A heads-up display for the CEO: The Chief Performance Officer

Fighter pilots traveling at supersonic speeds rely heavily on their displays and gauges. Split second decisions need to be made in real time. Their data monitoring needs are intensive: from weapons systems to power plant to radar images and navigation systems. Basing decisions on the wrong data can prove fatal.

Chief Executives also require data and input from their organization. They need to make critical decisions based on this data. Basing decisions on incomplete or faulty data can prove to be devastating for the organization and the CEO’s career.

Just as the fighter pilot relies on their heads-up display, the CEO’s needs are similar. But, since the data the CEO needs to make decisions is disparate in both business context and technical systems, it is not as simple as adding a heads-up display. Technology currently exists to provide CEO-level dashboards, but the real heads-up display is an emerging role in organizations, the Chief Performance Officer (CPO).

The CPO acts as the heads-up display for the CEO. And similar to the fighter pilot, actions are taken based on the indications from the heads-up display. Since much of the data required for decisions is business specific, the CPO must be specialized enough to provide the needed relevance and context to the required data.

In many organizations, the CPO role is actually being played by multiple individuals. Chief Financial Officers(CFO) provide the much needed input from a financial perspective such as revenue, margin, EBIT, etc. Supply Chain Executives provide the needed input from a vendor and supply perspective including lead times, turn around, etc. Research & Development, Customer Support and Human Resources all have their own measurements, also.

In reality, though, the CEO ends up being the integrator and interpreter of the information. The CEO is faced with taking in information from various reports, graphs and presentations from their direct reports and correlating this information to make an informed decision. There are two major problems with this scenario. First, the CEO may not have intimate enough knowledge with the data to perform adequate correlation of disjoint business data. Second, and more important, is that the CEO does not have the time for these tasks. In the fighter jet, the jet pilot is not using wind gauges, compasses, dipsticks and voltmeters to gather the information while flying at Mach 2. The pilot is presented with the most relevant data required for the decision at that exact moment. CEOs need this heads-up functionality for their business.

The heads-up display is input needed for the CEO to take actionable items. The CEO will make far reaching business decisions based on the relevant data presented, but he or she is ultimately the point of accountability for the decision.

In this way, the CPO becomes the nerve center of the organization. The CPO monitors all functions, but not as distinct functions, instead the CPO level metrics are cross functional and give a holistic view of the organization.

The CPO: Business Executive, Technologist, Interpreter

The CPO is faced with a unique challenge of being part business executive, part technologist, and part interpreter.

First, business expertise and business experience are paramount for the CPO. A thorough and complete understanding of the strategy of the business is required. The CPO must have expertise which can help to understand why results are happening in the organization, not just what is happening. Through this expertise, the CPO can identify and bring to relevance disjoint observations from the business data. The CPO also needs real business experience. This is not a role for a fresh out of college new hire. There are certain intangible business skills that are only achieved through experiences.

As part of the expertise, the CPO must have knowledge in business analysis tools such as forecasting, strategic planning, return on investment models, and governance compliance. These raw tools are most likely used by various parts of the organization, and the CPO will need some understanding of the applicability of certain tools and techniques.

Second, the CPO is part technologist. A successful CPO has technical knowledge, but is not burdened with technical implementation details. Unlike a Chief Technology Officer (CTO) or Chief Information Officer (CIO) which may implement programs for ‘technical glory’, the CPO is interested in technical pragmatism. The CPO must have awareness of the existing technology used by management in the company such as budgeting systems, data warehouses, and intranets. Detailed technical knowledge of the inner workings in not necessary, though, since the CPO is ultimately interested in the output, or data, from these systems. The CPO must also understand emerging trends in technology. Of particular interest are areas such as business intelligence, which concentrates on collecting and disseminating analytical business data, and collaborative systems, which allow automated sharing of information throughout the organization with web-based technologies.

It is important for the CPO to also understand the importance of incremental introduction of technology. Too many information technology project sponsors underestimate the impact of ‘technical saturation’. To a pure technologist, the latest java based, web enabled, thin client application may be the best answer, but to the actual business user of the system maybe an extension to their existing spreadsheet will accomplish the same ends. The CPO ultimately represents the business, and can not be lured into the trap of looking for ‘technical glory’.

Third, the CPO is part interpreter. The CPO must be able to communicate in both business and technical terms. Concurrently he or she must be able to speak at different levels of detail, whether at a management, executive, or board level. The CPO must have the vocabulary and interpretive knowledge to bring the information to the recipient’s level. It does little or no good to present middle management level project statistics at a board of directors meeting. Conversely, middle management may not understand or be privy to board level aggregated performance data. As interpreter, the CPO must quickly be able to adjust the level and context of what is being presented.

The 4 C’s: The Roles of the CPO

The roles of the CPO can be classified into four categories: collector, consolidator, condenser, and communicator. In performing each of these roles, the CPO can provide significant value to an organization.

Collector

The CPO plays the role of collector. He or she is collecting performance measurements and metrics from all parts of the organization. These measurements may be in automated systems on various technical platforms. The collection process involves significant business expertise to understand what is important to collect, and what can remain within the department.

As part of the collection process, certain technologies such as databases and corporate networks need to be understood and leveraged. Ultimately all the performance data will be in one place, and the CPO needs to begin with this end in mind.