The Vanguard approach is to derive an operation’s measures from its purpose.
There are two broad types of purpose:
The first is where we may have some intent: The purpose is to sell things to customers or perhaps to win business through responding to requests to tender, or even to change peoples’ meters from one type to another.
The second is where it is the customer who has intent – the customer would like us to create value for them; perhaps by servicing their appliance, solving a housing problem or giving them a loan.
In either case we should use measures of achievement of purpose to improve our ability to understand and improve what we do.
While many managers would not baulk at the first – e.g. measuring sales – they often baulk at the second, thinking that if we set out to give customers what they want costs could only rise. They couldn’t be more wrong.
Many convention measures are derived from the budget. Is that a useful purpose? Achieve budget?