Excellence in execution is not possible without an acute understanding of and sensitivity to the way the business really works— the performance architecture that diagrams how business activities are wired together and how material and information flow to support them. Organizations can determine their performance architectures by answering these straightforward questions:

 How do things happen here?

 What triggers them?

 How are we really performing now?

 How do the parts fit together?

 Where are the decision points?

 Are we organized and operating as effectively and efficiently as possible?

 What assumptions are we making and what constraints are we accepting?

 How do these assumptions and constraints affect our performance and are they valid now?

 How will our future assumption and constraint set affect us?

 Where are the leverage points for performance management?

 Where are the opportunities for improvement?

 What should our priorities and resource allocation criteria be?

 How can we make change happen?

Performance architecture then becomes a tool that can be used to clarify what is or what should be, to identify the gaps that constitute the corporate change agenda,

to stimulate and plan change, and to organize to produce results in a complex internal space and a competitive external market place.

Specifically, a company's performance architecture is basically a model of the way its major activities link together that thereby clarifies drivers, leverage points, potential hot spots, and integration mechanics. Based on the principle that whatever is done in an organization is done via its processes, it is a simple, easily established picture that captures the company's major processes and demonstrates input-output interrelationships.

A logical starting point for elucidating performance architecture is to compile a Process Inventory at an appropriate level of detail and then to use it to create a map. Because it is output-focused, this graphic depiction of performance architecture channels attention to the results levers (leverage points) and/or potential problem areas (hot spots) in the business. It encourages the development of, and provides an ideal platform for, a set of business-focused measures that can be deployed rigorously right into the heart of operations. Real performance-oriented measures are a rarity below the whole-enterprise level of the corporation. Meaningful customer- and corporate-oriented measures often lose their way as points of action between employees and the processes they support.

Performance architecture models can be used to create a consistent, clear, two-way line of sight from on-the-job measures to corporate strategic goals by showing employees their role

in the service of customers, shareholders, and other stakeholders. It allows them to make better independent, empowered decisions at critical points where the processes they oversee affect customers and profits.

Because they are designed to be comprehensive, performance architecture models can be used for analyses, improvement or redesign, training, education, communication, and interdepartmental or cross-functional management. Once the current performance framework has been mapped it can easily be probed for weak points, problems, and performance opportunities. It can also be used as a design template for directing strategic change by modifying it to reflect the demands of new strategy, thereby creating a revised model to serve as a guide to implementation.

Executives and senior managers can use performance architecture models to decompose existing or projected strategic plans so that appropriately aligned strategic performance measurements can be matched to key processes and activities. This entails the detailed examination of the constituents of each corporate level measure, looking at the performance variables that frame or underlie the measure. As they are resolved into their most basic elements, these variables can ultimately be linked to the processes that affect them most directly.

Every business measure can be easily broken down into its component parts. A classic example in the financial measures arena is the Dupont Return on Investment Model shown in Exhibit 3, originally developed by E Donaldson Brown of Dupont in the 1920s and employed as the dominant form of financial analysis into the 1970s. It demonstrates possible