Understanding Criteria Linkages

Which System is more Complex ? System : A System : B

How do you see Your Organisation ? (1) (3) (2)

“The key to the Toyota Way and what makes Toyota stand out is not any of the individual elements…..But what is important is having all the elements together as a system. It must be practiced everyday in a very consistent manner-- not in spurts .” – Taiichi Ohno

Relationships between Criteria and Sub Criteria Some of the more obvious links between Enablers and Results are: Criteria 3 and 7 5 and 6 4/5 and 9 2 and 5/9 Some examples of sub-criteria links are: Sub-criteria 1b, 2d and 5a 1d, 3e and 5b 1c, 4a and 5e The Criteria are not independent boxes, but should be clearly inter-linked in a good organization. Assessors should look for linkages specific to the organizations being assessed.

Achieving Shareholder Value Through Total Customer Satisfaction Income Growth Customer Loyalty and Commitment Customer Satisfaction Customer Responsiveness

Model Dynamics Up-stream Down stream 1. 2. Enablers Results Time lag Leading indicators Lagging indicators Up-stream Down stream 6a 6b 7b 7a Not a static model. First element of dynamics is to recognise that some of the Criteria are leading indicators and some are lagging indicators. The diagram above illustrates the principle in simple terms. Whilst 'lagging indicators' is in common usage in the UK, 'trailing' or 'following' may give a better meaning in translation. Performance measures provide an essential feedback-loop in the process of strategic change. However, the learning process is often hampered as the measurement system provides wrong or incomplete information. This is because the systems in use ignores the existence of different value systems within the organization. As a result, the knowledge generated by the performance measurement system is biased towards those groups of stakeholders that have the strongest influence. In order to achieve complete learning, a performance measurement system should reflect the value system of all the organization's stakeholders while establishing the right compromise between conflicting goals. This can be achieved by developing a hierarchy of performance measures that is aligned with the organization's value system and provides feedback for the evaluation of strategic options as well as their implementation. In a dynamic environment, it is not possible to first define and then implement a performance measurement system. The selection of performance measures must be a continuous process. The selection criteria is driven by the competitive environment and the individual learning requirements. It is therefore, necessary constantly to review the performance measurement system and make projections on future measurement requirements. By developing a performance measurement hierarchy for each group of stakeholders and establishing the interrelationships between these hierarchies, it becomes possible to align the performance measurement system with the organization's value system and strategic direction dynamically. 8b 8a 9b 9a

Linkages of People Results with Enablers 2c 2d Strategy 3a 3b 3c 3d 3e Leadership People 1a 1b 1d 1e People Results 7a, 7b Processes, Products and Services 5a 5b Partnerships and Resources 4c 4d 4e

Linkages of Key Results with Enablers LINKAGES OF KEY PERFORMANCE RESULTS WITH ENABLERS Linkages of Key Results with Enablers 2 Strategy Leadership People 1 3 Key Results 9a, 9b 4a 4b 4c 4d 4e Processes, Products and Services 5 Partnerships and Resources

Linkages of Customer Results with Enablers 2d Strategy 3a 3b 3c 3d 3e Leadership People 1a 1b 1c 1d 1e Customer Results 6a, 6b 5a 5b 5c 5d 5e Processes, Products and Services Partnerships and Resources 4a 4b 4c 4d 4e

Linkages of Society Results with Enablers Strategy 2a 2b 2c Leadership People 1a 1b 1c 1d 3a 3e Society Results 8a, 8b Processes, Products and Services 5a 5b 5c 5d 5e Partnerships and Resources 4a 4b 4c 4d 4e

Linkages amongst Results Criteria 6 Customer Results Key Results People Results 9 Society Results 7 8

Measurement for Effectiveness 6b 6a 9,8,7 Enabler Sub-criteria Performance indicator Perceptions Impact on other results

Criteria Linkages in the Model 6a to 9a 1d 3 1c 2a 5b 5c 5d 5e 6b 7b 8b 9b 6a 7a 8a 9a 1a 2c 2d 5a 1b 2b 4 6b to 9b 1C 1b & 4e

Policy and Strategy and The Effective Operation of its Processes Vision Mission Values Leadership Strategies Creating and Develop-ing Markets Creating and Develop-ing New Products Produc-ing Selling and Service Managing Relation-ships Performance Indicators Key Performance Indicators Key Strategic Outcomes Stakeholders’ Perceptions Partnerships Technology Finances (Investments) Information and Knowledge Physical Assets (Material, Building, Equipment) People