Writing vs Executing the Business Plan
author: Lee Buttolph
“Local performance measurements should not judge the end result, rather they should judge only the impact the local area being measured has on the end result. Local performance measurements should judge the quality of the execution of a plan, and this judgement must be totally separate from judging the plan itself.
This is especially important in our organizations, where the level in charge of execution often has very little, or even nothing, to do with setting the plan itself. If we are not careful to separate the judgement of the execution from the judgment of the plan, we might reward a department for superb performance, when actually its performance was very poor, but the plan was good enough to cover for the poor performance. Or even worse, we might condemn a department whose performance was superb, when the problems actually lie in the original plan.”
- “The Haystack Syndrome” Goldratt (1)
As the quote above reveals it is important to distinguish between those that develop the business model and those that execute on it. If the company was successful, who should be congratulated? A great business model or a great execution? Who’s fault is it if the company doesn’t get the required return on sale? Once again, a flawed business model or poor execution?
The “5 Things” matrix gives senior management a dashboard to look at that lets them know how the business model and the assumptions that went into it is doing. It also shows the areas where employees are not executing on the model and ways to fix them.
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(1) Goldratt, Eliyahu M. "The haystack syndrome." Croton-on-Hudson: North River(1990).