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Using OLAP to Improve Organizational Effectiveness – Part 1

February 21, 2010

OLAP tools have been widely available for years and are in use in a large number of organizations.  They are typically deployed as speedy, easy-to-navigate reporting tools.  With a little creativity though, this class of software can also be utilized in a very different manner.

As organizations struggle to communicate their objectives to employees and to align the activities of those employees with the objectives of the organization, they can get help from these same OLAP products.  OLAP software can help by providing the capability to:

  1. Improve management’s knowledge of progress on objectives
  2. Improve employee coordination on efforts to achieve objectives
  3. Communicate the link between employee effort and performance
  4. Communicate the link between employee performance and reward
  5. Improve employee performance feedback.

In this series of three posts, I’ll talk about the role OLAP tools can play in each of the areas above.  But first, I’m going to start out with an introduction to the concept of Organizational Effectiveness.  This introduction will give us a structure to frame the rest of the discussion.

I am not going to spend any time defining OLAP.  If you’re interested, check here and here for some background and definitions.

Organizational Effectiveness Defined

Effectiveness is defined as simply having the intended outcome.  In an organizational context, the intended outcome is the goal of the organization which is usually expressed in a mission statement.  The Hierarchical Definition of Strategy provides a framework for defining and explaining these concepts and I am going to use it extensively in these posts.

Hierarchical Definition of Strategy

Explaining organizational effectiveness requires a discussion of business strategy and the Hierarchical Definition of Strategy provides a simple framework for this discussion.  The Hierarchical Definition of Strategy is built on the concepts of Mission, Objectives, Strategies, and Tactics (Barney, 10).  I’ve drawn a simple figure below to help explain this model:

An organization develops its objectives based on its mission while strategies and tactics provide specific details regarding the attainment of these objectives.  In the Hierarchical model, the effectiveness of the organization can be determined by simply comparing actual performance to objectives.  Michael Beer summarizes organizational effectiveness in this manner:

“An effective organization is one capable of implementing its strategy … A strategy is implemented effectively when people and groups in the organization work in a motivated, skilled, and coordinated manner on the appropriate tasks.” (Note on Organizational Effectiveness, 10)

In other words, the effectiveness of the organization is determined by its ability to achieve its objectives.

Hierarchical Definition of Strategy – Example

An example will help to clarify these concepts and make them a little more concrete.  Dell Inc.’s Mission Statement is:

“Dell’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve.”

The high level nature of the statement, though necessary, makes it difficult for individual employees to apply it to their daily efforts.  At the next level of the strategy hierarchy, Dell management has likely developed Objectives that will lead to the achievement of this mission.  For instance, we can imagine that Dell has defined an objective to “Provide customer support with a customer approval rating of over 90%.”  This supports their mission of “…delivering the best customer experience…” and provides employees with a tangible performance target.

The final two levels of the hierarchy are related to execution.  Strategy is a means to accomplish an individual objective.  Continuing with our imaginary Dell example, the strategy developed might be “Deliver the fastest, most accurate technical support in the industry.”  This supports their objective in the sense that a firm delivering the fastest and most accurate technical support would very likely receive high approval ratings from customers.  Tactics are execution oriented and exist at the lowest level of detail.  In the Dell example, a tactic may be a requirement that all customer support personnel complete a certain set of technical and communication skill classes.

In the example developed above, Dell’s organizational effectiveness can be determined by comparing actual appraisals of their support services with their objective of a 90% approval rating.

Next Post…

Now that we’ve laid out some concepts and terms, we can move on to the heart of the discussion.  In Part 2, I’ll dive into the details and talk about how utilization of an OLAP tool can help an organization become more effective.

Written by TedWimmel · Filed Under Business & Leadership, Business Intelligence 

Comments

4 Responses to “Using OLAP to Improve Organizational Effectiveness – Part 1”

  1. LUCRUM Incorporated on February 22nd, 2010 2:42 am

    New blog post: Using OLAP to Improve Organizational Effectiveness – Part 1 http://bit.ly/bGwXZB

  2. Jodie Heflin on February 25th, 2010 4:22 pm

    Good post Ted. The best dashboards support the organizational mission and have related metrics for all members of that organization.

  3. OLAP's Impact on Organizational Effectiveness | TheFutureValueofBusiness.com on March 1st, 2010 10:37 am

    [...] in my series of 3 posts on using OLAP tools to improve the effectiveness of organizations.  In Part 1 I discussed some background concepts and terminology.  In this part, we’ll talk about some [...]

  4. Using OLAP to Improve Organizational Effectiveness – Part 3 | TheFutureValueofBusiness.com on March 21st, 2010 9:55 pm

    [...] and final post in my series on using OLAP tools to improve the effectiveness of organizations.  In Part 1 I discussed some background concepts and terminology.  In Part 2, I talked about some specific [...]

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