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The Root Cause Blog
03 Dec

Performance Insights: How Performance Measurement Can Drive Decision Making

Written by Steve Pratt, Director, Financial Sustainability

Strategy and performance measurement go together like a hand and a glove, but we typically think of the relationship between the two in linear terms. An organization first goes through some sort of process that either develops or forces a set of strategic choices. The choices are usually based on some assumptions—what we often call “strategic bets.” A performance measurement framework is then deployed to test the assumptions and, if necessary, refine the strategy.

In a business plan that we recently completed, our client chose to focus on growing revenue by converting one-time special event participants into annually renewing donors. The strategic bets are, first, that event participants have or can develop an interest in the organization’s mission beyond the appeal of the event (e.g., a celebrity golf tournament) and, second, that the newly developed interest in the mission can be translated into annual financial support.

Clearly, our client will need to track indicators that allow them to test their assumptions about donor conversion and retention. Based on what they learn from those tests, they may refine the strategy by emphasizing tactics that are showing results and dialing back on ineffective tactics.

Sometimes, an organization is not ready to commit to a set of strategic choices. There may not enough experience to draw upon, or the politics of decision-making could be too fragile. We’ve now worked with several organizations in these circumstances to develop performance measurement approaches that give leadership the tools to settle issues that block strategic decision-making. 

Our work with the Mississippi Center for Educational Innovation (CEI) offers a case in point. For the past five years, CEI has acted as an incubator of best practices in early childhood and K-12 education in the state. As with many young organizations, CEI has taken an opportunistic approach to what it incubates, working on the principle that with compelling needs to be addressed across the education landscape, there is not one “right” place to start. 

The organization has now reached a stage of maturity where it is ready to narrow its focus on a set of activities that show more evidence of impact, but a mix of financial and political considerations have to be settled before choices can be made. The performance measurement system that we developed in collaboration with CEI’s leadership is designed to provide the data that can drive decision-making. The key questions that remain to be answered have been identified, as have the indicators that will help answer the questions.

The experience offers a variation on our “action while planning” principle: not only do you not have to wait until you have a plan to make decisions, you can actually use the act of decision-making while planning to enrich and inform your planning process. The principle applies to performance measurement as well. You don’t need strategic clarity in order to implement a performance measurement system. You can use performance measurement as a path to strategic clarity.