant. Unfortunately, there is no washing machine in the world that can deliver useful washes until it has been properly plumbed-in, connected-up and switched-on. And therein lies the rub.

The same applies to any new performance measurement framework you may choose to adopt. Even if optimal performance measures are selected, and the very best format for their visual presentation is put in place, nothing useful is going to result unless action is taken on the basis of the information and insights thereby made available. Performance measurement frameworks, like new washing machines, need to be found suitable locations in the workplace, their inlet and outlet pipes need to be properly plumbed-in, and their power supplyneeds to be connected-up and switched-on before the equivalent of useful washes can be delivered day-after-day, week-in, week-out.

This simple analogy illustrates how critical it is to think about performance measurement frameworks not only in an abstract sense but also in terms of how to plumb them in and connect them up in practice. Indeed, it could be argued that ‘performance plumbing’[4]may soon become one of today’s fastest-growing ‘shortage trades’.

Performance Plumbing in Practice

The reality, of course, is that software for the visual presentation of data – however powerful its charting capabilities or embedded, interactive, problem-solving tools – can only ever be part of the answer to fundamental performance improvement and accelerated organisational adaptation. There are clearlyother components. Two essential ingredients, for instance, especially in situations of fast-moving operational data, are:

(1)‘The performance planning and review process’, including: (a) who needs to come together to review what, when, why and how; and (b) how differing levels of review can be made to integrate and inter-relate(Meekings, 2004);

(2)‘The updraught of management attention’, in other words the involvement of managers in ensuringthatthe performance planning and review processis fully implemented and exploited, including settingthe expectationthat insights from operational data will be translated into sensible decision-making, action and follow-through. This typically requires the CEO and COO, in particular, to reinforce the message that delivering statistically significant improvementsagainst a systemic set of performance measures is a primary task of managers throughout the organisation.

Effective performance planning and review, whether conducted individually or collectively, is vital to identifying critical performance issues and opportunities, informing downstream decisions and monitoring the impact of consequent actions. It is also hugely helpful in differentiating how various operational levels in organisations add value appropriately and inter-connect to best effect.

Interestingly, our experience shows that:

(1)Structuring and implementing an effective performance planning and review process in organisations, and capturingthe resultingbenefits, can be achieved surprisingly quickly, inexpensively and sustainably;

(2)Creating the necessary updraught of management attention depends critically on the determination of the person at the top of the organisation[5] (or, indeed, any subsidiary part of the organisation) to making performance planning and review matter. It is rare for effective performance planning and review to percolate from the bottom up.

Indeed, structuring and implementing the performance planning and review process in organisations could be seen as the equivalent of plumbing-in and connecting-up the inlet and outlet pipes for a new washing machine, whereas creating the updraught of management attention is the equivalent of plugging-in and switching-on its electrical power supply.

An Illustrative Case Study

We have brought together a body of knowledge,encompassing expertise in the visual presentation of data (includingthe application of SPC to management information) alongsidepersonal experience in implementing theperformance planning and review process in organisations as a vibrant cultural component. We believe this representsa genuine innovation, using Peter Senge’s definition of that term (Senge, 1990[6]).

This is usefullyillustrated by a case study fromthe health sector in the UK,namely Mersey Regional Ambulance Service (MRAS).MRAS provides ambulance services for Cheshire and Merseyside. It has a justifiably proud heritage. However, by 2005, it had become labelled as the worst performing ambulance trust in England. Operational performance was way below national standards and on a declining trend. In contrast, within a matter of weeks rather than months, operational performance had been transformed and operating costs reduced. For example:

• £1.2m in cost benefit was liberated and reinvested in fundamental, qualitative improvement;
• Up to £5.3m in funding was retained, when otherwise it would have been lost;
• Operational response to potentially life threatening emergencies was lifted consistently above the national standard;
• Performance on ‘urgent hospital admissions’[7] (often the sickest patients an ambulance service has to serve) was raised from 51% to over 92%, on a par with the best ambulance services in the country. Evidence indicated that General Practitioners (GPs) had lost confidence in the urgent admissions service and were increasingly using the emergency ‘999’ system instead to ensure patients received timely attention. As operational performance on urgent admissions improved, so there was a rapid, corresponding reduction inthe rate of growth of emergencycalls.

These achievements also need to be viewed in the context of underlying, year-on-year increases in demand, amounting to 4.3% for emergencies, 10% for urgent admissions and 15.4% for sub-acute transfers, all of which were accommodated at no additional cost. Moreover, such dramatic improvements in operational performance were complemented by equally significant improvements in patient outcomes. For instance, local performance on the measure of Return of Spontaneous Circulation (ROSC) following cardiac arrest was increased from 16% to 26%, against a national average of 13%. This translates in human terms, against this singleoperational measure, as over 200 additional patients per annum being given the chance of survival when otherwise they would have certainly died. It also illustrates that the time taken to respond to emergency incidents can make a huge difference to patient outcomes and life expectancy. In fact,the motto at MRAS is now “time to make a difference”.

The turnround at MRAS has been extraordinary. As Ken Hoskisson, Chairman of MRAS, said, “We were convinced that the strategy we set out for the Trust, with its focus on performance management, was the right one, but we never thought that our turnround strategy would achieve such impressive results so quickly.” Moreover, the results of this turnround have been felt not only within the ambulance service itself but also across the wider health community in Cheshire and Merseyside.

So what happened at MRAS, and how was this turnround achieved? The answer lies in a combination of factors:

• The sheer speed of implementation – in this case, four weeks from project authorisation to the firstwave of new performance planning and review meetings actually taking place;
• Having the personal involvement of both the CEO and COO as knowledgeable and active champions throughout;
• The concurrent implementation of three essential components in such situations, specifically: (a) implementing the new genre of performance improvement software; (b) structuring and enabling the new performance planning and review process; and (c) creating the necessary updraught of management attention.Let us examine each of these three components in turn.

Implementing The New Genre of Software That Currently Has No Name

We believe that ‘signalsfromnoise’ (sfn)2 constitutes a genuinely new category of software for performance improvement that currently has no name. It is not, for instance, a traditional statistical or SPC charting package (such as Minitab or WinChart), nor is it a data warehouse or business intelligence (BI) tool (such as Cognos or Business Objects), nor is it even a ‘balanced scorecard’ package (such as Panorama Business Views or CorVu). It offers many of these useful functions but does so fundamentally differently.

sfn was designed to sit across one or more operational databases, presenting data in a consistent way – underpinned by SPC and other embedded analytical tools – to enable new insights to be derived and to inform new ways of managing performance. It flourishes in situations of fast-moving operational data, notably where performance is measured hourly, daily or weekly, rather than monthly, quarterly or annually.

Using the plumbing analogy, sfn effectively shifts the challenge from designing an expensive washing machine yourself to buying a commoditised, high quality, inexpensive model from a convenient retail outlet. Because the software does things differently ‘under the bonnet’, so to speak, it is able to offermany novel features:

(1)The ease with which data from multiple operational systems can be integrated, for instance where common identifiers (such as individual patient recordnumbers) can be linked. There is no need to build new data warehouses to link multiple data sources – although sfn is able, of course, to integrate with any existing data warehouses;

(2)Allowing front-line staff, supervisors and managers to analyse performance in detail and to investigate for themselves the underlying drivers of performance. BI tools are also able to answer dynamic queries, but they do not offer the full suite of intuitive, SPC-based tools embedded insfn. With software other than sfn, separating signals from noise in large volumes of operational data typically requires a specialist ‘analyst capability’. In contrast, sfn puts powerful analytical tools directly in the hands of front-line staff and decision-makers across whole organisations. This is a genuinely new, software-enabled capability;

(3) The remarkably short time needed to configure and install the software on an enterprise-wide basis (typically no more than six weeks from a standing start);

(4) Low costs of ownership. In addition to avoidingdata warehouse development costs, sfnsignificantly reduces the ongoing overheadcosts of what could be termed ‘the management report construction industry’. For instance, iteradicates endless hours that people typically spend trying to provide plausible explanations for incidents actually lost in the noise of predictable variation. It alsocutsthe effort and expense of using BI and other tools for data analysis, and avoids the risk ofprevalent spreadsheet errors.

With sfn, the principles of effective performance measurement and management are more likely to enter the mainstream consciousness of an organisation, particularly in situations of fast-moving operational data, not least because:

• Everyone present at performance planning and review meetings sees the same chartsand so forms a shared picture of performance. This avoids the all-to-common phenomenon of individuals holding markedly differing opinions about performance[8]. Nor do people argue over issues of data quality. Errors in the data are highlighted by the software and get fixed downstream, because the charts are seen to be useful.
• Investigative ‘drill down’, at any level in an organisation, leads to charts and insights, rather than to tables of numbers which do not tell a story;
• The speed to identify and take action on priority issues is significantly faster;
• The pace of controlled experimentation rises dramatically. As someone remarked in the early days at MRAS, “This decision doesn’t need a three-month trial. We’ll be able to see if there’s a worthwhile impact in two weeks or less”;
• ‘Hiding places’ in operational performanceare eliminated. This is a fineaspiration in principle, yet can be extremely threatening for front-line staff, supervisors and managers, unless the path towards itis properly paved;
• Supervisors and managers are enabled to ask more powerful questionsand add value differently at their respective levels. This depends critically on structuring the performance planning and review process appropriately.

Structuring and Enabling The Performance Planning and Review Process

Our contention is that everyone in an organisationshould add value but in differing ways. This implies that:

(1)Front-line staff and supervisors should focus on: (a) doing the best job possible from a customer and organisational perspective; and (b) generating ideas for continual improvement, based on a keen understanding of customer value1;

(2)Middle managers should focus on: (a) ensuring that the right staff with the right skills are available at the right time, and that they are enabled to do the best job possible from a customer and organisational perspective; and (b) working on issues that front-line staff and supervisors cannot influence on their own;

(3) Senior managers should focus on: (a) coaching middle managers to play their importantrole to best effect; and (b) working on how the organisation collectively can best add value, both internally and externally.

What did this conceptual framework mean in practice at MRAS?

(1)Front-line staff and supervisors were enabled to focus on the things they could best influence, such as turnround times at hospital;

(2)Middle managers were enabled to focus on things they too could best influence, such as recruitment, training, demand forecasting and staff rostering, informed by predictable patterns of demand (by patient condition,by time of day, by geographic location,and so on, as informed by sfn);

(3) Senior managers were enabled to step-back and reflect on fundamental issues of service delivery[9] and alsohow MRAS could best add value to the overall emergency care system locally.

To bring this conceptual framework to life, it was necessary first to define who needed to come together to review what, when, why and how. Essentially, this involved examining the flow of information within the organisation, bottom-to-top and cross-functionally, in order to design an optimal architecture for operational performance planning and review[10]. Thisnew performance planning and review framework, initially focusing on emergency service delivery, was then rolled-out, complete with essential training and coaching to get the process workingproperly from the outset.

Two key principles,highlighted in the training and coaching,particularly resonated at MRAS, and their acronyms swiftly entered the local jargon:

• Issue-Decision-Action (IDA) – this principle reminds people that: (a) the purpose of providing performance information is to identifykey issues meriting attention and to enable quality decisions to be made; and (b) the only point in making qualitydecisions is to act on them, then follow-through rigorously to achieve worthwhile results thatsustain;
• Authority-Beneficial-Compliant (ABC) – this implies that if someone is in a position to make a decision that is: (a) within their authority; (b) beneficial to the organisation or its customers; and (c) compliant with external legislation and internal policies, then they are expected to press-ahead and take that action, and will be supported to the hilt by their senior managers. This is a key component of an effective updraught of management attention.

Creating The Necessary Updraught of Management Attention