Reviewing the articles in this edition of FOCUS raises questions about how the world measures organizational performance. A few years ago, Tom Johnston of Portland State University raised the specter of the redundancy of accounting practices, as we know them today. Alfred Rappaport of North West University challenges the accounting framework with the rallying cry of "earnings is an opinion, cash is a fact". Rappaport goes on to explain that mangers are required to maximize shareholder value, not earnings. We also know that value creation, as defined by the needs of key stakeholders, is the primary purpose of government organizations. Finally, we see ERP vendors, such as SAP, PeopleSoft and Oracle, working hard to develop and deploy Measurement and Management modules in their software products, with the objective of leveraging the usefulness of operational data in their clients’ systems data bases.

Many aspects of measurement need to be re-assessed in our increasingly wired world. More information is available at a relatively low cost. Never before have organizations and individuals had such huge opportunities to learn and grow. Internet sites offer free information to anyone who is curious enough to look, in a manner that is very simple. Managers, entrepreneurs, analysts and researchers routinely turn to the Internet to find what knowledge is available before they invest any effort in attempting to create something new. Good research fuels personal and economic growth, because it establishes a base line from which to start and perspectives of performance expectations, in order to set goals and to assess results. Knowledge of the performance of other people in the same or similar field provides an opportunity to assess or benchmark efforts. Furthermore, best practice information is known to provide insights to the way in which work activities are performed, and in so doing, provide managers of existing operations, knowledge of what results are needed for them to be competitive.

Measurement of shareholder value is becoming accepted as a better alternative to earnings. As stock markets tumbled during the last month, it was interesting to hear commentators discussing the way in which the value of "e" commerce businesses had tumbled, because investors were reacting to an old-fashioned short-term earnings downfall. The commentators went on to say how inappropriate the response was, because they felt that investors were ignoring the enormous growth and future cash flow opportunities offered by the "e" commerce sector. Meanwhile, investors were no doubt, concerned with the likelihood (risk) of future cash flow materializing. This raises the probability that there are a variety of investor needs that any organization should address on an ongoing basis, in order to be successful. Evidently, these needs reflect different perspectives of people as they seek to balance competing priorities.

Managers are used to having their perspectives and priorities pulled in a variety of different directions, depending on the needs of customers, owners, employees and other stakeholders. But, managers have the added responsibility of actually keeping the employees of their organization working in a productive manner. Hence, managers have the specific challenge of interpreting the needs of the stakeholders into an internal set of measures that depict the actual characteristics of the operations of the organization, rather than simply focusing on the results of past decisions as depicted by accounting results. Hence the shift in emphasis to share value being premised on future cash/value creation.

As we look at the measurement systems of most organizations, we find that they are unduly influenced by results of recent prior periods, which, in turn, are the results of decisions made well before the results occurred. The effect of this has been to cause managers to ignore basic, almost mechanical facets of their organization, such as the undertaking of data mining and simulation modeling of profitability by customer, and costs/performance of processes and activities in order to prioritize resource assignment.

This writer has an overwhelming sense of change being in the winds. As we meet with hundreds of people from many different companies, it is evident that the speed at which we function is demanding that we create new measurement systems that are based on many aspects of market, risk and economics, dynamic circumstances and envisioning future outcomes. To do this we need to develop sets of information and measurement methodologies, which interact in meaningful and actionable ways.

We need to change our measurement methods, because measures influence human behavior. Using the existing measurement systems, which are overly influenced by earnings opinions and historic financial results, we continue to cause people to behave accordingly. The articles in the third edition of FOCUS suggest that alternative measurement solutions are available to drive human beings to the next threshold of accomplishment.