Organizational Performance Measures Best Practice 5 – One Source of the Truth
Measurement of observable variables has always been as much an art as it is a science. How, when, where, and with what we measure observables highly influences the values derived. Subsequently, when using performance measures to evaluate the comparable results achieved by various products, services, business units, and individuals or a single item’s performance over time, differences in measurement methods and/or data resources can create undesirable variations in derived values and invalidate the comparison. This increased information uncertainty in turn diminishes decision-making effectiveness.
To perform comparative analysis, it is critical that organizational performance measures be based on one source of the truth. One source of the truth exists when comparable performance measures are derived in a consistent, repeatable manner from like data sources. Specifically, this means that data acquisition is performed at a specific time/time frame, in a consistent, predefined manner, using equivalent instrumentation, from the same (preferred) or highly similar sources. Additionally, all computations and manipulations are performed in a consistent manner to maintain comparability.
Decision-making becomes increasingly uncertain absent the one source of the truth principle. All data has an inherent level of uncertainty. Information gathered on different items or on one item over time shares a common level of uncertainty when the one source of the truth principle is applied; an uncertainty that is equally offsetting under comparative analysis. However, when inconsistency exists in the collection of comparative data, a state of unequal uncertainty is created between the data sets preventing an equal offset and increasing the decision’s chance of error.
Additional Information
Additional information regarding organizational performance measures can be found in the StrategyDriven whitepaper series Organizational Performance Measures.
Related Articles:
- Organizational Performance Measures Best Practice 4 – Core Performance Measures
- Organizational Performance Measures Best Practice 3 – Common Construction Characteristics
- Organizational Performance Measures Best Practice 1 – Vertical Cascading
- Organizational Performance Measures Best Practice 2 – Horizontally Shared
- Organizational Performance Measures – Introduction
