Assessing Results vs. Reflection

As we near the end of 2007, most of our respective organizations are looking at what we are going to do in 2008.

Part of that is usually to take a look at this year and look at where we are right now. There are a couple of ways to go about this, and I want to contrast them. This is based only on my own personal experience and, of course, your mileage will vary.

All too often I think this process consists of reviewing results vs. goals. The emphasis is almost solely on targets and actuals. The target was hit or not hit. Top leaders are not interested in “excuses.” I have seen particularly destructive forms of this that included going so far as to re-define success to match what had been achieved. The baseline was re-set at the beginning of the next year, and everything in the past forgotten. Managers took full credit for cost reductions which were “achieved,” not through their own actions, but due to fluctuations in commodity prices of raw materials. Likewise, managers were assigned blame for not hitting targets for the same reason if those prices went up.

There was no review of progress of activities which were predicted to achieve specific results, nor was there a prediction that specific activities would lead to specific results. Instead there was a general high-level target, then a list of actions. Since none of those actions was tied to a verifiable outcome or target, there was no way to know what worked and what didn’t.

Even worse, it really didn’t matter. As long as the targets were achieved, that was what counted. There were great negotiations about exactly how targets would be measured (this company measures everything, and measures nothing). Then, for example, if inventory reductions were to be achieved over the year the actions taken were: (1) Shut down production processes to starve the system. (2) Pull 1Q orders in to 4Q to book the sales. Ships were loaded and sent early because the inventory cleared from the books – even though this was intra-company shipment. They had a LIFO system, so the deeper they could reach into inventory for sales the higher profit they could make since the older the inventory the “lower the cost” associated with it.

All of these games were driven by a “hit the targets and don’t ask about how” mentality. By the way, when 1Q results rolled around things were dismal because they had pulled orders forward PLUS starved the system by shutting down production in 4Q.

This management system is designed intended to deliver results to Wall Street, though it really doesn’t Such is the corrosive nature of trying to manage to “shareholder value” using traditional cost accounting methods. Yes, shareholder value is important, but you can’t manage to it and expect to get the kinds of results that customer and processed focused companies do.

Reflection

Reflection is a learning process. It is designed to incorporate what was learned into shifts in approach for the future. Without it, learning is, at best, an individual action. At worst, the learning is how to survive in the system, not how to do better.

The three key questions are:

1. What did we intend or plan to accomplish?
2. What was actually accomplished?
3. Why the difference?

At a deeper level:

• Did you accomplished the actions you intended to accomplish? If so, how did that go? What obstacles did you have to overcome? If not, what got in your way that you could not clear?
• Did each of those actions deliver the expected or planned result? Are you sure? It is just as important to understand why you succeeded as it is to understand why you failed. The commodity price example above is an example of the opposite. They succeeded, but didn’t acknowledge that it wasn’t through anything they did or didn’t do. If an action did not deliver the anticipated result, why not? What did you learn?

Planned? Actual? Please explain.

This is nothing more than the application of PDCA and the Scientific Method. Your plan for the year consisted of a designed experiment. “If we do these things, we expect this results.” Then do that thing, and check that you actually did it. Compare your actual result with the expected result. Explain any difference. Learn.