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What is the Performance Prism? Description
The Performance Prism (Cranfield University) is an innovative performance
measurement and Performance Management framework of the second generation.
Its advantage over other frameworks is that it covers all stakeholders of
an organization. Principally investors, customers & intermediaries, employees,
suppliers, regulators and communities. It does this in two ways: by considering
what the wants and the needs are of the stakeholders, and, uniquely, what
the organization wants and needs from its stakeholders. In this way, the reciprocal
relationship with each stakeholder is examined.
Five facets of the Performance Prism
- Stakeholder Satisfaction.
- Stakeholder Contribution.
- Strategies.
- Processes.
- Capabilities.
These five perspectives are distinct, but logically interlinked.
Philosophy of the Performance Prism
The Performance Prism is based on the belief that those organizations 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 needs if these strategies are to be delivered and they have defined
what capabilities they need to execute these processes. The most sophisticated
organizations amongst them have also thought carefully about what it is that
the organization wants from its stakeholders. Employee loyalty, customer profitability,
long term investments, etcetera. 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
this topic. 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 if you thus derive measures from strategy,
you 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
- Stakeholder Satisfaction. Who are the key stakeholders. What
do they want and what do they need?
- Strategies. What strategies do we have to put in place, to satisfy
the wants and the needs of these key stakeholders?
- Processes. What critical processes do we need, if we are to execute
these strategies?
- Capabilities. What capabilities do we need to operate and to
enhance these processes?
- Stakeholder Contribution. What contributions do we require from
our stakeholders if we are to maintain and develop these capabilities?
Complexity and the Prism
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. One dimensional, traditional frameworks pick up elements
of this complexity. While each of them offers a unique perspective on performance,
it is essential to recognize 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.
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Compare with: Intrinsic
Stakeholder Commitment |
Strategic Stakeholder
Management |
Value Based Management |
Stakeholder Value Perspective
| Shareholder Value
Perspective | Balanced
Scorecard |
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