Operational Excellence: Journey to Creating Sustainable Value

CHAPTER 15MEASURES OF PERFORMANCE—METRICS AND KPI

Metrics, measures of performance, are essential contributors to the success of Operational Excellence. Metrics are objective measures of crucial program and performance parameters, including business/mission and operating effectiveness. They are the means employed within an enterprise to determine performance and effectiveness of operations, activities, systems, and equipment. Measures of performance are compared against standards to identify opportunities, create motivation for improvement, assure continuing progress to objectives, and demonstrate results.

Beginning with school grades and continuing with sports scores, league standings, blood pressure, and body weight metrics (the latter always above the benchmark!) are familiar to all. They are absolutely necessary in a modern, knowledge-based operating enterprise where survival and success demand superior performance in every activity.

Any worthwhile endeavor must have some method of assessing performance. In golf, par is a measure of performance against a course standard. By keeping score, one can determine how a player's game compares against the performance standard and other players and whether it is getting better or worse. More importantly, one can determine whether those very expensive lessons and time spent practicing are improving performance! Knowledge of body weight may determine whether that second helping of pie is a good idea!

Enthusiasm, ownership, responsibility, ...