Time period of performance analysis ► ► ►
Strategic analysis is about the long term. Therefore, strategic performance should be assessed over the long term. We have previously suggested that three years is now the 'normal' view of long term. Three years of past performance is therefore necessary to adequately assess how the most recent strategy period has performed. This is quite different from most analysis, which typically reports only on the current year, or the current period compared with the last period (Le. a maximum of two years).
Getting comparison information ► ► ►
Getting internal information should not be a problem for managers who have to make internal comparisons. For analysts, shareholders, customers and others outside the organisation trying to assess organisational performance, the lack of availability of internal targets and internal measures makes it difficult to truly assess performance,- however, for listed organisations, some of these measures are now expected to be available for investors.
There are many ways in which useful information can be generated from external sources. These include:
► Financial information. The stock exchange, the government bureau of statistics, industry associations and industry consultant specialists are some of the sources that may have financial performance measures for the industry.” In comparing financial information, there are many traps. For instance, the inclusion or exclusion of abnormal and extraordinary items, acquisitions and divestments during the period, changes to the definitions of business segments, changes to accounting procedures between segments, accounting policy changes, and accounting year changes or inconsistencies can all make it difficult to carry out appropriate comparisons across years or across organisations.
► Customer information. Market share information is often available from the government bureau,' industry associations or industry consultants. Customer satisfaction can be gathered by market research, or may be available for the industry from an industry specialist. Many organisations run their own focus groups to ascertain qualitatively what their customers feel about their products, services and service levels. Websites, blogs and twitters are increasingly valuable sources of information on company and competitor performance, but the information is not scientific, so it must be carefully considered, not just accepted.
'Mystery shopper’ organisations have developed, providing detailed reports based on the actual shopping experiences of trained, but disguised, shoppers. Direct contact with customers, potential customers and customers of competitors can provide good information, albeit of less quantitative reliability.
Many organisations also find that some of their own staff actually have a very good idea of what customers think, if this information can be collected in any systematic way. Finally, calling customers some time after purchase to see what their experience has been—while tedious—is often revealing, .as it occurs after customers have had time to experience their product, so their views are much better formed and therefore more valuable.
► Internal process measures. Customers of and suppliers to the organisation, consultants to it and to the industry, and employees who move from one organisation to another in the industry can be good sources of information. Market research can also be used to do intra-industry and inter-industry comparisons on key elements of process.
► Innovation, learning and growth measures. The same sources as listed for internal process measures may be useful here, but, again, it is difficult to source this information externally with reliability.
► Social/community measures. As for learning and growth measures. Organisations are developing to compare performance. For instance, the London Benchmarking Group has developed a model for measuring community and company benefits to measure community performance. Globally there are over 30 different rating agencies for social and environmental performance, as there are many elements to rate and many ways to rate each issue, depending on who the stakeholder is. Most business journals now work with consultants to publish 'Best organisation to work for' on an annual basis. Individual lobby organisations are publishing their own assessments of narrow criteria that suit their own interests.
Environment measures. As for social/community measures, as the CSR assessments also apply to environmental criteria, not just social criteria. The Carbon Disclosure Project is the global project most advanced for measuring and comparing environ¬mental performance, but it" still has no standards and no benchmarks and reporting/ involvement is still voluntary. Newsweek’s recent green ranking of major US firms is the start of a wider trend in this area. CorporateRegister.com's global database is available for analysts to do their own comparisons by accessing all available reports, but the information is not in common formats at this stage.