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 The Performance Prism
(Cranfield University)
is an innovative second generation performance measurement and management
framework. Its advantage over other frameworks is that it addresses
all of an organisation’s stakeholders - principally investors,
customers & intermediaries, employees, suppliers, regulators and
communities. It does this in two ways: by considering what the wants and
needs are of the stakeholders are and, uniquely, what the
organisation wants and needs from its stakeholders. In
this way, the reciprocal relationship with each stakeholder is examined.
The five facets of
the Performance Prism:
1. Stakeholder Satisfaction
2. Stakeholder Contribution
3. Strategies
4. Processes
5. Capabilities
These five perspectives are distinct,
but logically interlinked.
Philosophy
The Performance Prism is based on
the belief that those organisations aspiring to be successful in the
long term within today’s business environment have an exceptionally
clear picture of who their key stakeholders are and what they want.
They have defined what strategies they will pursue to ensure that value
is delivered to these
stakeholders. They understand what processes the enterprise requires if
these strategies are to be
delivered and they have defined what capabilities they need to execute
these processes. The most
sophisticated of them have also thought carefully about what it is that
the organisation wants from its
stakeholders – employee loyalty, customer profitability, long term
investments, etc. In essence they
have a clear business model and an explicit understanding of what
constitutes and drives good
performance.
 Approach: Starting with Stakeholders, not with
Strategy
According to Performance Prism
vision, one of the great fallacies of performance measurement is
that measures should be derived from strategy. Listen to any conference
speaker on the subject. Read any management text written about it. Nine
times out of ten the statement will be made – “derive your measures from
your strategy”. This is such a conceptually appealing notion, that
nobody stops to question it. Yet to derive measures from strategy is to
misunderstand fundamentally the purpose of measurement and the role of
strategy. That's why the Performance Prism starts its process with
thinking about the Stakeholders and what they want.
Five key questions for measurement design:
1. Stakeholder Satisfaction – who are
the key stakeholders and what do they want and need?
2. Strategies – what strategies do we have to put in place to satisfy
the wants and needs of these key
stakeholders?
3. Processes – what critical processes do we require if we are to
execute these strategies?
4. Capabilities – what capabilities do we need to operate and enhance
these processes?
5. Stakeholder Contribution – what contributions do we require from our
stakeholders if we are to
maintain and develop these capabilities?
Complexity and the
Prism
The
history of Value Based
Management is basically a history of increasing complexity. A prism
refracts light. It illustrates the hidden complexity of something as
apparently simple as white light and decomposes it in its elements. So
it is with the Performance Prism. It illustrates the hidden complexity
of our corporate world. Single dimensional, traditional frameworks pick
up elements of this complexity. While each of them offers a unique
perspective on performance, it is essential to recognise that this is
all that they offer – a single uni-dimensional perspective on
performance. Performance, however, is not uni-dimensional. To understand
it in its entirety, it is essential to view from the multiple and
interlinked perspectives offered by the Performance Prism.
Compare:
Balanced Scorecard |
Strategy Maps
| Value Mapping |
The Strategy- Focused
Organization |
Intangible Assets Monitor |
IC Rating
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