Episode 83: Performance Improvement: Why Good Enough Isn’t Good Enough Anymore

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Dr. Melissa Smith 0:00
Do you die a little inside when you hear the words performance improvement? Or worse yet performance review? Well, I hope not. I think we all know performance improvement matters, even if we don’t like thinking about it. Well, today, I hope to make it all a little bit more palatable.

Dr. Melissa Smith 0:19
Hi, I’m Dr. Melissa Smith, welcome to the pursue what matters podcast where we focus on what it takes to thrive in love and work. Wow, performance improvement, right? It is that time of year, where we’re thinking about performance improvement, we’re doing performance reviews, maybe you’re doing performance reviews, I don’t know, there’s some mixed research on performance reviews. But I’m gonna save that for another day, maybe. But today, I want to talk about performance improvement. And why good enough isn’t good enough anymore. You know, like, if we are not getting serious about performance improvement, right, we’re probably not going to be in business very long, because you’ve got to be paying attention to constantly improving and getting better. And hopefully, you want to be getting better, because you know, you want to serve more people, you want to create better products. And it’s just the right thing to do. So whether that is coming from intrinsic motivation, or extrinsic motivation, we hope that improvement, and performance improvement matters. So, we are going to focus on that today. And with today’s podcast, I also have a really good resource for you all about performance improvement to really help you dial this in. And I hope that you can use it as a resource as you move into the new year as well. And so as we get to the bottom of the podcast, I will give you the information for how you can access that resource. So I hope it can be useful for you as you move forward and really strengthen your confidence to lead as you pursue what matters.

Dr. Melissa Smith 2:34
And of course, every week with the podcast, that’s my goal is to help you strengthen your confidence to lead. And I try to do that in one of three areas, either a clarity to lead, and curiosity to lead and leading a community. And this week, in particular, I really want to help you strengthen your confidence to lead as you lead a community. And you know, that’s what we’re really focusing on. With performance improvement. It’s all about improving your teams and improving your organization and doing what works and focusing, really focusing on what matters and letting go of the rest. And that, you know, that is actually pretty good advice. When it comes to marriage. That’s pretty good advice when it comes to parenting. And certainly when it comes to our work, so that’s what we’re going to pay attention to today.

Dr. Melissa Smith 3:31
Okay, so when we think about performance improvement, and of your performance reviews, and KPI, right, the key performance indicators, we all know they’re important, but they can really make your eyes glaze over and make you wish you had a pencil to stab out your eyes. Please don’t do that. But we ignore performance improvement at our own peril. So today, I want to convince you if you don’t already, if you’re not already convinced maybe you’re already convinced that performance improvement doesn’t have to be painful. It doesn’t have to be something you or your team avoids. But it can actually be something really valuable and helpful to your organization. And of course, it really, really matters. It’s not enough to be good enough. If you want to compete and thrive in the new economy, you’ve got to get better and better. So this is a quote from William Foster, “Quality is never an accident. It is always the result of high intention, sincere effort, intelligent direction, and skillful execution. It represents the wise choice of many alternatives.” I really like that quote, I think there’s a lot of wisdom in there. Quality is never an accident. So of course you’ve got to push yourself and your organization to get better and more right like I believe you owe it to yourself those you lead The customers and clients you serve. So you need to bring your best work to bear every day. And that means you’ve got to pay attention to process improvement.

Dr. Melissa Smith 5:13
So today, I really want to focus on three principles of process improvement to really help you focus on because when it comes to process improvement, I think it’s really easy to get overwhelmed. And to just throw in the towel. And obviously, we don’t want that happening to you. So today, we’re just going to focus on three principles. And you know, they’re big enough for sure. But let’s just focus in on three principles. So I’m going to name them first just so you have them in mind, and then we will do a deep dive into each of them. So principle one is identify the standard, principle two is measure according to the standard, and principle three is provide feedback. So those are the three principles that we are going to be focusing on. So three principles of process improvement.

Dr. Melissa Smith 6:12
Okay, so let’s start with principle one, identify the standard. And with principle one, we are going to focus on three steps. Okay. So as a reminder, I bought a really great resource with this podcast. So all of these principles, and all of these steps are covered in the resource. So you don’t have to take notes, if you are so inclined, because you can just download the resource and all this will be covered on the resource. So just as a reminder, so principle one, identify the standard step one, so the first thing you want to pay attention to, what is the goal or the standard that you are aiming for? So if you don’t know what your goal or your standard is, how will you know if you reach it? And of course, how will you know if you are improving. And so here, we want to utilize the concept of first principles. And this comes to us from Ozan Varol. And, and he talks about this in his book, Think Like a Rocket Scientist, I will link to this book, in my show notes. This is a really, really great book, I have found it so useful. So think like a rocket scientist. So when we think about first principles, so this is the idea that in order to progress or improve, we must first go back to the beginning. So really, we want to think about going back to basics. And in his book Varol talks about Elon Musk. And when he decided he wanted to colonize space, and is a really fascinating story of, you know, Musk, you know, first of all, like he was flying to Russia, and he was trying to negotiate with the Russians on, you know, buying rockets, and how incredibly expensive it would have been to buy a rocket and you know, he was running the numbers, and it was just like it was prohibitively expensive. And I think it was on the flight back from Russia. He went back to first principles, right, which is this idea of going back to the beginning and just like looking at the the basics of what do I actually need to get to space? And then asking the question of like, can we can we build this ourselves. And so he actually on that flight, he used a spreadsheet, and he just started pricing out parts for a rocket right now Elon Musk is brilliant. So he priced out a rocket and figured out that he and his company could actually build it for a fraction of the cost and some examples of how they have built it. So first of all, you know, like NASA, build rockets, vertically, right, which requires this, you know, building a skyscraper to house it. And one of the things that Musk’s company has done is they build their rocket horizontally, because then they can buy or build an existing warehouse, which of course, is much cheaper than building a skyscraper to house a rocket. And that’s one small example.

Dr. Melissa Smith 9:48
Another example is for harnesses within their rocket they used they bought harnesses from I think it was either an NASCAR or some other racing. So I don’t know if it was Formula One or NASCAR. But when, and one of the one of the racing organizations, because they were very well tested, and they already existed, and it would have saved Musk a ton of money in, you know, the process of designing harnesses for their rocket. And then, for some of the handles on the rocket, they, I think they bought handles, like from, from like a home goods store. Because like, they just needed something very simple. And so, you know, the point that we’re all made with reasoning from first principles, is really getting back to discovering the way things have always been, may not be the best way for you to do them. So first principles means identifying the invisible rules that hold you back, it’s being willing to risk your significance by changing your mind, thinking like your competition, about how to put yourself out of business, and settling on the simplest solution to your problem, and then acting on it. And so his example of Elon Musk was really fascinating. And there were people initially who Musk tried to talk to in terms of, you know, getting help on building the rocket, one story in particular, the, gentleman, he tried to talk to the that musk wanted to fly to his house, and the guy did not want, he didn’t want musk knowing where he lived, because he’s like, this guy might be totally crazy. And so instead they met at, at an airport lounge in Salt Lake City, and ended up actually working together. But you know, Musk was willing to risk his significance with, you know, by thinking differently. And now, if we think about his company, SpaceX, I think, I think that’s his company, sorry, I’m, my, my husband would not be happy with me because he follows all of these launches religiously, and so on, I follow them just not quite religiously, but he would not be who’d be scolding me right now that I am not quite certain of the name of Elon Musk’s company. But anyway, and he has been so successful. And of course, there have been a lot of challenges along the way.

Dr. Melissa Smith 12:49
But first principles is this idea that you’re willing to get back to basics and rethink everything, and really looking at the simplest solution. And so is identifying the standard, what is the goal? What are you aiming for? And asking the question, if we were starting from scratch, what would we do? So it’s a fresh perspective on your system, your process and your organization? So some of the questions is there a better way to do something, so be willing to challenge convention, and especially the ways you’ve done things. And so it’s a reset from the status quo, a new way of looking at the world, your business and your project.

Dr. Melissa Smith 13:30
So the status quo This is from this is from Varol, from his book, so the status quo is a super magnet, people are biased against the way things could be and find comfort in the way things are. So isn’t that true? This, the status quo is a super magnet. So it becomes comfortable for us to stick with the status quo. But that’s not how we grow. That’s not how we improve. And so we really need to resist that pull. And the other thing is to not set our sights too low, because what might happen, we might just fly into the ground. And so are there some accepted practices or processes in your industry? That you need to question but you haven’t. So if you could change one thing about the way your business is run? What would it be? So I think that’s a really good question to ask yourself, and that might be a really good reflection for you, at the end of this year, you know, to really take some time before you prepare for some vision planning, which I would totally encourage you to do.

Dr. Melissa Smith 14:37
And I might just have a podcast coming up about that. But that you take some time, and really reflect on you know, what, if you could do something, if you could change one thing, what would it be? What are the barriers to this change? What is your biggest pain point at work currently? And do you see a solution So I think that that can be really very helpful. Because it just expands your horizon and expands your perspective. And so that is step one, what is the goal or the standard that you’re aiming for? And we want to help you reason from first principles.

Dr. Melissa Smith 15:19
And then step two, of principle one is that we want to help you identify patterns. So what is working? and for whom? And what is not working? and for whom? So I want you to consider answers according to your team members, your organization, your clients, your potential clients, and other stakeholders that you may have. And then the next question is, are you getting the results you want? And if not, right, like, what is getting in the way? And what do you understand about the barriers to your desired results. And so have some of your processes become ruts that your team or your organization gets stuck in, because that can often happen, like, we just do the same things, because we’ve kind of always done it that way. And our processes become ruts that we get stuck in. And that can be really problematic.

Dr. Melissa Smith 16:26
And then third, so this is step three, of principle one, and that is learn from outliers. So right, from statistics, we always want to pay attention to our outliers in the system, because they have a lot to teach us. So pay attention to outliers in your system. So either processes or people, right, so either can be an outlier, that fall outside of your norms. So what can you learn from your outliers? What is different, maybe they’re more effective, maybe they’re less effective. Either way, they have something to teach you. And so we really want to be very curious about what is going on with outliers. And, and you know, with this, we recognize that change culture happens from the top right, I mean, we got to lead from the front, and establishing a standard and shifting a standard must happen. And from the top. So, you know, check out my podcast next week, where I will be covering this topic in depth. So I won’t say more about that, here.

Dr. Melissa Smith 17:44
Okay, so now we want to move on to principle two of process improvement. And principle two is measure according to the standard. And so with principle two, we have three steps again, okay. So step one is to identify your metrics. So this is from James Harrington, he said, measurement is the first step that leads to control and eventually to improvement. So if you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it. Okay, so we’ve got to be able to measure according to the standard. And so with that, what I would say is measure only what is absolutely necessary. And we live in a world where we are inundated with metrics. And so my recommendation to you is decide what you absolutely must measure, and then measure the hell out of it. But this is a situation where less is more, when you have more metrics, whether at the organizational level, or the individual lever level, they, they will lose their value and their meaning. So you’ve got to resist the urge to measure everything. So you also this is related to this is bracket creep, resist bracket creep, just because you can measure it doesn’t mean you should and like I said, like, we live in a data rich world, where, you know, it’s, it’s kind of possible to almost measure everything, but it’s just too much static and too much noise in the system. Because as humans, we can only pay attention to a few things at any one time. And when you have for instance too many KPIs Key Performance Indicators, you start to undermine the effectiveness of your system.

Dr. Melissa Smith 20:09
So you’ve, you really have got to resist the tendency of measuring too much and having too many metrics for your people to be paying attention to. So of course, Steve Jobs was famous for his hyperfocus. And I’ve got a, I think it’s a really interesting story that is related to product development. But I think it also applies to process improvement. So I wanted to share it. So when he returned to Apple in 97, and it you know, Apple was producing a random, random smattering of computers and other products, including like 12 different types of Macintosh. And so after a few weeks of product review sessions, he like Jobs, like freaked out, he had just had enough. And so in one of these meetings, he just screamed, stop. And he said, this is crazy. So he grabbed a magic marker. And he padded in his bare feet to the whiteboard. And he drew a two by two grid. And this is what he said, he said, here’s what we need. And atop the two columns, he wrote consumer and pro, right, so for a professional, and he labeled the two rows, desktop and portable. And he said their job. So this was to the team members was to focus on four great products, one for each quadrant, all other products should be cancelled. And they said that in that meeting, there was a stunned silence. But by getting Apple to focus on just making four computers only four computers, he actually saved the company. And of course, one of his most famous quotes, is deciding what not to do is as important as deciding what to do. And that’s true for companies. And it’s true for products. So I would just say, right, deciding what not to measure is as important as deciding what to measure. Because, you know, after a certain point, it all becomes static and noise in the system, and it will become a drag on the system. And it will make your team members less effective. And it will undermine process improvement. And so you really got to pay attention to that.

Dr. Melissa Smith 22:46
And, and, you know, Jobs was also just so well known for his hyper focus. And so one of the things that he would do, he would have his top 100 people that he would take to a retreat every single year. And on the last day of that retreat, he would stand in front of a whiteboard, right? Like he really liked his whiteboards. And he would come up with a, you know, what are the 10 things we should do next year, and people would really fight to get their suggestions on the list because right, that was a big deal. So they would, they would come up with their list of 10 things. And right, like, they started with a lot more than 10. But they It was like a harsh process. But once they got to their list of 10 jobs would then slash the bottom seven. And then he would announce, we can only do three. So he was really, really harsh about that. And so when you think like, No, we’ve got to measure this, we got to do this, we got to do that, like you got to discipline yourself. And so these stories come from a Harvard Business Review article, which of course, I will link to. I think those are good examples of, you know, less is more. And when it comes to process improvement, like focus on what matters, measure the heck out of it. That don’t, don’t try and do too much.

Dr. Melissa Smith 24:19
And then let’s move on to step two, of principle two, which is ensure you are measuring what you want, and need to measure. So make sure you’re measuring the right thing. So right here, I want to talk about the difference between reliability and validity. Because they’re not the same thing. And a lot of times we get them wrong and it’s it’s at our own peril. So, measure is reliable when it consistently measure something over time. But here’s the thing you need to know about reliability, a measure can be reliably wrong. So you might be getting consistent results. Over time, but those results are not accurate. So you know, when someone says this measure is reliable, well, that might not necessarily be a great thing. So you’re getting consistent results, but it can be inaccurate. So it meaning it’s not measuring what it’s designed to measure. So then let’s talk about validity. So a measure is valid, if it measures what it is actually designed to measure. So if a test or a measure is, is considered valid, it is also usually almost always, also considered reliable. So the measure of validity is a higher standard than reliability, they’re independent of one another. But if you have a measure that is valid, it is usually considered reliable. So I want you to pay attention to that when you are thinking about process improvement. And when you’re thinking about KPIs, because when it comes to KPIs, it’s really, really important that they are not just reliable, but they’re also valid, you want to be able to consistently and accurately measure the KPI in order for it to be effective, right, you want to know that you’re measuring what you set out to measure. So what are the key performance indicators for the various roles, depending on the size of your organization, this can be a really big question. And maybe, you know, these are already well established. And what I would say is that this doesn’t let you off the hook. So do your due diligence and review your KPIs with your team leads and your managers, and make sure that your existing KPIs actually make sense. Because a lot of times they just don’t make sense. Sometimes, because people kind of cut corners, because, you know, newsflash, people don’t really like KPIs. And so they cut corners on them. And so you know, make sure you do your due diligence, and make it a collaborative effort. So do it with the employee did team leads and team members should do these together so that they make sense?

Dr. Melissa Smith 27:25
Okay, and then step three, of principle two, is I want to talk about the five characteristics of effective KPIs. And this comes from a really great article that I will also link to in the show notes. So you know, of course, what what you decide to measure depends on the specific roles and the nature of your business, you know, obviously, but effective KPIs should meet five characteristics. So I’m just going to review these characteristics. And hopefully that can be helpful for you. And of course, I cover all of these in the resource that goes along with this podcast. So I hope you will take the time and download the resource, and hopefully that can be helpful for you. So the first characteristic is that it’s simple, a KPI so this is from this is a quote from Jay Liebowitz, who is a business analytics expert. So he says that a KPI should be simple, straightforward and easy to measure. Amen. I totally agree with that. So he says that an effective KPI is one that prompts decisions, not additional questions. And so is the KPI. Simple. Does it make sense? Does it make intuitive sense? So he said, for example, how many customers did we add this quarter? Right? That’s super clear. That’s super simple. So can you find the information quickly and easily? Does it make sense? Is it intuitive? So or does it require an advanced degree to decipher? If so, you should probably steer clear of it. So the first characteristic is it’s simple.

Dr. Melissa Smith 29:17
The second characteristic is it’s relevant. Right? Your KPI must be relevant to your strategic priorities. So if you don’t know your vision, your mission or your strategic priorities, then you got to go back to go. Right do not pass go do not collect $200 like you, you got to go back to the start and figure out what your strategic priorities are. And so your KPIs must be relevant to your priorities.

Dr. Melissa Smith 29:54
And then the third characteristic is, your KPI must be aligned so KPIs are an outgrowth of your strategic vision, mission and strategic priorities. Right? So they should be directly connected to all of those things. And if they aren’t, you got to reconsider them. So when you look at the KPIs, can you see how they are bridged to your vision, and your mission and your strategic priorities, you should be able to make that link very easily. And, of course, you don’t want your KPIs to undermine your strategic vision, or to be at cross purposes, with other divisions. And so of course, this is where you want to be very aware of your reward system. So you know, check out my recent podcast on rewards, I just did that very recently. I will link to it in the show notes. Because of course, you don’t want to be looking to reward one thing and recognizing that you’re actually rewarding something else. But KPIs must support the overall strategy of the organization.

Dr. Melissa Smith 31:12
And then the fourth characteristic of an effective KPI is that it’s actionable. For sure. I mean, a KPI is all about action. It’s the behaviors. So why do KPIs exist? They’re not. So managers have something to talk about during end of year performance review. So you know, this is where you would have permission to gouge your eyes out if you were so inclined. I mean, don’t do that, for sure. Don’t do that. But that’s not what KPIs are all about. They what’s the purpose, right, they should drive action toward the strategic vision, they should help team members see how to take effective action toward a goal. So the other thing about KPIs is, you know, we want to have realistic goals that don’t set teams up to fail, or result in demotivation, right? So we want to have, we want to have targets that really fit with the strategic vision, but we want them to be realistic as well.

Dr. Melissa Smith 32:21
Okay. And then the fifth characteristic of an effective KPI is that they are measurable. And of course, this one’s also really important, because how do you track progress if they’re not measurable? So you’ve got a specific focused outcome. And here’s the thing about KPIs. It is okay, to include both qualitative and quantitative measures and outcomes. I think sometimes where people get a little bit tripped up is they believe that KPIs should only be quantitative. And I think that’s actually not very realistic. And so including both qualitative and quantitative measures and outcomes is very appropriate. And you know, there are great ways to do that. So those are the five characteristics, I will just review those really quickly. So simple, relevant, aligned, actionable, and measurable. And of course, I will cover all of those in in my resource that goes along with this podcast.

Dr. Melissa Smith 33:33
Okay, are we ready for the third principle of process improvement. So as a review, the first principle of process improvement is identify the standard. The second principle is measure according to the standard. And then the third principle, which we will cover right now is provide feedback. And of course, there are three steps here with providing feedback. So step one is provide feedback that is specific. That’s so important. So a good KPI will help team members take action in their roles. And then from there, make sure your feedback is specific. So what do team members need to know in order to be successful in their roles? So do they understand what the KPIs mean for them in their role, like you’ll be surprised like sometimes they don’t really know exactly what that means. And so be willing to clarify and make sure that they know like, it might be crystal clear to you, but not to them. So when in doubt over communicate. You may wrongly assume that team members know what the KPI is and why it matters and you may be wrong. So, you might need to revisit the simplicity characteristic above. So, you know, especially if you came up with it, you’re like, this is so clear, this is awesome. And you might be wrong.

Dr. Melissa Smith 35:07
Okay, and then step two provide feedback that is actionable. So provide feedback that team members can take immediate action on, what can they do to improve? What would that look like? How is the feedback directly related to the KPI? If not, why not right? Like if that feedbacks not related to the key KPI, why not? What does improvement look like, paint them a picture, help them understand what improvement will look like, and clarify the concern or the gap as needed.

Dr. Melissa Smith 35:42
And then the third step, provide feedback that is timely. So linking feedback in time to the behaviors is always the most effective approach, if you’re actually interested in seeing behavior change. So saving feedback for end of year reviews is almost completely pointless. So these performance reviews at the end of the year, and if that’s the only time or the main time, that you are giving feedback, it is a waste of time, you’ve got to get you’ve got to link feedback in time to the behaviors. So if feedback is to be effective, it must be timely, so that team members can act on it and integrate the learning. Like that’s the main thing, like they’ve got to be able to integrate the learning. So if it’s given long after the incident, there is going to be really low motivation, or even connection to the change. So the chances of them integrating that learning is very, very low.

Dr. Melissa Smith 36:47
So again, with the third principle, provide feedback we want there three steps, we want to provide feedback that is specific, actionable and timely. And that’s so important when it comes to process improvement. Because how can people change and improve if they don’t have the feedback they need in order to improve? And how can there be process improvement if there’s not that feedback, so don’t forget, I have a really great resource that that spells out all of these principles in detail and really gives you some some very good earth reflection questions to help you as you consider your process improvement in your organization. And I think this actually is a really good process for you to go to go through as you prepare for vision planning for the next year. So that’s what I would recommend, as a way of kind of preparing yourself for the new year.

Dr. Melissa Smith 37:58
So I hope that you will consider downloading this resource and so the way that you can do that is by heading on over to my website, and you can check out the show notes and then of course, access the resource there www.drmelissasmith.com/episode-83 one more time, that’s www.drmelissasmith.com/episode-83. I’m Dr. Melissa Smith. Remember love and work, work and love. That’s all there is. Until next time, take good care.

Transcribed by https://otter.ai