Volume No. 61

A Consultant's Pursuit of Simplicity

One of my biggest "pet peeves" lately is the degree to which the consulting industry, including many of my peers for whom I have the greatest respect intellectually, are tending to gravitate toward the complex solutions, over the simple and more powerful INSIGHTS that our clients demand. At the risk of offending some within my industry, it's a problem worthy of some straight forward discussion, and one in which even the best management advisors (including those who "advise from within," i.e. internal consultants and change managers) can stand to learn a great deal from.

Nowhere is this more prevalent that in the discipline of Performance Management. I'm referring here to all phases of PM including defining, measuring, benchmarking, analyzing, reporting, and improving organizational performance. Many of those in the consulting profession are, by trade, Engineers, Accountants, Economists, and Statisticians. And while all of these disciplines are essential to good business, it is often their very nature to opt for the more intellectually robust answers to even the most simple of business problems.

One of the areas most affected is (and what should be) the SIMPLE process of defining and reporting on Key Performance Indicators (KPI's) within the enterprise. I've had the opportunity most recently to develop these types of frameworks in the Utility Sector – an industry which is most heavily dominated by very analytically sophisticated engineering. In a recent review of Utility Industry PM scorecards and KPI's at over two dozen organizations, I saw numbers that ranged from a low of 12 KPI's inside of a very tight architecture, to a high of over 400. After all, they are called KEY performance indicators for a reason, right?

Of course, it is important to look at the problem in the right context. If, in fact, the organization reporting 400 KPI's had them all sitting inside of a tightly aligned "architecture," I could be convinced that they were in fact on the right path. But reality shows companies with the highest volume/number of indicators often have the weakest structures within which these measures are managed; and as a result have little "line of sight" between what is important to the organization, and the metrics they manage to.

All of us have heard the adage of "analysis paralysis" – the process of getting so lost in the numbers that we lose sight of the forest by only seeing the trees. Sure, we have our 10 layered, drill down analyses and sophisticated multivariate regressions with super high predictive values, but does the guy in the bucket truck at the "work-face" really understand what it all means? We have the most sophisticated models but we've sacrificed the most important variable – the connection with the job that needs to get done on the front line.

To add insult to injury (and the core of my frustration), it is that the vast majority of business consultants often bring MORE complexity to a client who already has an overly complex way of managing their business. These clients don't need more analytical models or more layers of analysis in their performance management system, they need less! Ironically, it is the simplest of frameworks that deliver the most insight.

So what can us consultants and executive advisors do to drive this type of simplicity into our client offerings and deliverables. Here is a short list of things we can do, particularly in PM space, to stop us from going down the proverbial slippery slope:

1.   Focus on the enterprise outcome at hand and link everything to that – purge your client's KPI list of all those random measures that would mean nothing to an executive of the business. In other words, make a distinction between KPI's and what might just be random data elements or input variables.

2.   Focus on PM insights and conclusions. Don't overwhelm your client with overly complex analytic or economic models. Rather, steer toward the answer with a handful (2-3) supporting justifications. Summarize the result of your analysis without bringing them through all of your analytic machinations.

3.   Shoot for directional cues, not analytic precision. 90% of the insights you generate for your client can likely be drawn from 20% of the effort you put you and your team through. For example, where factors can be assessed using scales of high, medium and low, then opt for that rather than trying to develop more complex normalizers or coefficients to make the same point.

4.   Make your analysis approach simple enough that the client can follow your path, and replicate the analysis himself if he wants to. For example, design your models around 3-5 high impact variables versus 50 smaller ones.

5.   Focus your PM framework on outcomes, not activities. If you look carefully at what your client calls key metrics or KPI's, you're likely to find that most of them are oriented around activities and project milestones, not result indicators or business outcomes. Keeping the two separate will allow you to assess causal impacts between initiatives and outcomes, rather than cluttering up your PM framework/system with a mix of both.

6.   And where you can, price your projects on value, not man-hours. The larger consulting firms will have the biggest problem with this since they are all focused on amassing huge amounts of billable hours, where complexity is your friend. Trust me, your client is waiting for someone to turn this model on its head. The faster you do that, the more competitive advantage you'll have.

So, in the spirit of simplicity, all of this can be summed up by adopting the age old adage of K.I.S.S. (keep it simple stupid), and using that as your guiding principle. Of course, the most pedantic, intellectually sophisticated, and complex thinkers among us will most certainly have a different view on this. But that's the whole point isn't it?

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held international management consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services. UMS Group has consulted with hundreds of companies across numerous industries and geographies. Visit UMS Group at http://www.umsgroup.com or contact us directly at 973-335-3555.