Can Performance Management Combine the Best of Soviet Planning and Capitalism?

April 17, 2009
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April 12th is a celebrated day in one country. Do you know where and why? Read on.

This past week in Moscow I presented seminars and met with customers of my co-workers in Russia. It was my fourth visit to Moscow, but this time my eyes were a bit more open to look at what works well in Russia rather than my typical misperception of what didn’t work there, particularly its management of its national economy.

First, let’s talk about Russia. If you think you’ve learned a lot about Russia from movies of the Kremlin and Red Square next to it, or through its Olympic figure skaters and hockey players, that’s just the tip of the iceberg. I had the pleasure of seeing the Bolshoi Ballet perform in the famous Bolshoi Theatre. They were fabulous, and not only their technique but also with their facial and body expression – true feelings exhibited with no mask. And what about the music of composers like Tchaikovsky (his Violin Concerto in D, #35, is my favorite of all classical music), Rachmaninov and Rimsky-Korsakov? And what about writers like Pushkin and Dostoevsky? Russia has incredible performing arts and literature, and a national audience and readers who cherish them. And the


April 12th is a celebrated day in one country. Do you know where and why? Read on.

This past week in Moscow I presented seminars and met with customers of my co-workers in Russia. It was my fourth visit to Moscow, but this time my eyes were a bit more open to look at what works well in Russia rather than my typical misperception of what didn’t work there, particularly its management of its national economy.

First, let’s talk about Russia. If you think you’ve learned a lot about Russia from movies of the Kremlin and Red Square next to it, or through its Olympic figure skaters and hockey players, that’s just the tip of the iceberg. I had the pleasure of seeing the Bolshoi Ballet perform in the famous Bolshoi Theatre. They were fabulous, and not only their technique but also with their facial and body expression – true feelings exhibited with no mask. And what about the music of composers like Tchaikovsky (his Violin Concerto in D, #35, is my favorite of all classical music), Rachmaninov and Rimsky-Korsakov? And what about writers like Pushkin and Dostoevsky? Russia has incredible performing arts and literature, and a national audience and readers who cherish them. And the work of their Classical painters, like Levitan and Shishkin, are so remarkable that, had Russia been less shut off from the world, today these painters could be household names like Rembrandt.

So what is significant about April 12? On April 12, 1981, the USSR launched cosmonaut Yuri Gagarin on Vostok 1: the first human in outer space and the first to orbit the Earth. Every Russian knows this date as Cosmonaut’s Day.

What’s my point? Russians have strengths, and their maligned Soviet central planning is now not looking so bad as we better understand the causes of the economic meltdown produced by capitalism. What do I mean by this?

Although Soviet central planning has been discredited at the macro-economic level and replaced with allegiance to capitalism’s “invisible hand” to self-correct imbalances in an economy, global management teams in all industries and trade commerce have always been practicing Soviet-like central planning – but at the micro-economic level. Simon Caulkin of the UK-based Guardian newspaper describes this in his article, Inside every chief exec, there is a Soviet planner.

Caulkin joins the increasing chorus of journalists who now explain, with hindsight, how those small cracks in capitalist macro-economic structures theory created large structural economic collapse. But at the micro-economic level how does Performance Management’s integrated methodologies relate to Soviet central planning? Perfectly. And it makes central planning work even better. How?

Performance Management (PM), when supported with software automation such as from my employer SAS, empowers central planning by linking true customer preferences and needs to the “central plan.” In the days of the USSR this link was weak or missing. PM refers to the “central plan” as its strategy map, balanced scorecard and dashboard methodologies. The executives “centrally” formulate the strategy, and these methodologies then communicate to employees what the plan is and guide managers and employee teams how to achieve it. The old adage, you get what you measure, kicks in.

Finally, Performance Management has business analytics including predictive analytics embedded in each of its integrated methodologies. Therefore PM substantially improves the “plan” in central planning. And PM’s integration of methodologies, such as customer analytics with profitability reporting using activity-based costing principles, assure achieving that plan. And since today “central plans” keep changing, PM’s methodologies allow the organization’s employees and resources to quickly re-adjust and align to execute the executive team’s revised plan.

Before entering the Vostok 1 capsule, Cosmonaut Gagarin said, “Poyekthali” which means, “Let’s go.” If you are hesitating about pursuing PM, I suggest you take Gagarin’s attitude. I think Lenin would have liked Performance Management.