performance. It is in this context that we are introduced to the concept of the Effective Frontier, the goal of maximizing corporate performance by measuring and managing selected metrics simultaneously, not individually. We also learn the critical difference between efficient and effective, a distinction all but lost in many companies.
If the text stopped here, it might be worthy of consignment to the shelf labeled Interesting Academic Ideas. Fortunately for the reader it is only the beginning. For it is in fleshing out the what, why, and how of Metrics That Matter that the book truly shines. It is based, first and foremost, on a three-year collaborative effort of Lora and researchers at Arizona State University. The results – presented effectively and at an appropriate level of detail – are startling: industry leaders who are not really leading, accepted practices worthy of the discard pile, conventional wisdom debunked. Along the way we learn what works, what does not, and, most important, why.
For the rest of the book we are drawn into the change process of the company, as the consultant (Lora) gradually introduces new concepts and overcomes the inevitable – sometimes fierce – resistance. This focus on change is one of the most important contributions of the story and, once again, it does not disappoint. For impressive though the research data may be, extensive use of individual case studies and interviews serve to really close the deal. And these are cases with real company names, not some abstract “Company A.” There is more than enough evidence to convince even the most skeptical of readers. Finally, Lora emphasizes a critical component of change: the criteria by which we measure, evaluate, compensate, and promote individuals must be revamped as well, lest the silos live on.
There really is a way forward from the morass of supply chain management. Entrenched behaviors are not modified easily. We have unwittingly been chasing either the wrong metrics or the right ones in the wrong combination. But Lora very convincingly shows us that one of Murphy's corollaries is not universally valid: the light at the end of the tunnel need not be the headlight of an oncoming train. Rather, we see in the distance the prizes of substantially improved performance and competitive position. Lora shows us the way to get there via one of the most creative approaches that I have had the pleasure of reviewing in a long time. That is indeed a substantive contribution.
Preface
Over the past decade, good business practices did not become great. Scorecards were difficult to balance, and leadership teams struggled to evolve. Today, executive boards are disappointed. Even though companies have spent 1.7 percent of revenue on improving technology, they have not been able to maximize the value that they were expecting to earn in the information economy.
In our research, we find that 9 out of 10 companies are stuck. Growth has slowed, and progress on operating margin and inventory turns is difficult. The answers are not as easy to find as promised.
In this book, we tell the story of a leadership team struggling to make progress. The story is fictional, but the characters and the dialogue are a composite of the teams that we have worked with over the past three years. This team, like many that we work with, finds itself seeking the answers to many questions:
• What drives value in a value chain? What is value? Different industries have matured at different rates. What can we learn?
• How do companies maximize value? Which portfolio of corporate metrics maximizes market capitalization and cash flow?
• How do we move forward? The book is the story of a leadership team finding its way.
Each chapter in this book is written to answer specific questions. The goal of Chapter 1 is to answer the question, “How does a company start the journey?” Chapter 2 answers “How do you build a guiding coalition to drive change?” Chapter 3 introduces the concepts of value networks and how metrics can be improved by working collaboratively with trading partners. Chapters 4 through 8 highlight how individual companies have successfully aligned operational strategies to improve corporate results and answer the question of “What is possible?” In each chapter, to make the case, we share research and case studies to give new perspectives on how other companies have worked to drive alignment, balance, and resiliency to improve corporate results.
By analyzing the trends of corporate performance over the period of 2006–2013, in the story, we share insights on the strength, balance, and resiliency of industry peer groups. In the creation of the book, we have developed a methodology to evaluate which companies have been able to deliver the greatest value. More important, we have begun to understand the stories behind these patterns of performance. This analysis is based on three years of research on corporate performance. The reader will gain insights on the management of the value network as a complex system.
Leadership teams want to understand what is possible, and what maximizes value. They want to evolve and mature. Organizations are seeking a road map. Here we provide it. It is our hope that this book can help organizations maximize value and harness the true value of the information economy.
Acknowledgments
Writing a book is easier said than done, but there is nothing better than smelling fresh ink when you crack the cover of a book that you have completed. While my name is on the front cover, this book would not have been possible without the efforts of a team.
This book took two months to research and a year to write. I owe a debt of gratitude to my team at Supply Chain Insights, who toiled tirelessly on this book. To Regina Denman, my friend and colleague, I give thanks for wrangling the corporate schedules of executives for case studies and interviews.
The story is based on a deep research effort with many starts and stops. I am appreciative for the work of Abby Mayer and Heather Hart. It took many long hours to build the research, refine the graphics, and finalize the work on the Supply Chain Index. I know that it was not easy, and I am thankful for your dedication to see this mission to completion.
I find it easier to type endlessly at my kitchen table than to follow style guides and punctuation practices. Every writer appreciates a good editor, and I am appreciative to Michael Hambrick and Jill Smith for their many, many hours of proofreading and editing. They were an awesome team and I am grateful for the many hours of training on writing styles.
Each chapter of this book was written and rewritten four to five times. When I was stuck (which was often), I would beg friends to read a chapter and give me suggestions. The manuscript was written first as a nonfiction textbook; but, at the urging of my friend, Eric Treworgy, I rewrote the story to give it life through a narrative point of view. This resulted in a four-month delay and a complete rewrite, but I think that the book is a better read as a result. I give thanks to Eric for giving me the courage and inspiration to build the characters that come alive in the chapters that follow.
As a new writer, it is hard to write a book. I am appreciative to Angela Tavares of Here Booky Booky for her coaching on narrative style and her guidance on character development. Everyone needs a good coach and her help was invaluable.
Finally, in the middle of a project like a book, everyone needs a good laugh. Lenny Barlow kept me grounded and laughing through the 140,000 words.
I give thanks to all. It took a team! I hope you enjoy the read.
Chapter 1
Starting the Journey
Energy filled the room, and excitement reigned. The global team was gathered for this February meeting. It was the beginning of a new year. Many of its members had worked together for years, but never met face
