Keeping score in the 10X process is the means to achieve accountability and assure focus. It is a process that enables organizations to translate a company’s vision and strategy into implementation, working from 4 perspectives: Financial, Customer, Business Process, Learning and Growth. This allows the monitoring of present performance as well as trying to capture information about how well the organization is positioned to perform in the future. A balanced 10X scorecard is designed to focus managers’ and teams’ attention on those factors that help business strategy the most. Alongside financial measures, it adds measures for customers, internal processes and employee learning.Metrics are a means of telling a story. The value is in describing an aspect of a business that purports to provide a prediction or estimate of the usability of the business and aid management in allocating resources and monitoring intent and performance. An example might be focusing on customer value. Metrics would include customer acquisition, retention and expansion. This provides another way to forecast cash flow and the value of a 10X venture. Keeping score becomes a process of telling a story. Like all stories there are actors, actions and outcomes. What is the future that you want to create? Portfolio managers have different needs than executives, who have different needs than product and program managers. The choice of metrics always depends on context and is different for each organization, phase of development and market segment. Before committing to a specific measurement system or set of metrics, a team needs to develop an objection evaluation of the organization, project or venture in the”Path of Least Resistance” phase of the 10X process. There needs to be a particular focus on understanding the requirements of the various  metrics users. What is the business model and what are the drivers of performance? According to performance metrics guru, James Bors,

 There is a significant difference between the two types of performance metrics, results metrics and predictive metrics. Results metrics measure the overall degree of success or output of a process. They are usually influenced by several interacting variables. In manufacturing, examples of results metrics include efficiency, productivity, downtime, quality, customer satisfaction, profitability and others. Unfortunately, most workers do not carry out their normal tasks with results metrics in mind. Their minds are more occupied with carrying out the task at hand, which is where predictive metrics come in to play. Predictive metrics more directly relate performance to an end-user’s tasks. They measure the degree to which specific tasks are accomplished within a person’s job process. Well-designed predictive metrics directly correlate to results metrics. If predictive metric goals are attained, results metrics follow.

 In my work with hundreds of firms, I’ve discovered an interesting phenomenon: Profits are often too low because the management has failed to establish adequate metrics for the products and programs. If a client, partner or stakeholder is only crystal clear on the cost (the fee) but is vague about the results (the return) then the scale will inevitably tip toward a lesser ROI. Consequently, it is incumbent upon the 10X value creator to provide the stake- holders with the proper metrics with which to measure results and convert those metrics, two of which you must prepare before you attempt to achieve a collaborative agreement:

First, daily metrics. These would include sales reports, customer resource management stats, network statistics and customer or user feedback.

Second, organizational and market factors. These would include departmental goals achieved, executive behavior change, changes in brand awareness. 

Third, project or program specific metrics. Virtually all 10X ventures will have some measures unique to their particular culture, market segment and business.

Keeping score is both necessary and fascinating journey that leads to extraordinary value.  

The path of least resistance describes the physical or metaphorical pathway that provides the least resistance to forward motion by a given organization, team or entity, among a set of alternative paths. The concept is often used to describe why an organization, team or entity takes a given path. The Path of Least Resistance moves us from the vision, strategy and goals to integration is the biggest part of germination of an idea is choice. Leaders make choices about what to create, discarding ideas that are unlikely to work in an effort to find one that does. Ideally, this process leads a organization or team to the best idea, the one that’s worth assimilation and, eventually, completion. The biggest challenge, though, is that we sometimes use faulty criteria to make that choice - we’ll discard great ideas because they’re too hard and they may stress us too much.  

You got to where you are in life right now by moving along the path of least resistance much like a river meanders along the path that is most comfortable to you. The underlying structure of your life determines this path of least resistance just like mountains and valleys determine where rivers go. You can change the underlying structure of your life just as engineers change the underlying structure of a river bottom to channel it where they would like it to go.

In physics, the path of least resistance is always taken by objects moving through a system. For example, water flowing downhill follows the path of least resistance as it is pulled downward by gravity. Electricity flowing through a circuit behaves similarly; while every available path has some current flowing through it, the amount of current through each path is inversely proportional to its electrical resistance. Atmospheric disturbances (storms) flow on the path of least resistance by flowing toward zones of low barometric pressure, where lower air density offers less impedance to the storm system than higher pressure zones.

The path of least resistance will usually be our best value creation strategy.  An analogy I like is in white water-rafting, a beginner will often focus on the rocks, attempting to get around them but not knowing how, often ending up swimming, wet and scared.  An experienced rafter, by contrast will ignore the rocks, looking instead for the flow line of the water moving far ahead.  By following that flow, focusing on it, as the water moves in an endless stream around the rocks, the experienced rafter will successfully navigates the dangers.  

Near my home in Tahoe City, California one of the most popular things for people to do in the summertime is take a raft ride down the Truckee river, our family has been doing it for three decades, it’s a tradition.  A few years ago I purchased a canoe for some relaxing afternoons and some good summer exercises.  

I decided to get a bit daring and try canoeing down the Truckee River rather than in a more stable raft.  The first attempt was a real learning experience because one does tend to focus on the obstacles—rocks, other rafts, bridges, and sand bars—as you can expect the first trip included some swimming and some anxious moments.  I enjoyed the afternoon and my canoe mate and I laughed a lot as we tipped over a half dozen times arriving at the River Ranch way point soaked and a little beat up by the rocks the currents.

My next attempt to canoe the Truckee River was with an experienced kayaker in the front with me.  We navigated the entire first couple of miles of the river without a single tip-over arriving at our destination high-and-mostly dry.  What was the difference.  My more experienced partner looked ahead and kept us in the path of least resistance, that is, we guided the canoe to flow with the currents rather than focusing on the obstacles.  

Bruce Lee often told his students to be like water. So what on earth does that mean? It means to follow the path of least resistance. If you pour a cup of water on top of any surface or structure that water will find its way to the lowest points of that surface without any effort at all. The effect of gravity causes the water to follow the path of least resistance and it does so 100% of the time, nothing ever stands in it way. So what Bruce Lee meant when he said be like water was let yourself flow naturally whether you are fighting an opponent or living your life.

Jane Harmon a leadership coach tells us “For some strange reason most of us end up socialized to accept the concept that “doing something worthwhile or valuable must be difficult.” We are suspicious of things that come too easily. But this assumption only creates unnecessary frustration and struggle. Taking the path of least resistance can often be the best and smartest thing you can do. The reason is that at its core the concept of “taking the path of least resistance” really means following the course that is most in line with who you are and how you operate, and seeking out environments that will allow you to express and leverage your natural tendencies.”

In order to go forward and claim authenticity as a growing, learning and building organization, we much go back and inventory what we are carrying with us from our past.  In brainstorming session we often get a lot of “post-its” that are expressions of what I call “organizational baggage,” that is things, problems, issues, or miss-conceptions that team members have from the past.  By posting these concerns in a open and somewhat public—to the organization—place something happens that is quite motivating.  Team member recognize that many of there concerns are common to the organization as a whole as well as a realization of some obstacle or barrier that was transparent.  

After the group has moved from the diverging stage of brainstorming to the converging stage of ranking and priortizing the “post-its” someone almost always remarks about how much of the discussion was about things that really had little to do with the path of least resistance other than being obstacles or barriers along the way.  This process of clearing the “organizational constipation” is a natural and important step toward building the right strategy and developing future vision.

Earl Nightengale said “Your problem is to bridge the gap which exists between where you are now and the goal you intend to reach.”

Robert Fritz tells us in his 1984 classic book The Path of Least Resistance “In the creative process, once you have activated the seeds of your creation by conceiving and choosing the results you want, the next stage of growth develops within you.  As a newly planted seed begins to establish itself in the soil first by sending out roots, so the vision you have germinated is also taking root within your structural makeup.” 

The idea that making fundamental choices in the life of an organization can literally transform you as a person, your organization and carry you past what you believed were your limitations before. This is usually the result of a number of fundamental choices along with recognizing what the obstacles are and working to change them.

Vision, Strategy and Goals communicate today’s reality as well as tomorrow’s vision. Look closely at the picture that illustrates this topic. The person standing on that mountain top had a vision of how to get there, then a strategy for getting there and finally reached the goal (and is celebrating with great enthusiasm!). This is exactly what you want to do with your business.

Being able to articulate your reality, create your vision for the future, and to develop and apply your strategy to reach your goals are all keys to your success in today’s world of dynamic, changing market, technology and abundant opportunities. 

As a leader, you need to be able to communicate and integrate your vision with your teams and clients to form win-win visions that elevate individuals, teams and organizations to new levels of achievement. 

Some leaders (could this be you?) seem to have early warning sensors that allow them to look over the current business horizon and understand the meaning of trends in markets, economics, technologies and competitive pressures. Recognizing these trends, visionary leaders are able to make bold and sometimes courageous strategic choices. These choices may also be risky. Nonetheless, they get you to the top of mountain! 

Strategic Success Factors (SSFs) are those characteristics, conditions, or variables which, when properly sustained, created, or led, can have a significant impact on the success of a firm competing in a particular industry.  SSFs are often difficult to identify and rank in relative importance and are often mutually interdependent.  However, SSFs are always important in helping executive leadership make strategic decisions.

SSFs are not easily identified by one method.  Five different levels of analysis have merit:

Inter-industry environment analysis examines factors across industry boundaries.

Industry-level analysis focuses on factors in the basic industry structure.

Corporate-specific analysis focuses on factors common to the firm’s business units.

Strategic-business-unit-level analysis addresses the business unit’s internal factors

Program-specific analysis addresses factors that are specific to a program, thrust, or initiative.

These five levels have special links to several of the steps found in a typical strategy development model.  

Specifically, they can be instrumental in the following:

Environmental Scanning: Assessing market, technological, organizational, and economic variables, their impact on the industry, and the potential of significant uncertainty, threats, and opportunities facing the firm.

Resource Analysis: An inventory of a firm’s strengths and weaknesses.

Strategic Evaluation: Comparing the leadership’s strategic options with the value- creation objectives.

Five strategic success factors provide a measurable methodology for assessing options and ranking strategic choices.  These factors are:

Market Factors

Products and Programs

Strategic Alliances

Value Creation Results

Strategic Choices

These five factors are linked by two groups of subjective factors.  The first group, called differentiating factors, are the relationships between the strategic choice and the other four SSFs.  These relationships provide the methods of differentiating the leadership’s strategy.  The second linking, called integrating factors, associates the first four SSFs after the strategic decision is made.  The SSFs, the differentiating factors, and the integrating factors form a framework for evaluating strategic situations.  

The SSF framework provides an analytical technique to measure change and assess the influence of major decisions.  The framework can be used to compare the relative changes in strategic situations between firms, or to compare relative changes in a specific firm over time.

Once SSFs are identified, a means of establishing their relative importance is available.  Five criteria are suggested:

SSFs are usually found in the major activity of the business.

SSFs usually involve large dollars or a significant resource commitment.

SSFs usually have a major economic impact (profit, EPS, P/E, enterprise value).

SSFs lead to decisions that, once made, are difficult or impossible to reverse.

SSFs often accompany major changes in the leadership’s performance.

There is a more fundamental method for assuring that any organization grows and develops, outperforming the competitors, designing the future as they go. I call this fundamental method Value Creation. In addition to my career in executive management, I took on a personal challenge to write a book about the hundreds of miles of hiking trails in the Lake Tahoe Basin where I live. I would like to illustrate the value creation concept using an analogy from my hiking experiences.

Read the rest of this entry »

Welcome to my blog, please check back often as content will be added regularly.