Chris Adams

The performance prism in practice

This article describes and illustrates the practical application of a new measurement framework – The Performance Prism – which addresses the shortcomings of many of the traditional measurement frameworks being used by organisations today. The Performance Prism, with its comprehensive stakeholder orientation, encourages executives to consider the wants and needs of all the organisation’s stakeholders, rather than a subset, as well as the associated strategies, processes and capabilities. DHL’s board for the UK have used this framework to re‐engineer their corporate measurement and reporting system and the article explains DHL and other firms’ experiences with the Performance Prism.

Business Performance Measurement: Performance measurement frameworks: a review

Introduction It has been widely reported that there has been a revolution in performance measurement in the last 20 years. The enormous interest in measurement has manifested itself in practitioner conferences and publications as well as in academic research (Neely, 1998). Research indicates that organizations using balanced performance measurement systems as the basis for management perform better than those that do not (Lingle and Schiemann, 1996). For this benefit to be realized, it is necessary for organizations to implement an effective performance measurement system that “enables informed decisions to be made and actions to be taken because it quantifies the efficiency and effectiveness of past actions through acquisition, collation, sorting, analysis, interpretation, and dissemination of appropriate data” (Neely, 1998, pp. 5–6). This definition is important as it indicates that a performance measurement system has a number of constituent parts: individual measures that quantify the efficiency and effectiveness of actions; a set of measures that combine to assess the performance of an organization as a whole; a supporting infrastructure that enables data to be acquired, collated, sorted, analyzed, interpreted, and disseminated. For the full benefit of measurement to be exploited it is important for organizations to maximize the appropriateness and effectiveness of measurement activity at each of these levels. This contribution is concerned with the second of these points, that is how an organization identifies a set of measures that reflects the performance it is trying to achieve. Numerous processes have been proposed that organizations should follow in order to design and implement performance measurement systems (Bourne et al., 2000; Neely et al., 1996).

The balanced scorecard and intangible assets: similar ideas, unaligned concepts

With their most recent publications on the balanced scorecard, Kaplan and Norton have focused on the learning and growth perspective in an attempt to clarify its constituent parts, as they acknowledge that many organizations struggle with what to include in this perspective. For that reason Kaplan and Norton introduce the concept of intangible assets as the content of the learning and growth perspective. They classify intangible assets into human capital, information capital, and organization capital. However, it is believed that this latest attempt to evolve the balanced scorecard might have an adverse effect. This article outlines how Kaplan and Norton failed to acknowledge the large body of literature on intangible assets and, therefore, produced an inconsistent, incomplete, and potentially very confusing classification of intangible assets.

Better budgeting or beyond budgeting

There is massive interest within the financial community in ways of improving and shortcutting the arduous process of planning and budgeting. Sponsored by Accenture, researchers at Cranfield School of Management’s Centre for Business Performance reviewed the literature and interviewed 15 leading companies to obtain insights into the best practices organizations are actually adopting. While some companies have simply exorcised the term budgeting from their corporate vocabularies, a group of pioneering Scandinavian companies have dispensed with budgeting altogether.

Survival of the fittest: measuring performance in a changing business environment

The design and use of performance measurement systems has received considerable attention in recent years. Many organizations have redesigned their measurement systems to ensure that they reflect their current environment and strategies. But how to maintain them over time? Increasingly, the environment in which organizations compete is dynamic and rapidly changing, requiring constantly changing strategies and operations that reflect these changing circumstances. Despite this, few organizations appear to have the internal culture and systematic processes in place to manage their performance measurement systems in order to ensure that they continue to reflect their environment and strategies. This article presents case study research that investigates what actions organizations can take to ensure that their measurement systems change over time.

The performance prism to boost M&A success

In an age of an ever‐increasing number of mergers and acquisitions, why do so many fail? Throughout the 1990s, and on into the 2000s the newspapers are full of reports of frenetic M&A activity. Yet horror stories highlighting failed mergers and acquisitions – AT&T, Quaker Oats, Disney, Sony, Compaq, General Electric (yes, even GE) – abound. It is almost as if the excitement of the deal consumes management’s passion. In the run up to the merger or acquisition, energy levels are intense. Yet, afterwards planning and post‐merger activities are weak and ineffective. There are of course numerous reasons why M&As fail – poor strategic concepts, personality problems at the top, cultural differences, poor employee morale, incompatible information systems, etc. The one explored in this article is post‐merger integration. Specifically, we ask how managers can track whether their post‐merger integration efforts are working.

Measuring and improving the capital planning process

Much research has been done into capital planning approaches on both sides of the Atlantic over several decades, but it has tended to be one‐dimensional – focusing almost exclusively on the application of financial appraisal techniques. Meanwhile little has been done to examine either the efficacy of other elements of the process or executives’ satisfaction with the way the process works. Members of Cranfield School of Management’s Centre for Business Performance, sponsored by Accenture, set the record straight with both literature and practitioner research into the capital planning process that also presents a new framework and develops best practice principles.

Business Performance Measurement: Performance measurement – frameworks and methodologies

The second part of the book explores some of the frameworks and methodologies associated with performance measurement. While there is considerable interest in the balanced scorecard, there are, of course, numerous other measurement frameworks and methodologies, each with their own strengths and weaknesses. The first contribution in this part, from Andy Neely, Mike Kennerley and Chris Adams, reviews some of these other measurement frameworks and then proposes an alternative framework: the performance prism. Neely, Kennerley and Adams argue that the strength of the performance prism lies in the fact that it unifies existing measurement frameworks and builds upon their individual strengths. The balanced scorecard, for example, is strong in that it argues for a balanced set of measures, but weak in that it omits some extremely important stakeholder perspectives – i.e. those of employees and suppliers. Similarly, activity-based costing is strong in that it explicitly recognizes the importance of activities and processes, but weak in that it does not link these processes back to strategies or stakeholders. The performance prism addresses these, and other issues, by providing an integrated framework with which to view organizational performance. The second contribution explores the concepts of “beyond budgeting” and the adaptive organization. In recent years there has been significant interest in beyond budgeting, a notion promulgated by Jeremy Hope and Robin Fraser.