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The performance measurement manifesto.
1Harvard Business School.
Harvard Business Review
|December 10, 1990
Summary
Business success relies on nonfinancial metrics like quality and innovation, not just financial data. Implementing new performance measurement systems requires strategic planning, technology, and leadership commitment for long-term competitive advantage.
Area of Science:
- Business Strategy
- Performance Management
Background:
- Traditional financial data alone is insufficient for predicting business performance.
- Nonfinancial metrics such as quality, customer satisfaction, and market share offer better insights into economic condition and growth prospects.
Purpose of the Study:
- To highlight the importance of nonfinancial performance measures.
- To outline the essential activities for implementing new performance measurement systems.
Main Methods:
- Developing an information architecture.
- Implementing supporting technology.
- Aligning incentives with the new system.
- Leveraging external resources.
- Establishing an internal process for system implementation.
Main Results:
- New technologies and advanced databases make nonfinancial performance measurement systems feasible.
- External organizations can support the adoption of these systems.
- Successful implementation requires careful preparation, perseverance, and CEO commitment.
Conclusions:
- Shifting to nonfinancial performance measurement is crucial for future business success.
- Companies demonstrating superior nonfinancial performance can redefine industry standards.