Managers now have access to a plethora of business performance data to help them understand how well their companies are going, and to keep strategic priorities on track.
But does all this data really lead to better decisions?
Some managers are happy with the benefits of their performance management approaches, while others still struggle to maximize their use of data to guide business decisions and help them manage performance.
I’ve developed a business performance management (BPM) maturity model to explain the differences between companies that merely compile data and those that thrive from it.
At the lowest levels, companies have very little data. They collect and report data in uncoordinated ways, and generate few (or zero) real benefits from it. On the other hand, companies at high maturity levels reap enormous benefits from their data by using it to inform operational decision-making and make predictions for the future.
BPM Maturity Model
How advanced is the business performance management level at your company? Examine the seven levels of BPM maturity to make your assessment and figure out your next steps.
Level 1: No data
At the lowest level of BPM maturity, a company has little to no performance data supporting management decision-making. Some SMBs in traditional industries may be at this level because they’ve never created the systems for properly collecting and reporting data.
Level 2: Data and facts
At this level, companies have some facts and data – and management recognizes that data can be useful – but the collection and usage of these data are uncoordinated and inconsistent. A lack of systems for collection, analysis, and reporting of data leads to isolated, ad hoc insights, but very ongoing decision support.
Level 2 companies often create more confusion than ever, because the data isn’t generated in an organized or consistent fashion.
Level 3: Information
This is a very common level of BMP maturity. Companies have more structured approaches to collecting and reporting data, and the data is more relevant.
Companies can produce regular performance reports and dashboards to support management decision-making. These reports and dashboards provide some useful information, but true insights for decision-making are still limited. Companies often collect the wrong data, or have data quality issues.
Level 4: Operational insights
At this level, companies start to generate real value from their data. They use performance data in coordinated ways, generating new insights that improve operational decision-making. Managers collect, analyze, and report operational performance data such as internal efficiency or quality performance data to improve and optimize the way they operate.
However, the focus is on the operational aspect of the business. The scope of the insights is often limited to a single business unit or operational silos, like finance, marketing, or supply-chain performance. Information silos like these can create disconnects between strategy and operations.
Level 5: Strategic insights
At Level 5, companies recognize the importance of relevant data to support decision-making and are able to gain insights from their data – and they also collect, analyze and report strategic performance data such as high-level performance reports and board-level dashboards.
Strategic insights are delivering slightly more business benefits than just operational insights, and therefore this is a higher level of maturity than Level 4. However, companies that don’t link performance data to operational decision-making can create a disconnect between the strategic direction of the business and what operations delivers to achieve it.
Level 6: Strategic and operational knowledge
Companies that reach Level 6 use relevant performance data in a coordinated way to gain new knowledge, leading to improved operational and strategic decision-making. Every level of the business recognizes the importance of data, and data generates a high level of business benefits both operationally and strategically.
The companies at this level create a tight link (both top-down and bottom-up) to ensure operational performance information feeds into strategic performance information. Then the strategic performance insights feed into what operational performance data are used.
The only difference between this maturity level and the highest one is the time focus – at Level 6, most of the data are backwards-looking and focuses on reporting past performance rather than future predictions.
Level 7: Strategic foresight
Companies at this level have evidence-based decision-making as part of their corporate DNA. Level 7 organizations use relevant performance data at all levels to make operational and strategic decisions, and to develop strategic foresight and predictions for the future. Predictive analytics and scenario-mapping are common practices among Level 7 companies.
Companies at this highest level of performance management maturity know the value of data, and exploit their data to generate ongoing competitive advantages in all areas of their business.
To find out more about how to measure, report, and manage progress so you can improve performance, check out my related articles.