Lessons from the Airwaves

Here's a lesson in Business Operations from an unlikely source - the Hawaii Public Radio semi-annual fund drive.

I listen to HPR (usually KIPO) even during their fund drives. I'm that much of a Public Radio junkie (I'm also a "True Believer"). I'm always amazed that they raise the amount of money they need, and they almost always achieve their goal on-time.

That's your first lesson. They set a specific goal, a specific dollar amount that they need to raise, and a specific time frame to reach it. Lesson? Set specific, measurable, achievable goals.

But I was getting worried this drive because they had fallen significantly behind after several days. With the economy the way it is and all the cutbacks and layoffs, it wasn't really a surprise, but it was a concern. But they got back on-track and even managed to reach their goal right on time. Amazing! So how did they do it?

Here's the big lesson. The big, final goal is hard for most people to really get their head around. It's a big number and people don't see how their little, individual contribution puts a dent in it. So what HPR always does, and what they sat down and really pushed and focused on after they fell behind, is break that big, final goal down into smaller targets set for each program or hour of the day. That is, instead of having to think about how your $60 membership (or $120 True Believer or $365 Dollar-A-Day pledge) puts a dent in the $700,000-plus final goal, you can get a really clear picture of how you pledge makes a difference in a $1,200 target during your favorite show. Lesson? Break a big, final goal down into smaller, more easily digestable targets that people can understand and feel good about.

Oh, and donate to your favorite Public Radio station (even if you're not liberal-leaning, the music's great).

Be The Best

I've been interviewing people/organizations to include in my upcoming book (to be released this Fall). I'm speaking with organizations that are doing things well in terms of their Business Operations (since that's the topic of the book). One of the questions I get regarding these interviews is what is the theme or common thread I see among the organizations I speak with.

The answer is - The best organizations plan, and they monitor their progress towards their planning goals. I'm constantly harping on planning and measuring performance, so it's nice to have confirmation for my near obsession.

I call it the Goal Attainment System, and it consists of three parts:

1) Goal Definition
2) Action Plan
3) Performance Measurement System

Define the goals of the organization as a whole. Develop a plan of action to reach those goals. Develop a system to monitor the progress towards those goals. Simple.

So why don't more organizations do it?

Do Nothing

The news is full of talk about the rising cost of healthcare. But I’m always confused, because I don’t understand what costs are rising. At the same time there are reports of many doctors leaving certain areas, physical and specialty, because their pay can’t keep up with their bills (like paying off medical school, insurance, office rent, etc.). Nurses certainly aren’t being overpaid, so what costs are rising and why?

Well, I finally heard an answer, and it was very interesting. The NPR (National Public Radio) show Marketplace spoke with someone who had an answer. Apparently I’m not the only person thinking about this, and someone much smarter and more ambitious decided to look into it. Dr. Atul Gawande wrote and article and spoke with Marketplace host Kai Ryssdal about what he found.

Dr. Gawande looked at the healthcare costs in McAllen, Texas, which has one of the highest per capita healthcare costs in the nation, and the Mayo Clinic, which has one of the lowest costs of healthcare in the country. Why the disparity, especially given the reputation of the Mayo Clinic. As I said, the answer is interesting, and ties directly to this blog’s discussion of Business Operations.

It turns out that two of the primary causes of high healthcare costs are some of the same issues we find in Operations. The first issue is fragmentation. In McAllen, Texas, patients shuttle between many different facilities and service providers. There is no clarity to care, and also no central person or place dedicated to preventive care. This sounds exactly like the operations of many organizations with no clearly defined direction and plan to get there. In other words, no Goal Attainment System in place: Goal Definition, Action Plan, Performance Measurement System.

The second issue is the bias towards action. In McAllen, just about every test and procedure that can be performed is performed. There is no integration between the disparate service providers. And the natural human tendency to “do something”, even when you’re unsure of what to do, is in place. The problem is, sometimes it’s better to do nothing. At least not right away. Study and analyze the situation first, then propose a change, then implement it. Sounds like Six Sigma (the Six Sigma management system). I heard an interesting piece (public radio again) about human’s bias towards action a couple of weeks ago. Even when evidence proves that it’s better to do nothing, most people “do something.”

The thing I found most interesting was a study about soccer (football to the rest of the world) goalies and penalty kicks. This study proved that a goalie is more likely to block a penalty kick if he or she doesn’t move, meaning doesn’t jump left or right. But goalies almost always move. Even when not moving would be better. I’ve seen many organizations feel the need to do something, anything, rather than take the time to look at the issue and develop a better solution.

Maybe your new motto should be “Just do nothing”.

Performing

I just read an article in Inc. magazine (December 2008 issue, yes I’m behind in my reading) that ties into a conversation I had yesterday. The article is titled How to: Conduct Annual Employee Reviews. My conversation included why annual reviews are mostly useless and how a proper Performance Measurement system should work.

I’m doing some work with a small non-profit arts organization. The art is great. The business side needs a little work. Part of my discussion revolved around measuring the performance of the administration; Executive Director, Artistic Director, and the Board. Many non-profit arts organizations struggle financially and administratively. It almost goes with the territory. In that kind of environment, an annual review is irrelevant. Performance needs to be monitored constantly, as part of everyone’s daily work. To do that, it has to relate to something. Performance has to relate to progress towards defined goals.

The Goal Attainment System includes the Goal Attainment Plan, where the goals of the organization as a whole are defined, the Action Plan, where the map of how the goals will be achieved is developed, and the Performance Measurement System, where the performance and actions of everyone are tied to the defined goals and work towards achieving them.

With this arts organization, everyone should know where they stand at all times. The Executive and Artistic Directors will know almost daily how they’re progressing and how they’re moving the organization towards its goals. The Board meets monthly and should know prior to each meeting how the organization is progressing, and how both the Executive and Artistic Directors are doing in progressing the organization towards the goals. Any other paid staff and volunteers must be included in the system too.

When looking at performance and performance measurements for your organization, look at one industry where measuring performance is critical to success – the sports industry. I was thinking of an example while reading some of Wendy’s blogs at Your Scrumhalf Connection. Wendy is a top athlete, but she’s had a couple of injuries lately that have temporarily hindered her progress. Think about what kind of impact an annual performance review would have on her and her rugby club, rather than a dynamic and ongoing measurement system. A year ago Wendy might have been in peak condition and at the top of her game. A performance review then would be very high. But if you relied on that review to assign her work and give her rewards for the entire next year, that would be a mistake.

In rugby, whether at the local club level or at the international level, players are selected each week or just prior to each game. You can’t wait for an annual performance review or rely on last year’s to select players for the next game. You have to rate their performance right now, how they’ve been performing the past few weeks or months and how their fitness is right now. The club or team has defined goals for where they want to be. Each individual, whether player, coach, or administrator, must help to get them there. They must know at all time how they are performing and how they are helping the organization to progress towards the goals.

So chuck the annual reviews and start developing your Goal Attainment System and Performance Measurement System. And Go Wendy!

Preaching to the Choir

I was speaking with a colleague the other day and we were talking about our business and the current tough economy, how it's effecting businesses, and how we can help. Basically we were ranting, or "preaching to the choir" (each other).

In these tough economic times organizations have to operate as efficiently and effectively as possible. Their performance has to be exceptional. But my argument is that this is how organizations should operate at all times. Sure, in this kind of economic environment there are some actions that have to be taken that wouldn't be considered in normal times, even in tough normal times. But for the most part, organizations should always be examining how they do things (their processes) and working to make things work better. To me this means working towards defined goals. Develop a plan with defined goals for the organization, develop an action plan that will get you to those goals, and develop a performance measurement system that ties everything that everyone does to those goals. I call this Goal Attainment.

This should be done in the best of times, but it is imperative that it be done now. You can't afford not to.