PI Models: From "Performance Improvement" to New Business and Value Creation

We can classify the multiple PI/HPT models –more than 46 according to current research[1]- into three main categories according with their focus and scope[2]:

• 1.       Individual performance models –such as Gilbert´s BEM (popularly known as the “Six Boxes”), Mager´s performance analysis algorithm, Langdon´s Language of Work (LOW) or Spitzer´s context of work considers individual workers as the unit of analysis.
• 2.      Organizational performance models – such as Rummler´s Anatomy of Performance (AOP), Brethower´s Total Performance System (TPS), Tosti, Carleton and Lineberry´s SCAN, or Addison, Haig and Kearny´s Performance Architecture (PA) makes process and functional performance their unit of analysis.
• 3.      Strategic, societal performance models – such as Kaufman´s Organizational Elements Model (OEM) analyze single or multiple organizations´ performance in the market, as part of business and social ecosystems from the perspective of the value added (or subtracted) to customers, employees, investors and other stakeholders.

In the real world, most performance problems have multi-level causes and consequences, and require the collaboration of multiple specialists as multi-disciplinary teams.

A review of the models and disciplines involved in more than 60 projects and organizations – summarized in Figure 1 (Bernardez, 2006) -, shows that improving performance to create value for customers and internal stakeholders involves connecting external and internal factors and multiple HPT and non-HPT models.

Developing worthy[3], value-adding performance starts by analyzing external, strategic factors  defining results –what is to be accomplished-. Multiple HPT and non-HPT models are required to identify markets, clients and stakeholders’ needs –defined as gaps between current and desired results- and define strategic, business and marketing plans.

Once the strategy is defined, multiple HPT and non-HPT models and tools must be combined working inside the organization to deliver tactical and operational performance, dealing with internal factors addressing how to get the desired results.

Individual performance models

Individual performance models –such as Gilbert’s classic Behavior Engineering Model –BEM- (shown in Table 2) - are quite helpful in understanding and optimizing performance at the job level –the level of the individual worker-.

Table 2: The behavior engineering model (Gilbert, 1978)

	S₫ Information	R Instrumentation	Sₓ Motivation
E – Environmental supports	Data 1.       Relevant and frequent feedback about the adequacy of performance 2.      Descriptions of what is expected of performance 3.      Clear and relevant guides to adequate performance	Instruments 1.       Tools and materials of work designed scientifically to match human factors	Incentives 1.       Adequate financial incentives made contingent upon performance 2.      Nonmonetary incentives made available 3.      Career-development opportunities
P – Person’s repertory of behavior	Knowledge 1.       Scientifically designed training that matches the requirements of exemplary performance 2.      Placement	Capacity 1.       Flexible scheduling of performance to match peak capacity 2.      Prosthesis 3.      Physical shaping 4.      Adaptation 5.      Selection	Motives 1.       Assessment of people’s motives to work 2.      Recruitment of people to match the realities of the situation

Organizational performance models

A few years later, Gilbert’s former business partners, Geary Rummler and Dale Brethower, took the entire approach to performance analysis and improvement several steps further in the systemic direction, noticing that using Gilbert’s BEM model frequently led to optimize individual workers’ performance at the expense of process and organizational performance.

If each worker were allowed to “improve” his/her own activities at the job level based on Gilbert “Six Boxes”, regardless of other co-workers working ahead, before or while collaborating in a shared work process, their collective performance would experience a noticeable setback –as it would happen if each rower in a coxed four were to row at his/her own pace and rhythm-.

Rummler’s and Brethower’s[1] Anatomy Of Performance –AOP- model started by envisioning three levels of performance –nested one into and under each other-: job level, process level and function level –as shown in Figure 1-

 Figure 1: Three levels of performance (Rummler & Brache, 1995)

From (Bernardez, 2006)

Rummler’s AOP model analyzes performance in three levels –job, process, organization- and at three levels of “performance needs”: -goals, design, and management- considered from a performance management perspective.

Table 3: Geary Rummler’s organizational “nine boxes” (Rummler & Brache, 1995)

		Performance needs
		Goals	Design	Management
Performance level	Organization level	Organization objectives & indicators n   Macro n   Micro	Organization design n   Macro n   Micro	Organization management n   Macro n   Micro
	Process level	Process objectives & indicators	Process design	Process management
	Job level	Job and task objectives & indicators Resources levels & requirements	Job and task design Resources allocation system	Job and task management Resources management

Rummler & Brethower’s matrix includes at the lowest level all key elements of Gilbert’s BEM models, although not organized in Six Boxes[2].

Strategic, societal performance models

Although Rummler/Brethower’s AOP and Tosti/Carleton’s SCAN include references to the societal context considered as the “supra-system”, their models do not pay such prior intense attention to societal performance as Roger Kaufman’s Organizational Elements’ Model – OEM- does.

Kaufman’s model –later reframed as part of his Megaplanning methodology- focuses on the planning process, particularly in differentiating the true “strategic” part –represented by Mega-level, societal results driven by a Minimal Ideal Vision (MIV)[3] of the future- from “tactical” levels such as benefits for the organization –Macro- level goals such as revenue, market share or profit- and “operational” –which for Kaufman starts at the “outputs” (products or services) level or Micro-level and includes Activities[4]- and Resources –defined as inputs for Activities-.

Figure 2: Organizational Elements Model –OEM- (Kaufman, 2006)

Kaufman’s model focuses on establishing vertical alignment between strategic, tactical and operational results. Such alignment is –according to Kaufman- the only way to guarantee delivering actual value to external stakeholders, keeping the organization useful and focused.

Kaufman’s OEM model provides a uniquely helpful guide to align all internal elements –after all, organizations are not ends unto themselves, but means to achieve results and produce value- and make sure that our sequence of definitions follows an “outside-in”, “top-down” order rather than the other way around.

Using Kaufman’s OEM as a “builder’s plumb”-to continue with the home improvement analogy-, we can keep our performance improvement efforts honest and aligned with results and actual value for external stakeholders and the survival of the organization.

Integrating Kaufman’s OEM, Rummler & Brethower’s AOP and Gilbert BTE as shown in Table 4, we can connect and align the three levels of PI models and get a complete, systemic “blueprint” of what is involved in change and its probable impact in the organization’s overall performance.

Table 4: Aligning models: multi-level framework

Level	Objectives Goals, standards & indicators	Design “How to”, programs	Management Implementation, control
Societal/External(Mega) n   Community n   Clients n   Market n   Suppliers n   Value chain	Mega objectives & indicators n  Community n   Market n   People n   Suppliers	Social & organizational plan strategic directions related to n   Community n   Market n   People n   Suppliers	Social and regional management n   Market n   Policies n   Regulations
Organization n   Macro (org. results) n  Micro (products)	Organization objectives & indicators n   Macro n   Micro	Organization design n   Macro n   Micro	Organization management n   Macro n   Micro
Processes n   Internal services	Process objectives & indicators	Process design	Process management
People & resources n   “Six boxes” n   Individual performer	n  Job and task objectives & indicators n  Resources levels & requirements	n  Job and task design n  Resources allocation system	n  Job and task management n  Resources management

Combining models to create new business

Developing new organizations from the “kitchen table” to the market required also to align and adapt traditional performance improvement models and tools –developed to help existing organizations at a mature stage- with the requirement of the different stages of organization development,

Another application of the multi-model “adapter” matrix developed in by the PII Faculty team working in collaborative online and on site sessions in Sonora, Tucson, Chicago and Albuquerque[1] helped combine the specific strengths of different models in developing new organizations along the stages of planning, incubation –developing the organization- and acceleration -placing the new business in the market-

Figure 2:  PII multi-model process “roadmap” for developing new organizations from the “kitchen table” to the marketplace

  

Using the multi-model adapter as a process “roadmap” the PII Faculty and students identified the specific tasks and deliverables required for each stage and aligned the HPT and non HPT models better suited to produce them.

Table 3 shows the HPT and non HPT models utilized, organized following the three stages of new business development:

Table 3: Combining different HPT and non-HPT models in the real world (the ITSON case)

Stage	Deliverables	HPT (and non-HPT) models applied
Planning	·         Strategic plan (Vision, Mission, SPI) ·         Business Case (Top line, Bottom lines) ·         Marketing plan (Value proposition, client experience, Competitive model) ·         Organizational Design (high level)	·         OEM (Kaufman, 2006) ·         Double Bottom line business case (Bernardez, 2008, Volume 1, Number 1) ·         Value proposition (Anderson, Narus, & van Rossum, March 2006) ·         Client experience model (Bernardez, 2008) ·         Competitive strategy model (Prahalad & Krichnan, 2008) ·         AOP (Rummler & Brache, 1995)
Incubation	·         Organizational Design (detail) ·         Value chain design ·         Key process design ·         Management system ·         Work level-design and individual competences ·         Training design & delivery	·         AOP (Rummler & Brache, 1995) ·          Organizational SCAN (Tosti & Jackson, 1997) ·         Value chain design (Rummler, 2004) ·         AOP (Rummler & Brache, 1995) ·         TPM (Brethower, 2007) ·         BEM (Gilbert, 1978) , Performance Improvement algorithm (Mager & Pipe, 1970, 1983) ·         ISD/ADDIE , e-performance (Bernardez, 2003), EPSS (Gery, Electronic Performance Support Systems (EPSS), 1992)
Acceleration	·         Brand development ·         Market development	·         Brand architecture and engineering model (Bernardez, 2008) ·         Ecosystems model (Prahalad C. .., 2005) (Bernardez, 2009) ·         Clusters development model (Iansiti & Levien, 2004)

Combining different models actually helped both to enrich and accelerate the collaborative process, since each one of the key HPT and non-HPT models had a long and solid track record along decades or application to a variety of organizations, was supported by detailed documentation and tools customized to a variety of industries such as those of the 34 new organizations to be developed through the PII program.

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[1] This multi-model business creation process “roadmap” was developed in collaborative sessions in Tucson (2006) by Geary Rummler, Dale Brethower, Roger Kaufman and the author. The last time we met Geary at the ISPI Fall Conference in Albuquerque, shortly before his lamented passing away, he presented to us the first drafts of yet another combination of OEM and AOP models he have been working on.

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[1] According to their own report, Geary Rummler and Dale Brethower started expanding and questioning the primitive BEM model during their years of research together, and after parting for decades –Rummler to consulting, Brethower to academia- developed two models AOP and TPS that were in essence variations of a common one. They re-baptized it Anatomy of Performance –AOP- and have been working later years associated at ITSON with AOP.

[2] Alhtough Gilbert’s BEM formulation separates “environmental control” factors –see Table 2-, these are considered as part of the “job context” as in a “job description”. The AOP model goes much further by differentiating “job conditions” such as these from process and organizational levels.

[3] For a complete description of Kaufman’s  MIV see Kaufman’s Change, Choices and Consequences (Kaufman, Change, choices and consequences: a guide to Mega thinking and planning, 2006) or Bernardez’s Tecnologia del Desempeno Humano (Bernardez, 2006)

[4] Kaufman’s”Activities” are a  more general equivalent  to what AOP defines as organization and process levels

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[1] (Kaufman, Thiagarajan, & MacGillis, THe Guidebook for Performance Improvement: Working with individuals and organizations, 1997) (Dean & Ripley, 1997) (ISPI, 2006)

[2] The models mentioned in each category are the most widely known and applied in each category of performance.

[3] (Gilbert, 1978)

Decoupling

Professor Thales Texeira, from Harvard Business School presents and discussed the concept of decoupling in his latest book: "Unlocking the Value Chain: How Decoupling Drives Consumer Consumption" (2019).

Teixeira defines decoupling as "breaking apart the chain of consumption". 

Consumers decouple products and services constantly, seeking to:

1. Optimize their user's experience (UX), by eliminating, simplifying or replacing non value-adding activities, 
2. Reduce cost; 
3. Increase performance;
4. Increase satisfaction and/or  
5. Solve problems by re purposing or re framing the original products or services.

Large dominant companies usually sell or deliver their products and services bound in "packages" of a series of activities that consumers have to go through along their customer and user experience (UX): 

"Traditional companies in these industries have enabled customers to conduct most if not all consumption activities in partnership with them as customers go about acquiring goods and services. These companies bind together as a single “chain” all the steps that consumers undertake in order to acquire products and services. In today’s new wave of disruption, upstart firms are breaking apart these chains, offering customers the chance to fulfill just one or a few activities with them, and leaving incumbents to fulfill the rest. I call this process of breaking apart the chain of consumption “decoupling."

It all starts with a large, dominant company offering a long and complex package of services "all in one" to customers. 

Teixeira exemplifies this process with the cases of Best Buy and Amazon, TV networks and Netflix, News and Facebook.

"Customers could purchase goods from Amazon, while turning to traditional retailers as showcases for discovering products and educating themselves about them. Netflix broke apart the chain of activities by which customers consumed video entertainment, offering only the delivery of content, while leaving it to telecom operators to provide investment- intensive infrastructure for customers to connect their households to the internet.

Facebook targets and distributes news. But it doesn’t produce the news itself— traditional news organizations and users do. These disruptive companies, and many lesser- known firms that we’ll analyze, all deploy innovative technologies, but they use technology to enable their business models. The business models themselves represent the true innovations."

One of the most popular and impactful forms of decoupling is "show -rooming",  or the process of separating exploration of the product from comparing and purchasing it. Consumers still go to Best Buy or Home Depot stores to look at the products or get ideas but don't buy the product at the stores. They only explore it and then go online to Amazon to compare and buy.

Amazon has successfully captured customers from Best Buy, in the same manner than Best Buy captured clients from Macy's or other less specialized department stores. 

Decoupling requires looking at the value chain from the consumer's perspective and explore five main stages or segments that can be "captured" or separated to maximize the user experience:

1. Searching for, 
2. Evaluating, 
3. Purchasing, 
4. Using, and
5. Disposing of products.

Disruptive innovators such as Expedia, AirBnb, Uber, Amazon, ZipCar or UPS stores are examples of companies that offer a better experience and value to customers by improving the segment that provides more value to them.

Using a car, for example, can be separated from owning it by renting it through ZipCar or just hiring a ride with Uber. Each one of these options might maximize the experience for a large group of users.

Purchasing can be separated from finding, searching and evaluating can be maximized and simplified by combining a showroom provided by one large retailer with the reach and choice, shopping optimization of a large online portal such as Amazon.

Traditional organizations are constantly exposed to decoupling by customers and end users that create opportunities for new businesses and new customer experiences.