International Association for Management of Technology IAMOT 2011 Proceedings MAKING THE IMPORTANT MEASUREBLE

Performance measurements related to product development typically focuses on what is easy to quantify and not necessarily what is important to measure. This research uses a case study approach to test a new model for designing performance indicators (DPI) based on what is important for a specific organization developing new products. The foundation for an effective performancemeasurement system is that the performance measurements are derived from relevant performance criteria and objectives. The proposed DPI method is therefore based on three consecutive steps. The first step is to decide what performance objectives are needed to be fulfilled in order to realize the pursued strategy. This step is followed by the identification of performance criteria / success factors that will contribute to the realization of the performance objectives. Performance criteria are typically related to what needs to be achieved in order to fulfill the objectives while success factors focus more on how they are to be fulfilled. Based on the most important performance criteria /success factors the supporting performance indicators can be derived from the literature or by using the performance measure record sheet. The performance allocation tracker is developed as a result of applying the DPI method in a real case and it is an indicator of the performance of the studied development project. The properties of the indicators resulting from using the DPI method include similar characteristics as leading indicators of performance. It is concluded that by focusing on performance criteria and success factors in the development of performance indicators, leading indicators of performance is derived.