A successful CPO will create an environment that has a certain level of poor quality data tolerance. This environment will need to detect and compensate for the data deficiencies. There are a number of techniques that can be utilized in areas such as statistical modeling with confidence ratings to provide an adequate quality rating of the performance data being presented. The CPO is also measured on his or her ability to point out where the performance data can be improved, even if he or she does not have the explicit control of that data. If the fighter pilot notices that the navigation systems are malfunctioning, first he must make immediate adjustments for this deficiency. Upon returning to the hanger, he must let the maintenance crew know what is wrong or it will continue to be a problem.
Timeliness is the second measurement criteria of the CPO. If the performance data is old or outdated, can it really be useful in making CEO-level decisions? The CPO needs to have a firm grasp of the importance of timeliness of the performance data. The CPO must understand the ‘shelf life’ of the performance data and build adequate refresh strategies. The CPO must also guard against “I need everything, now” mentality. It is highly unlikely that a CEO will need up to minute order status with real time updates to facilitate strategic decisions. A refresh rate of daily, weekly or even monthly may suffice, as long as the proper level of detail is available for confirmation.
Since refreshing the data is typically a resource and information technology intensive process, the CPO must pragmatically apply the refresh strategy to satisfy the CEO needs and control the cost and overhead. Providing the proper level of timeliness is a key measurement of the CPO.
Combining quality, timeliness and business insight leads to the third measurement of the CPO, relevancy. Much the technology to enable a heads-up display for the CEO (network, database, application) is readily available, since this is a fairly mature segment of the technology. Implementing the system or technology, though does not solve the business problem. The CPO must add relevancy to the analysis through business insight.
Many organizations implemented Executive Information Systems (EIS) in the 80’s and 90’s. Most of these implementations were technical successes, but business failures. Executives were presented with infinite possibilities for analyzing their data. But, most executives do not have infinite time to analyze these infinite possibilities. How many times has the CEO said “Skip the detail, what is the bottom line?”.
The CPO must be able to bring the CEO directly to that ‘bottom line’. And, it is only through providing relevancy that the CPO can do this, not by implementing a computer system mired in detail.
A CPO must be measured against these three criteria: quality, timeliness and relevancy. It is only through a combined measurement that the performance of the CPO can be measured.
These three measurement criteria are impacted differently by the four roles (collector, consolidator, condenser and communicator) of the CPO. As a collector, the timeliness becomes the most critical measurement of the CPO. One of the main reasons is that the CPO is playing a balancing act between timing of the data resources and timeliness needs of the CEO. As a consolidator, the CPO is mainly measured in terms of quality. In a consolidation role, there is much correlation and elimination of data, and the CPO must pay particular attention to the garbage-in garbage-out trap. As a condenser, the CPO is measured against relevancy. With all the data collected and cleansed, the CPO must now use the business expertise to condense the data to a relevant level. And, as a communicator, the CPO is measured equally against all three criteria. As a communicator, the CPO must adequately communicate what is in the data, what is the applicable time frame, and who should be using it.
Conclusion
The CPO is an invaluable role in any organization. Relieving the CEO of having to collect, consolidate, and condense various data related to performance, the CPO acts as a heads-up display for the CEO. The CEO can then concentrate of making the decisions based on fact and performance data. CPOs add value to an organization in four ways:
- One stop shopping for performance data – The CPO collects and disseminates the disparate performance data spread throughout an organization. With performance data ‘the buck stops here’. The CEO has one place to go for performance management.
- Accountability – The CPO take ultimate responsibility for the performance data. Previously there was not a single point of accountability which lead to inefficiency and finger pointing.
- Closing the Loop – The CPO now gives an organization the ability to measure their performance, and take action. Since the CPO is presenting this data at an executive level, executives can take actions immediately and the data can then be disseminated to upper and middle management in real time.
- Decision Enablement – The CPO is ultimately responsible to the CEO, but the data and analysis collected can enable decisions at all levels. This can be applied to regional, cost center, product or project managers. Since they will most likely be the physical implementers of the decisions from executives.
Tony Politano is author of “Chief Performance Officer: Measure What Matters, Managing What Can Be Measured”. He is currently the Chief Performance Officer at Niteo Partners, An NEC Company, and regularly consults with executives regarding performance management issues and resolution. Regularly published in trade journals and magazines, he holds a M.S. in Information Management from the prestigious Howe School of Management at Stevens Institute, where he is currently a doctoral candidate. Your suggestions for future KPI of the month topics can be sent to .
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