EXAMPLES OF KPI THAT WORK
As I dove into writing this post it quickly became apparent to me that truly great examples of key performance indicators that work occur on multiple levels. There is both a strategic or high level measure of success and an operational or tactical level of success. The strategic and operational differ but, are co-dependent. This post will look at three examples of KPI that work at the strategic level. The assumption is that if you achieve your goals at the strategic level you must be doing something right at the operational level. This post the second in a series of posts on key performance indicators.
Three (3) examples of KPI that work are;
- NASA Project Apollo
- Canada’s “Own the Podium” Program
- Safety first at Alcoa
A common thread of all these projects is that they were led by a vision and a BHAG. BHAG stands for Big Hairy Audacious Goal and is a term coined by Jim Colin’s in his timeless classic “Good to Great”. Vision is that quality a project where all contributors know where they are going and are working toward a common goal. All of these project had a vision and BHAG in mind when they started out.
Project Apollo, was the third human spaceflight program carried out by the National Aeronautics and Space Administration (NASA). The program was championed by President John F. Kennedy and is famous for landing the first person on the moon. Project Apollo unleashed America’s creative energies and was probably one of the most successful large scale projects in global history.
The “Space race” October 4, 1957
The Cold War era dawned shortly after World War II. The era was a titanic struggle for supremacy between the United States and Soviet Union. On October 4, 1957, the Soviet Union launched the earth’s first artificial satellite, Sputnik I. The successful launch came as a shock to the United States and perhaps a blow to their national ego. The fact that the Soviets were successful fed fears that the U.S. was falling behind in developing new technology. As a result, the launch of Sputnik intensified the space race and raised tensions between the two nations.
On April 12, 1961, Yuri Gagarin became the first human to reach space. This Soviet Union accomplishment further fueled American fears of falling behind in the space race. President John F. Kennedy (JFK) had first aired Americas ambitious “We choose to go to the moon” goal in congress on May 1961. The moon shot was announced just six weeks after the Soviet Union’s Yuri Gagarin became the first human to reach space.
We choose to go to the Moon, September 12, 1962
At Rice Stadium in Houston, Texas, on September 12, 1962, JFK said; “… [The United States] should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth.”
- Establishing the technology to meet other national interests in space.
- Achieving pre-eminence in space for the United States.
- Carrying out a program of scientific exploration of the Moon.
- Developing human capability to work in the lunar environment.
The Apollo Project had a specific and unambiguous goal coupled with a measurable outcome. “Get a man to the moon and return them to earth.” The goal was difficult to achieve with the technology available at the time and yet also attainable. Finally and perhaps most importantly the goal had a hard time limit “by the end of the decade.”
“That’s one small step …” July 9, 1969
The Project Apollo mission culminated when Neil Armstrong took the first step on the moon in July 9, 1969. The Apollo program had a clear destination, focused objective and a simple measurable definition of success. On July 24, 1969 the crew of Apollo 11 splashed down about 812 nautical miles south west of Hawaii. The successful return of Apollo 11 and its crew fulfilled the ambitious goal set by JFK and was a great source of American pride.
OWN THE PODIUM PROGRAM
Own The Podium (OTP) is a program that was originally introduce to prepare Canadian athletes for the 2010 Winter Olympics in Vancouver. The program continues to operate in Canada and has broadened its mandate to include the Summer Olympics. According to the OTP 2007 annual report the program stated goal was;
Our Goal is for Canada to win the most medals at the Olympic Winter Games and among the top 3 at the Paralympic Winter Games in 2010.
Montreal 1976 and Calgary 1988
Canada had hosted the summer Olympic Games at Montreal in 1976 and the winter games at Calgary in 1988. However, Canada also had the dubious distinction of being the only Olympic host nation NOT to win a gold medal at home. When Vancouver won the right to host the 2010 Winter Olympics, Canada launched “Own the Podium”.
The program launched in Calgary 2004 when a number of Canadian sporting organizations met to develop a framework for success. The thirteen agencies met shortly after Canada had won the right to host the Vancouver 2010 Winter Olympics. The inital meeting developed a framework for success and the plan to put Canadian Athletes on the podium.
The program stated mission, vision were;
- Mission – Working in partnership to achieve Canada’s performance goals at the Olympic and Paralympic Winter Games
- Vision – Canada’s high performance sport system has the commitment, leadership, programs, policies and resources to ensure Canadian winter athletes can be the best in the world.
The project had a specific and unambiguous goal coupled with a measurable outcome. The project was also time bounded and had a specific date for completion. Perhaps most importantly the program delivered results at the 2010 Winter Olympics in Vancouver.
I remember watching the Vancouver 2010 Olympics on TV and sharing the moment with friends on Twitter. On February 14, 2010 Alexander Bilodeau became the first Canadian to win a gold medal on Canadian soil, it was truly a joyous moment. The gold medal win was also a major milestone for Canada and the first of many victories for Canadian athletes at the Vancouver winter games. The Vancouver 2010 Olympics were a great source of Canadian pride and a significant accomplishment in terms of placing athletes on the Olympic podium. Canada won the most gold medals ever at a winter Olympics and had our best showing on the world stage.
Post Vancouver and 2014, 2018 Winter Olympic results
With a clear goal and measures of success Own The Podium prepared Canada athletes for Vancouver 2010. The result, Canada went on to place 3rd overall and win a total of 26 medals (14 Gold, 7 Silver and 5 Bronze). This was Canada’s best performance at the Olympics and set a record for the most gold medals won by any country at a single Winter Olympics.
Canada has gone on to continue its high level of performance at the Winter Olympics at Sochi (2014) and Pyeong Chang (2018). The table below summarizes Canada’s medal performance for Canadian performance at the Winter Olympics from 2002 to 2018.
Canadian Winter Olympic Results 2002 to 2018
ALCOA “SAFETY FIRST”
Introduction Alcoa’s’ New CEO
I recently read “The Power of Habit” by Charles Duhigg. One of the stories that really resonated with me was Chapter 4 “The Ballad of Paul O’Neil”. The Ballad of Paul O’Neil is the first chapter in the section on “The Habits of Successful Organizations”. The story of Paul O’Neil starts when he is appointed CEO of Alcoa. Alcoa was one of America’s largest companies and a producer of aluminum products. When Paul O’Neil became CEO he used a single metric to initiate a significant cultural shift at Alcoa.
Plotting a new course “Safety first”
What I find truly fascinating about the Paul O’Neil story is the rationale for choosing Safety as Alcoa’s key measure of success. Safety as your key success metric seemed extremely counter intuitive at the time. In 1987 corporate America was focused on profits and value to shareholders. The link between “Safety” and improved shareholder value was somewhat oblique. Alcoa at the time had a good safety record when bench marked against the rest of the industry. The challenge before O’Neil was finding a KPI that would satisfy the needs of all stakeholders; workers Union, Management, shareholders and the board of directors.
“Safety” is key performance indicator that all of the organizational stakeholders could endorse. The theory was that Safety would create foundational organizational habits that would lead to positive side effects. The result of improving safety would be an overall improved organization. Interestingly enough Alcoa’s performance did improve under Paul O’Neil’s leadership and the organization continued to be an industry leader for a long time after O’Neil stepped down.
KPI Lost work day rate “Zero”
“Lost work day rate” is a safety metric that measures the number of workers out of 100 that lost at least one day of work due to injury. In June of 1987 when Paul O’Neil started as CEO of Alcoa the Lost Work Day rate was 1.86. The industry average at the time was five (5). One of Paul O’Neil’s first meetings was with the Director of Safety. He informed the Director of Safety that Alcoa goal for safety going forward would be a Lost Work Day Rate of zero “0”.
The reason O’Neil chose Lost Work Day Rate as Alcoa’s key success indicators was that it would align the interests of all stakeholders and create a positive organizational change. Many organizations say that people are there most valuable asset. However, the follow through and delivery on this value is often absent. Making Lost Work Day Rate the key measure of success would provide a tangible way for Alcoa to demonstrate that employee health and well being are important.
Alcoa performance from 1987 to 1999 and beyond
Paul O’Neil became CEO of Alcoa in June of 1987 and retired as Chair of the board in 2000. During his tenure Alcoa continuously improved their financial performance and safety record. Paul O’Neil personal measure of success for his leadership was how the culture endured after his departure. When he first became leader in June of 1987 the Alcoa “Lost Work Day Rate” was 1.86. In 2014 almost a decade and a half after he left the organization the Lost Work Day Rate was 0.126.
CONCLUSION – EXAMPLES OF KEY PERFORMANCE INDICATORS THAT WORK
Project Apollo, Own The Podium and Alcoa focus on safety are all examples of key performance indicators that work. When you start to dig into projects or programs that work it seems like there is usually a leader(s) with a vision, a goal and a way measure continuous Improvement. The vision is backed by a BHAG (Big hairy Audacious Goal) and metrics to gauge continuous improvement. The goals are usually time bounded with specific and measurable results. Most importantly perhaps, is programs with a big vision, BHAG and excellent implementation can go on to produce long term sustainable results.