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Define Your Path

Understanding Business Performance

Understanding Business PerformanceBusiness performance is a lot like art. It seems to be hard to define. A lot of people have different ideas about what it takes to create good performance. One of the things I have noticed as I do presentations on business performance is that many people approach driving business performance without the proper context. Hopefully this article can help provide some of that.  

Performance is the noun of the verb to perform that refers to the execution or accomplishment of work, acts, feats, etc. In business it usually refers to the achievement of desired goals, and is the result of the investments we make in our human capital and other assets. Our understanding of performance needs to take into account the desired business behaviors and the valuable outcomes produced by those behaviors. For example, we could say that a behavior would be assembling and packaging a microwave oven. The outcome we would want would be 25 Microwave ovens in inventory and ready to ship. We want the performance outcome, but the only way we can really drive that is to manage the behaviors that lead to it. Analyzing and managing those behaviors is a key driver of business success.   

This leads to the question of, what are behaviors and how do we manage them? Again, business people talk about these but rarely do we break them down into the component parts that we can digest. Behaviors are made up of the observable actions and/or mental processes of the people who perform the job. Observable actions are what we do, and mental processes are what we think. The table below illustrates this.

Mental Processes Observable Actions
Decide which tool to use Assemble the product
Interpret alarm light Set controls
Notice light is red Apply the brakes

So how is this taxonomy useful in understanding our business and driving performance? It is useful because it allows us to execute six simple steps:

1) Define the outcomes we want
2) Identify the behaviors that lead to those outcomes
3) Identify the observable actions that are part of those behaviors
4) Identify the mental processes that are part of those behaviors
5) Develop and implement processes and training programs that help enable the team to perform those observable actions and mental processes
6) Measure the outcomes and adjust as necessary

While the details of this process may get more complicated depending on the organization, every organization's efforts can be put into these categories.  And figuring out what categories to set up is where most organizations get into trouble. 

If you are interested in learning more about business performance and have considered going back to school, Benedicitne University offers an online MBA program to help expand your business knowledge.

About the Author

Jimmy Brown, Ph.D. is a senior level management consultant with eighteen years of experience leading efforts to develop and implement practical strategies for business performance improvement. Dr. Brown has held senior level consulting positions at leading firms such as Booz-Allen & Hamilton, Accenture and Hewlett-Packard. 

He can be reached at www.jimmybrownphd.com or via Twitter @jimmybrownphd