Performance Measurement and Management Control: Challenges for Applications and Research in New Settings Marc J. Epstein Nice, France September 15,2017

Sample Logic Model for Kaboom! Inputs Resources Capital and volunteers Processes Activities Construct playgrounds Outputs What you did Playgrounds completed Outcomes Effect on client Children play on playgrounds Impacts Effect on society Healthier children and communities

I have used logic models in much of my academic research and consulting in non profits and governments where mission focus and measurement of success is social impact—such as charities, sustainability, education, health, etc. It is also fundamental to my research and consulting with corporations using similar causal linkage models and strategy maps--- and central to our field

Wide applications in research and consulting—and improving organizations and society Three areas for potential research contributions: 1) personal improvement, 2) social impact, and 3) corporate governance and innovation Personal Logic Models

IPADE’s Mission Consistently ranked by FT, Forbes, and others as the top business school in Latin America “Develop Leaders with Global Vision, Social Responsibility, and Christian Values who are able to transform Organizations and Society”

Evaluating IPADE’s Success Does IPADE develop leaders with the needed critical skills, global vision, social responsibility, and Christian values? Do those graduates then transform organizations and society? Develop an independent and empirically based research project to answer these questions.

A Logic Model is Critical First Step Hypothesized relationships Causal model Significant challenge in most social impact projects Rigorously and clearly articulate the mission and how to achieve it

Better Society IPADE LOGIC MODEL INPUTS ACTIVITIES OUTPUTS OUTCOMES IMPACTS External Environment Participants’ profile Tutor/Mentor Skills developed (leadership, technical, management) Better managers IPADE’s Culture and values Mandatory teamwork Better Society Case Method IPADE’s mission* Social responsibility Better human beings International Experience Living the “IPADE” experience Global vision acquired or enhanced Better Organizations Faculty The attention to detail Christian values acquired or enhanced Better business community Staff Interaction between participants and staff Facilities Behavior as an example (of faculty and staff) Chapel and Chaplain Daily Mass and spiritual direction

Research Design Data 1) archival data 2) self reported data from interviews with IPADE graduates 3) observations by NON-IPADE’s of behavior, actions and impact of IPADE graduates

Semi-structured interviews from graduates from all campuses, all major programs, all decades from inception Examine counterfactual 174 in-depth interviews—all confidential— three interviewers

IPADE LOGIC MODEL RESULTS INPUTS ACTIVITIES OUTPUTS OUTCOMES IMPACTS External Environment Participants’ profile Tutor/Mentor Mandatory teamwork Skills developed (leadership, technical, management) Better managers IPADE’s Culture and values Case Method Better Society Better Society IPADE’s mission* IPADE’s mission* Social responsibility Better human beings International Experience Living the “IPADE” experience Global vision acquired or enhanced Better organizations Faculty The attention to detail Christian values acquired or enhanced Better business community Staff Interaction between participants and staff Facilities Behavior as an example (of faculty and staff) WEAK SUPPORT Chapel and Chaplain MODERATE SUPPORT Daily Mass and spiritual direction STRONG SUPPORT

Project Summary This was an empirical test of the efficacy of the logic model and the mission. The interviews provide significant support for some elements of the IPADE logic model and less support for others. This provides an opportunity to do more on those elements that are currently less effective to create more impact.

All universities and business schools should be evaluating their social impact. It is critical to clearly and rigorously define mission and success and then empirically test whether the desired impact is achieved. Measuring inputs, activities, and outputs is not enough. There is an obligation to determine whether the desired social impact is being achieved and whether the school is making a difference—and how the contribution to society can be improved.

A Current Challenge Application of management control and performance measurement to creating breakthrough innovation in startups What does the logic model look like?

Corporate governance principles and processes are critical for the effective management of established companies. But, are they good or bad for breakthrough innovation and startups? The research literature on this is extraordinarily weak.

Here are four important unanswered questions:

Should corporate governance principles change if the leader is a founder/visionary? Does a visionary founder/CEO require more or less supervisory control and governance? What are the processes that lead to breakthrough innovation success in start ups and established corporations? What are the leading indicators that would help us predict success?

Controlled corporations and their leaders that “offend good corporate governance may deliver better long term results since they have the confidence needed to take the appropriate level of risk by investing in innovation” 2017 by Sir Martin Sorrell, CEO of WPP, the global communications and branding giant with 200,000 employees

The typical governance practices of visionaries with top down management and their companies like Apple, Amazon, Facebook, Tesla, and Snapchat are well known. How can corporate boards protect against corporate practices gone awry like at Enron, Theranos, Volkswagen, and Wells Fargo while still promoting creativity and innovation?

The challenge is to develop a corporate governance and strategic oversight model that can foster an ethical, responsible, and innovative culture with an often strong and visionary leader. Companies must balance the need for innovation and entrepreneurship with the needed governance and controls—and ensure that innovations and creativity do not lead to dysfunctional behavior.

Look at Enron, VW, and WF—and creative solutions that were disastrous Look at Enron, VW, and WF—and creative solutions that were disastrous. These corporate governance failures were the result of weak governance mechanisms and processes. An active board that encourages healthy debate and seeks out contrary opinions is critical.

More research on the intersection of governance and innovation is desperately needed for both academics and managers. Both startups and established companies must have strong corporate governance practices. The governance must also accommodate visionaries and big bets. And, it must adhere to the foundational ethical and corporate governance principles.

New Opportunities Rigorously defining success, articulating the processes needed to achieve it, and then measuring success is critical in all aspects of improving our lives. The models that we use in performance measurement and management control have important applications in personal improvement, social impact, and corporate performance that are not presently being developed. More research and applications are necessary.