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Jim Highsmith Proposes An Adaptive Performance Management System

Speaking at the Agile 2006 Leadership Summit, the Director of Cutter Consortium's Agile Project Management Practice Jim Highsmith spoke about "An Adaptive Performance Management System."  Highsmith told the audience, "In order to achieve truly agile, innovative organizations, a change in our approach to performance management systems is necessary."

According to Highsmith, "Conforming to plans is a budget-driven mentality -- a mentality in which the budget, or plan, is sacrosanct -- never mind that the budget is months out of date, and the competitive situation has changed three times since the budget was developed.  Having a 'system' that leads managers, and others, into valuing 'conformance to plan' while delivering 'scant business value' will seriously impede agility, whether in projects or the entire enterprise.

"We need an adaptive performance management system (APMS) to focus any enterprise group (team, project team, department, division, or company) on a set of desired strategic or tactical outcomes and to encourage those groups (project teams) to perform at high measures of output."

Highsmith believes that to make the transition from a few Agile project teams in an organization to a truly Agile organization, the performance management systems we use must be overhauled. There are three measurement ideas critical to creating an adaptive organization:
  1. We must acknowledge that our performance measurement system impacts agility.

  2. We must alter our obsession with time to become an obsession for customer value.

  3. We must separate the project performance management system from the team performance management system.
"The ultimate key to a successful transition to an Agile organization, project, or enterprise is focusing on customer value rather than schedule; building collaborative project communities based on trust and honesty; and, learning from good feedback systems," says Highsmith.

Highsmith heads the Cutter Consortium, which helps companies leverage IT for competitive advantage and business success through its comprehensive range of consulting, training and content, provided by the leading expert practitioners in business and IT.  Cutter's research and inquiry response services differ from those of other analyst firms, because Cutter believes that the complexity of the business-technology issues confronting corporations today demands multiple detailed perspectives from which a company can view its opportunities and risks in order to make the right strategic and tactical decisions. The simplistic pronouncements other analyst firms make do not take into account the unique situation of each organization. By presenting multiple facets of important issues, Cutter enables clients to determine the course of action that best fits their unique situation.

Update, August 9th 2006:

Read the free Cutter Executive Summary of Jim Highsmith's report:
An Adaptive Performance Management System

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