Supply Chain Metrics that Matter

1. 1Name the complexity sources before you set any target. The passages cite product proliferation, platform complexity, changes in manufacturing operations, and channel increases. Define complexity as an 'increase in products or channels' and list each source in your company.
2. 2Put complexity on the same page as the other three metrics: growth (year-over-year revenue), profitability (OM, COGS, EBITDA), and cycles (cash-to-cash, inventory turns, order cycle times, production cycle times). Treat them as one system with finite trade-offs, not four separate scorecards.
3. 3Trace each complexity source to its measurable damage. The passages name revenue per employee, ROA, RONA, and ROIC as the usual casualties. Pair each source with the metric it degrades, and record the baseline.
4. 4Check for symptoms of unmanaged complexity before you attack any single metric. Joe's company showed 37 percent of products on allocation, demand outstripping supply, and unreliable processes. Ask what the symptom says about the system before you pick a goal.
5. 5Judge each complexity driver by whether it earns its place. Keep what supports your growth strategy and the value you sell (benefit over cost). Prune or redesign what only adds cost, cash, or cycle time.
6. 6Set outcome goals at corporate level, not functional level. Check that sales (volume), operations (cost), and finance (cash) are not each optimizing a different side. Align incentives to movement on the Effective Frontier, since misaligned incentives let complexity grow unchecked.
7. 7Redesign operations on a schedule. The passages state that as complexity rises, the organization's potential falls, and holding the status quo requires constant redesign. Put a recurring review on the calendar, not a one-time cleanup.
8. 8Run the proposed goal past the cross-functional group as a dialogue before you commit. Ask what the target will do to cost, service, and inventory together.

Joe, an executive in the passages, picks inventory reduction as his BHAG, with a target of 77. The company is pursuing growth, 37 percent of its products are on allocation, demand exceeds supply, and processes are unreliable. The company had already cut inventory sharply at the end of the recession, and customer service suffered. Lora Cecere's advice is to view cost, service, and inventory as one system with finite trade-offs. She asks why the goal is not to reduce items on allocation, which attacks the complexity-driven symptom directly. She suggests a group dialogue on the BHAG. Joe agrees to the dialogue but keeps the goal for the moment ('this is a business, not a democracy') and later receives tough feedback from his team. The lesson is that an isolated inventory goal ignores rising complexity. Joe also admits that Frank's incentive is volume, his own is cost, and Lou the controller focuses on cash, so no one owns the cross-functional trade-off.

• If a leader proposes a single-metric goal such as inventory, then test it against growth, profitability, and cycles together before approving it.
• If a product or channel addition raises revenue but degrades ROA, RONA, ROIC, or revenue per employee, then require a redesign of operations or reject the addition.
• If a large share of items is on allocation or processes are unreliable, then treat that as the complexity problem to fix first, ahead of cost-cutting goals.
• If functional incentives (volume, cost, cash) conflict, then move the goal to a corporate performance metric and change the incentives, because only leader action drives alignment.
• If a complexity source supports the strategy and the value delivered (benefit over cost), then keep it and fund the operations redesign it requires.

• Attacking one metric in isolation. Tell: a goal like inventory reduction is set, then service drops, as happened after the recession cuts.
• Letting complexity accumulate silently. Tell: leaders are told to cut costs and improve working capital while products and channels keep growing, with no way to push back.
• Treating the goal as a decree rather than a dialogue. Tell: the group goes quiet or resistant and tough feedback surfaces later.
• Functional metrics and incentives that pull in different directions. Tell: sales argues volume, operations argues cost, finance argues cash, and quarterly talk about corporate goals changes nothing.
• Cutting complexity indiscriminately. Tell: the pruning removes products or channels that drive the growth strategy, because nobody asked which complexity earns its place.

• ▸Complexity source: name the product line, platform, manufacturing change, or channel that is adding complexity.
• ▸Growth contribution: state the year-over-year revenue this source contributes.
• ▸Profitability impact: note effects on operating margin, COGS, or EBITDA.
• ▸Cycle impact: note effects on cash-to-cash, inventory turns, and order or production cycle times.
• ▸Return impact: record effects on revenue per employee, ROA, RONA, or ROIC.
• ▸Symptoms: list allocation share, service failures, and process reliability problems tied to this source.
• ▸Strategic value: write whether it supports the strategy (benefit over cost) and why.
• ▸Decision: keep and redesign, simplify, or exit.
• ▸Owner and incentive check: name the cross-functional owner and confirm incentives reward corporate, not just functional, results.

1. 1Name the trigger. Alignment starts with awareness of the need to change, and the source says the stimulus is often failure: a missed earnings call, end-of-quarter surprises, lost market share. Document the performance gap and use it as the shared call to action, so you are not waiting for a crisis to make bad news travel.
2. 2Define metrics from business strategy, not from function. Make a conscious, deliberate selection of a few meaningful metrics that represent all elements of the complex system. Cut the list, because most companies measure too many things and are unclear on which matter.
3. 3Build a cross-functional guiding coalition with a clear vision. Seat sales, operations, finance and the other functions in one group. The source frames this as the core of the third step, driving organizational alignment on the metrics system.
4. 4Map each functional metric to the corporate metrics framework. For every function, write down how its current metric (volume, cost, cash) connects to the corporate objective. Then set targets that drive incentives, so functional goals no longer pull against the corporate ones.
5. 5Manage the metrics together, not individually. Review the selected metrics as one portfolio on the Effective Frontier, with balance and resiliency as the goal, so trade-offs are made visibly across functions.
6. 6Ground the discussion in peer-group performance. Compare against industry leaders to see what good looks like, then craft a road map for performance improvement. The source notes leaders often do not know the end state.
7. 7Revise how people are measured, evaluated, compensated and promoted. The foreword warns that if these criteria are not revamped, the silos live on.
8. 8Refine and adjust over time. Treat alignment as a multi-year journey with year-over-year executive discipline. Expect progress in millimeters, not meters, and push to a new frontier only after balance and resiliency are achieved in the current state.

The source's composite manager, Joe, describes the misalignment directly. His sales leader, Frank, is focused on volume. Joe is incented on cost. His controller, Lou, steers every discussion to cash. Corporate objectives are discussed at quarterly and annual meetings, but nobody is incented to make progress on the Effective Frontier, so a steady, balanced course is impossible. The consultant's answer is that this is common and that it should be handled cross-functionally as a team. Applying the steps: first, name the performance gap as the call to action. Second, choose a few strategy-based metrics that cover volume, cost and cash as one system. Third, form a guiding coalition of Joe, Frank and Lou. Fourth, align each function's metric and incentive to the corporate framework. Fifth, move to a new frontier only once the current level is balanced and resilient. Joe also raises the people problem: the organization is hardwired for incremental improvement through Six Sigma and Lean, so leadership must be willing to adopt a new mental model.

• If functional leaders are incented on different single metrics (volume, cost, cash), then do not expect trade-offs to optimize the corporation until targets and incentives are tied to a shared corporate framework.
• If the team tracks many metrics and cannot say which matter, then stop adding and select a few that represent every element of the complex system, anchored in business strategy.
• If the current state is not yet balanced and resilient, then do not push for a new frontier; build organizational potential only after balance is achieved.
• If growth is slowing, then expect tension over metric improvements to rise and invest more in cross-functional trade-off discipline.
• If a proposed change breaks from continuous-improvement habits (Six Sigma, Lean), then plan explicitly for a new mental model and for leadership willingness to risk disruption.

• Waiting for a crisis: alignment is only triggered when a missed earnings call or lost share sends bad news through the organization. The tell: good news travels fast while bad news moves slowly.
• Metrics overload: the company measures too many things and cannot say which matter. The tell: leaders cannot describe what good looks like or the end state.
• Alignment in words only: corporate goals are recited at quarterly and annual meetings but incentives stay functional. The tell: each leader quotes a different metric (volume, cost, cash).
• Managing metrics in isolation: one function improves its number without regard to the interrelationship of metrics. The tell: gains in one metric erode another and there is no balanced portfolio view.
• Sprint thinking: expecting fast results from a multi-year journey. The tell: the executive team loses discipline after early progress is slow, rather than measuring progress in millimeters.

• ▸Trigger/performance gap: describe the event or gap that creates the call to action.
• ▸Business strategy statement: one sentence the metrics must serve.
• ▸Selected corporate metrics (few): list the metrics covering all elements of the system.
• ▸Function-by-function current metric: for each function (sales, operations, finance), list its current metric and incentive.
• ▸Link to corporate framework: state how each functional metric connects to the corporate metrics.
• ▸Known trade-offs: list conflicts (e.g., volume vs. cost vs. cash) and who decides.
• ▸Guiding coalition members: name the cross-functional leaders and the vision they own.
• ▸Revised targets and incentives: define the new targets and how compensation and promotion change.
• ▸Peer benchmark and road map: record industry-leader performance and the next improvement steps.
• ▸Review cadence: set when metrics are refined and adjusted for balance and resiliency.

1. 1Write the definition down before any target is set: 'the ability to achieve the same cost, quality, and customer service given a level of demand-and-supply volatility.' The passages say there is no industry-standard definition and that companies fail to define agility well enough to act on it, so the definition is the first deliverable.
2. 2Separate agility from responsiveness in writing. Responsiveness is shorter cycles and a quicker response. Agility is the potential of the system to absorb volatility and improve resiliency. Strike any 'agility' goal that is really a cycle-time goal.
3. 3Pick the response you are designing for: responsive, agile, or efficient. The passages say these are mutually exclusive and can be defined by the same metrics system but need different targets. The most efficient response (lowest cost per case or lowest labor input per unit) is by definition not the agile one, so record the trade-off as a conscious choice.
4. 4Name the volatility level you are testing against (demand and supply) and fix cost, quality, and customer service as the three outputs that must hold. Agility is measured by how little those three degrade at that volatility level, not by speed.
5. 5Select a few meaningful metrics that cover the whole system, and set their targets to drive the agile response. The passages warn that most companies measure too many things and are not clear which matter. Do not set targets in isolation; Joe's inventory-only BHAG ignored that 37 percent of products were on allocation and processes were unreliable.
6. 6Check the metric pair for balance. Read margin and inventory turns together, as in the footwear case, to see whether a speed gain has thrown the system out of balance.
7. 7Rate importance versus current performance on a 1-7 scale, as in the 2013 survey (Low = 1-3, Middle = 4, High = 5-7), and use the gap to make the case for agility as a pillar of operating strategy.
8. 8Align incentives to the chosen response and revisit the metric set-points as strategy changes. Let metrics evolve slowly, like Mike's bonsai: trim, listen to the organization, and adjust.

The footwear company in the passages believed shorter cycles would improve corporate performance. Its cycles were shorter than competitors', but its margins were 18 percent higher on average and its inventory turns were 50 percent worse. The company had 'successfully done the wrong things faster, throwing the system out of balance.' Applying the steps: first, the team would label the initiative as responsiveness (shorter cycles), not agility. Second, it would define agility as holding cost, quality, and service at a stated level of volatility. Third, it would read cycle time alongside inventory turns and margin, since turns had deteriorated sharply. Fourth, it would reset targets so that absorbing volatility, not cycle speed alone, is what the metrics reward. The lesson from the case is that a quicker response can coexist with a more brittle, less balanced system.

• If the proposed goal is 'shorter cycles' or 'faster response,' then classify it as responsiveness and do not report it as agility.
• If leadership wants both the lowest cost per unit and agility, then force a choice: the efficient response is by definition not the agile one, so set different targets for each.
• If a team asks for 'agile' with no definition, then stop target-setting until cost, quality, service, and a volatility level are written down.
• If a metric improves in isolation (inventory, cycle time), then check its paired metrics (turns with margin, allocation, process reliability) before accepting the gain.
• If the strategy or capabilities change, then revisit the metric set-points rather than carrying over old targets.

• Equating agility with responsiveness. The tell: the agility plan consists only of cycle-time reductions, and margins or inventory turns move the wrong way, as at the footwear company.
• Leaving agility undefined ('be aligned and agile' with no definition). The tell: Joe's boss uses the words but cannot say what would count as progress.
• Optimizing for efficiency and calling it resilience. The tell: the lowest cost per case or labor input per unit is achieved, but the organization is brittle and cannot flex with market changes.
• Using the same targets for efficient, responsive, and agile responses. The tell: one metrics scorecard for all three, with incentives pulling in conflicting directions.
• Attacking a single metric in isolation. The tell: an inventory-only goal while 37 percent of products are on allocation and processes are unreliable.

• ▸Agility definition: write the sentence 'same cost, quality, and customer service at [volatility level].'
• ▸Volatility level: state the demand and supply volatility being tested.
• ▸Chosen response type: mark responsive, agile, or efficient, and why it is a conscious choice.
• ▸Cost baseline and floor: the level cost must hold under volatility.
• ▸Quality baseline and floor: the level quality must hold under volatility.
• ▸Customer service baseline and floor: the level service must hold under volatility.
• ▸Paired balance check: list the metrics read together (for example margin and inventory turns) and their direction of change.
• ▸Importance vs. current rating (1-7): score both and note the gap.
• ▸Incentive alignment and review date: name which incentives support the target and when set-points are revisited.

1. 1Separate the volatility into its named sources before you act. The passages split it into demand volatility, supply volatility, and volatility from channel and supplier relationships. Write each one down with the metric it hits (inventory, margin, cash-to-cash). A single label like 'the market is volatile' cannot be managed.
2. 2Baseline where you are on each metric and what you have sustained before you set any target. Joe's team had reduced inventory over a couple of years but could not sustain it. Treat a failed hold as evidence that volatility or a trade-off is pushing back, and find that cause first.
3. 3Test every stretch target for feasibility against the whole metric portfolio. Metrics are interwoven as a complex system. A 25 percent inventory cut (to 77 days) means nothing until you know what happens to service, margin and cost when demand or supply swings. Do not set the target on instinct ('it just feels right').
4. 4Check whether you are absorbing volatility or pushing it backward. Lengthening payables and pushing cost and waste onto suppliers improved Joe's cash-to-cash cycle but began to hurt margin. Any gain from stretching supplier terms goes in the ledger as a short-term benefit with a longer-term supplier-risk cost.
5. 5Segment inventory policy to match how demand actually behaves. Verizon's example is micro-segmentation of inventory policy as products, channels and services multiply (same-day delivery, omni-channel). The aim is any item in the network able to serve any order for any channel. The tell that you need this is 'too much inventory of the wrong type'.
6. 6Choose reliability over speed on purpose and measure it. Companies given a choice between fast improvement with volatility and slower results with more reliability choose reliability. Track whether year-over-year improvement holds as the market shifts. That is resiliency: returning to shape after a shock without exceeding the elastic limit.
7. 7Align sales, operations, finance (and IT) on the same metric portfolio. Tension between sales and operations, and finance, shows up when the market shifts faster than internal processes. Aligned organizations act faster and withstand demand-and-supply volatility better. Functional goals overpower corporate objectives by default, so make the shared metrics explicit.
8. 8Stress-test against the 2007 recession pattern. The impact varied by industry and was more pronounced where corporate maturity and metric alignment were weaker, in industries further back in the value chain. Ask where you sit in the chain and whether your systems could flex or would shut factories.

Joe, a leader at a major global multinational, opens his annual kickoff with a 'big, hairy, and audacious' goal: cut inventory 25 percent, to 77 days, to free cash for R&D, since a new product now costs four times more to bring to market than five years ago. His team has just been through layoffs and faces rising costs, increasing demand and supply volatility, and shifting priorities. They go blank. Asked how he knows 77 days is right, Joe admits the goal is untested and 'feels right'. He also admits earlier inventory cuts did not hold. Under questioning he adds that, to satisfy financial markets, the company stretched payables and pushed cost onto suppliers. That helped cash-to-cash but is now hurting margin. The corrective path from the passages is to test feasibility against the interwoven metrics. It also means treating the failure to sustain past reductions as a volatility signal and replacing the supplier push with a balanced portfolio on the Effective Frontier. Reliability, not a one-year stretch number, becomes the standard.

• If a target has not been tested for feasibility against the other metrics and current volatility, then do not announce it; baseline first.
• If an improvement came from lengthening payables or pushing cost to suppliers, then count it as short-term and watch margin and supplier health.
• If you hold too much inventory of the wrong type after a market shift, then segment inventory policy by product and channel rather than cutting the total.
• If the choice is fast improvement with volatility or slower improvement with reliability, then default to reliability.
• If sales, operations and finance blame each other after a demand swing, then fix metric and data alignment before adding another functional goal.

• Setting stretch goals on instinct: the tell is a team that stares blankly and has not bought in, with previous reductions that never stuck.
• Exporting volatility to suppliers: the tell is a better cash-to-cash cycle alongside slipping margin and strained supplier relationships.
• Optimizing one functional metric: the tell is functional goals outweighing corporate objectives and sales, operations and finance disagreeing about inventory.
• Treating volatility as one undifferentiated condition: the tell is a single blanket policy, such as one inventory target, applied to products and channels that behave differently.
• Judging performance by peak improvement instead of reliability: the tell is big gains one year and reversals the next, with the system unable to flex when the market shifts.

• ▸Metric and proposed target: state the metric and the number (e.g., inventory days) and who set it.
• ▸Baseline and history: record the current value and what you reached and could not sustain before.
• ▸Demand volatility exposure: describe how demand varies and which products or channels swing most.
• ▸Supply volatility exposure: describe supplier and channel relationship risks that affect availability or cost.
• ▸Interlocked metrics at risk: list the other metrics (margin, service, cash-to-cash) that could move if this one does.
• ▸Cost shifted to suppliers?: note any payables extension or cost push embedded in the plan and its margin effect.
• ▸Inventory segmentation needed: list segments (product, channel) that need their own policy.
• ▸Functions aligned: confirm sales, operations, finance and IT have signed on to the same metric portfolio.
• ▸Reliability test: state how you will confirm the result holds year over year when the market shifts.

1. 1Anchor the metric set to business strategy first. Write down the strategy and ask how you will measure its success. Do not start from the list of metrics you already report. Source guidance: most companies measure too many things, and no leadership team can handle more than five to seven metrics at once.
2. 2Cover all four dimensions of the Effective Frontier with a few metrics. Growth is year-over-year revenue improvement. Profitability is operating margin, COGS, or EBITDA. Cycles are inventory turns, cash-to-cash, order cycle times, or days of receivables and payables. Complexity is the increase in products or channels. Pick the most meaningful metric per dimension, with the operating margin and inventory turns pair as the core cost-versus-cash trade-off.
3. 3Baseline the trend, not the snapshot. Pull year-over-year results for each chosen metric over as many years as you can. The source analyzes 2006–2013 for strength, balance, and resiliency, and also counts consecutive years of simultaneous improvement (2, 3, 4 years). Record both the direction and the number of sequential years.
4. 4Score the three characteristics separately. Strength: is the trend positive? Balance: did the metrics improve in the same years, or did one gain while another fell? Resiliency: how volatile is the year-to-year movement? A company can pass one test and fail the others, so keep three scores.
5. 5Align functional metrics and targets to the corporate framework. Build a cross-functional guiding coalition with a clear vision. Map each functional metric to a corporate metric and set targets that drive incentives. Revise how people are measured, compensated, and promoted, or the silos persist.
6. 6Benchmark against industry peers to set potential. Use the performance of peer-group leaders to ground the discussion, then craft a road map for improvement. Remember each company has its own frontier, set by its products, processes, technologies, markets, and channels. Do not copy another company's targets.
7. 7Manage complexity as a cost to the frontier. As product and channel complexity rises, potential falls, and operations must be redesigned just to hold position. Check each complexity increase against the effect on revenue per employee, ROA, RONA, or ROIC.
8. 8Review on a long cycle and refine. Adjust the metrics over time to build strength, balance, and resiliency. Judge progress in millimeters, not meters. Expect substantial change to take many years, and keep the discipline of a repeated annual review.

The source's own evidence of how rare this outcome is comes from Table 1.1, built from balance sheet data for 2000–2012 sorted by Morningstar sector. It counts companies that improved both operating margin and inventory turns in consecutive years. In Communications Equipment (n = 94), 33% managed 2 years only, 13% managed 3 years only, and just 2% managed 4 years. In Semiconductors (n = 76), the figures are 33%, 5%, and 1%. In Chemical (n = 22), they are 32%, 9%, and 0%. In Drug Manufacturers—Major (n = 17), they are 12%, 6%, and 0%. The conclusion drawn is that nine out of ten companies are stuck, with no more than three years of sequential improvement on these two metrics. To apply this to your own company, plot operating margin and inventory turns for each year and mark the years when both rose. A run of two years puts you with the typical peer. Three or four consecutive years puts you in rare territory, and you should then ask whether the gains held steady rather than swinging year to year.

• If a metric improves but a paired metric falls in the same year (for example, operating margin up and inventory turns down), then count it as a trade-off, not progress, and do not score balance.
• If you are tracking more than five to seven metrics, then cut the list. Keep one or two per Effective Frontier dimension and drop the rest.
• If a proposal raises product or channel complexity, then require evidence that revenue per employee, ROA, RONA, or ROIC will hold before approving it.
• If a team celebrates a single-metric win in productivity or cost, then check the other dimensions. Efficiency alone is not effectiveness, and it can throw the organization out of balance.
• If functional targets and incentives do not trace to the corporate metrics, then fix the compensation and promotion criteria before adding new initiatives.

• Chasing the efficient organization (lowest cost per case, highest productivity per employee) instead of the effective one. The tell: cost metrics improve while cash or growth metrics stall.
• Measuring too many things. The tell: no one on the leadership team can name the five to seven that matter, and scorecards are difficult to balance.
• Mistaking a project win for sustained improvement. The tell: one or two good years on a singular metric, then a reversal, with no run of three or four years of consecutive gains.
• Keeping silo incentives. The tell: functional vice presidents defend turf and are rewarded on ever-changing functional metrics that conflict with corporate targets.
• Expecting a sprint. The tell: targets demand large step changes in a year, and the effort is dropped when results come in millimeters instead of meters.

• ▸Business strategy statement: write the strategy and how its success will be measured.
• ▸Growth metric and yearly values: year-over-year revenue change for each year.
• ▸Profitability metric and yearly values: operating margin, COGS, or EBITDA for each year.
• ▸Cycles metric and yearly values: inventory turns, cash-to-cash, or similar for each year.
• ▸Complexity indicator: change in number of products or channels per year.
• ▸Strength check: is the multi-year trend positive on each metric (yes/no)?
• ▸Balance check: list the years in which all chosen metrics improved together, and the longest consecutive run.
• ▸Resiliency check: note the year-to-year swings and any reversals (high/low volatility).
• ▸Peer-group benchmark and owner: record the peer leader result used for the road map and the executive accountable for each metric.

1. 1Write the definition into the metrics charter: market capitalization = shares outstanding × market price per share. It moves with the market, so it is the outcome you track, not a dial you set. Record the share count and price date used for every reading.
2. 2Pull the company's quarterly market cap series alongside the ratios it sits with in the source's Table 1.4 financial-ratio set (cash-to-cash, days of inventory, DSO, DPO, operating margin, ROA, ROIC, RONA, revenue growth, R&D ratio). Use at least several years of quarterly data. The source used six years of quarterly correlations.
3. 3Run the correlation by industry peer group, not company-wide only. In Table 2.1, days of inventory correlates in 7 of 8 industries (88%), so test your peer group's own pattern before borrowing another industry's.
4. 4Start with the intersection the research found strongest: inventory turns and operating margin. Plot the two together against market cap by quarter, not each on its own.
5. 5Widen to the basket that gave the greatest benefit: the ratios that drive cash-to-cash, operating margin, and return on invested capital. List the component ratios (DOI, DSO, DPO) beneath each so you can see which one moved the result.
6. 6Standardize the return metric before setting targets. ROA is net income/total assets, RONA is net income/(PP&E + current assets − current liabilities), and ROIC uses operating income plus income tax over shareholders' equity. The research found ROIC correlates better with market cap, yet operations leaders tend to manage to ROA. Pick one definition and publish the formula.
7. 7Before approving any stretch target, test feasibility against the other metrics. Ask what the current level is, what peers achieve, why past gains did not hold, and what the target does to the remaining ratios.
8. 8Review trends against peer-group history (the source analyzes 2006–2013), and decompose any compound metric into its parts before drawing a conclusion.

Take the food peer group in Tables 2.7a/2.7b. Many operations leaders manage to ROA, but ROIC correlates better with market cap, so you compare the two. 2000–2013 averages: H.J. Heinz ROA 8% vs ROIC 14%; Campbell Soup 11% vs 15%; Anheuser-Busch InBev 4% vs 7%; Mondelēz 5% vs 6%; ConAgra 5% vs 6%; Nestlé 10% vs 9%. The ranking changes with the lens. Nestlé looks strong on ROA but its ROIC is below Campbell's and Heinz's. Trends also separate. AB InBev's ROA rises 2%→4%→8% across the three periods and its ROIC rises 4%→9%→12%. Mondelēz's ROIC falls from 8% to 5% and stays there, while its ROA moves only 5%→4%→5%. A team measuring only ROA would miss that spread. The lesson from Joe's unvalidated 77-day inventory cut follows: pick the return metric the market rewards, then test the target against the connected ratios before committing.

• If a target is proposed because it 'feels right' or is a stretch goal, then stop and test feasibility against peer history and the connected metrics before communicating it.
• If your return metric is ROA and the goal is market value, then add ROIC and compare the two, since ROIC correlates better with market cap.
• If cash-to-cash improves, then decompose into DOI, DSO, and DPO before celebrating. A payables stretch worked for one quarter in Joe's company before it caught up with them.
• If a compound metric (cash-to-cash, perfect order) or an absolute number shifts, then ask what drove each component. Do not benchmark on absolute numbers alone.
• If you borrow a correlation from another industry, then re-run it on your own peer group, since the correlations in Table 2.1 vary by sector.

• Treating market cap as a controllable target. The tell: goals are stated as a price or market cap number, not as the portfolio of metrics that drives it.
• Optimizing one metric in isolation, such as the 77-day inventory cut. The tell: gains vanish within a few quarters and other ratios deteriorate. Joe's team had cut inventory before and could not sustain it.
• Gaming cash with payables. The tell: cash-to-cash improves one quarter, then operating margin moves a couple of quarters later and the finance team is explaining the reversal.
• Speeding up without balance. In the footwear case, cycles were shorter than competitors' but inventory turns were 50 percent worse; the company had 'done the wrong things faster.' The tell: a shorter cycle time alongside worse turns.
• Using ROA by default because operations owns it. The tell: operations metrics look healthy while market value does not follow, as with Nestlé's strong ROA against its middling ROIC.

• ▸Share count and price date: record shares outstanding and market price used, and the date, so market cap = shares × price is reproducible.
• ▸Peer group and sample: list the industry peer group, number of companies, and the quarters of data used.
• ▸Correlation results: for each ratio (DOI, inventory turns, operating margin, ROIC, cash-to-cash), record its correlation to market cap by quarter and whether it holds across the peer group.
• ▸Return metric standard: choose ROA, RONA, or ROIC and paste the formula you will use company-wide.
• ▸ROA vs ROIC gap: record both values for the same periods and note any trend divergence.
• ▸Compound metric decomposition: for cash-to-cash or perfect order, list each component's change and the driver of each change.
• ▸Target proposed: state the metric, the target, who proposed it, and the basis (data or intuition).
• ▸Feasibility test: record the current level, peer range, past attempts and why they were not sustained, and the effect on connected metrics.
• ▸Decision and review date: approve, revise, or reject the target, and set the quarter to re-check against market cap.

1. 1Start from the corporate strategy in one sentence (e.g., Joe's company is 'in a growth mode'), then write down what the value chain must do to deliver it. Cecere says metrics framework 'requires a clear definition of strategy' and that 'there are no cookie-cutter answers.'
2. 2Define the end state before choosing targets. The passages note leaders 'do not know what good looks like' and that there is 'a lack of clarity on the end state.' Write the operations-excellence definition for your company, then test it against what peer leaders have achieved.
3. 3Map the strategy onto the four Effective Frontier dimensions: growth (year-over-year revenue), profitability (OM, COGS, EBITDA), cycles (cash-to-cash, inventory turns, order cycle times), and complexity (more products or channels). Mark which two dimensions your strategy accepts as the trade-off, since 'there are finite trade-offs between interconnected metrics.'
4. 4State the trade-off explicitly as an operating choice. The text says companies get 'trapped at the intersection of operating margin and inventory turns... a battle of cost versus cash,' and 'leaders must forge the operating strategy to help others understand the trade-offs.' Record which side wins when they conflict, and why.
5. 5Choose a few metrics that represent the whole system. 'Most companies measure too many things.' Pick a small balanced set (e.g., margin, turns, service), and avoid isolating one metric, since 'we cannot move the frontier to the next level' that way.
6. 6Validate feasibility with the people who own the levers before announcing any target. Joe's 77-day goal was set 'without asking anybody about the feasibility.' Run root-cause analysis on what a target would impact (cost, service, inventory) first.
7. 7Align functional metrics to the corporate framework and tie targets to incentives, using a cross-functional guiding coalition with a shared vision. This is step three of the metrics journey.
8. 8Set a review cadence: strategic and annual, end-to-end 'from the customer's customer to the supplier's supplier,' not week-to-week. Refine metrics over years, because 'progress needs to be measured in millimeters, not meters.'

Joe, a leader at a global multinational, opens his annual kickoff by unveiling a 'BHAG' on a board: 77, meaning 77 days of inventory, a 25 percent cut. The company is in growth mode and wants cash returned. The team is resentful and detached: layoffs, rising costs, volatile demand and supply, shifting priorities, and a target set with no feasibility check. Cecere asks, 'How do you know that 77 fewer days is the right inventory target?' She points out that cost, service, and inventory are intrinsically related and each organization has its own potential. Joe admits that inventory cuts at the end of the recession 'severely impacted customer service.' The fix is to stop announcing a single-metric number. Instead, look at the metrics together as a system to see what the inventory cut would impact, then restate the choice as a trade-off (cost versus cash versus service) that the team understands and helped test.

• If a target arrives as one metric (e.g., inventory days) with no stated trade-off, then stop and map its effect on cost, service, and cash before communicating it.
• If functions cannot explain why a metric matters to the corporate strategy, then the strategy is not yet an operating strategy; rework the cross-functional alignment before setting incentives.
• If complexity (products, channels, platforms) is rising, then expect potential on the frontier to fall and plan for constant operational redesign, or constrain the complexity.
• If you have reached full potential on your current frontier, then force a disruption and change the mental model rather than pushing the same metrics harder.
• If the metric list keeps growing, then cut to the few that represent the whole system, since measuring too many things hides which ones matter.

• Announcing a stretch goal without asking owners about feasibility. Tell: blank stares, phones out, 'we've been here before' fatigue.
• Optimizing one or two metrics in isolation. Tell: inventory falls but service drops, as after the recession cuts, or margin improves while turns stall.
• Treating strategy as a slogan rather than a set of choices. Tell: leaders cannot say what good looks like or what the end state is.
• Running metrics as a week-to-week or month-to-month initiative. Tell: gains reverse ('victims of entropy') and the company stays stuck for years, like the nine out of ten with no multi-year gains on both margin and turns.
• Siloed functions with unaligned metrics and incentives. Tell: each function hits its own target while corporate performance does not improve.

• ▸Corporate strategy (one sentence): state the high-level strategy, e.g., profitable growth.
• ▸End-state definition: describe what operations excellence and 'good' look like, benchmarked to peer leaders.
• ▸Frontier position: current levels of growth, profitability, cycles, and complexity.
• ▸Primary trade-off: name the two metrics in tension (e.g., operating margin vs. inventory turns) and which takes priority.
• ▸Core metric set (3–5): list the few metrics that represent the whole system.
• ▸Feasibility check: who owns the levers, what they said, and root causes found.
• ▸Cross-functional owners and incentives: which functions align to which corporate metric, and how targets drive incentives.
• ▸Review cadence: annual strategic review date and the signal that triggers a mental-model change.
• ▸Impact check: expected effect of the target on cost, service, and inventory.

1. 1Separate your metrics into two lists: functional and corporate. In Joe's company, Frank's volume, Joe's cost and Lou's cash are all functional. Corporate metrics are the outputs no single function owns. Build the portfolio from the corporate list only.
2. 2Choose a few metrics from each Effective Frontier dimension. The source lists growth as year-over-year revenue improvement; profitability as operating margin, COGS and EBITDA; cycles as cash-to-cash and inventory turns. Add a complexity measure for the fourth dimension. Keep the total small enough that the whole leadership team can recite it.
3. 3Pair every metric with the metric it trades against. Operating margin pairs with inventory turns, and both pair with growth and complexity. Record each pair on one page so no one reads a metric alone.
4. 4Establish the baseline and the trend. Check whether you have improved operating margin and inventory turns together for two, three or four consecutive years. The research shows that nine out of ten companies have not managed more than three. Also write down what good looks like in your industry, because the source says many leaders cannot define the end state.
5. 5Model the trade-offs before you set targets. Companies design factories for years but rarely model the corporate performance system. Test what added product proliferation or higher service expectations does to operating margin and inventory turns, so every trade-off is a conscious choice.
6. 6Make the portfolio the primary scorecard for the whole leadership team. Move incentives away from purely functional goals. Sales, operations and finance should share the same corporate metrics, not volume, cost and cash separately.
7. 7Measure outputs, not just inputs, and hold the metric set steady. Do not let it become the 'ever-changing performance metrics' the foreword criticizes. Review it as a team, and redesign the system only when complexity changes the business.
8. 8Move to a new level of the Effective Frontier only after you have achieved balance and resiliency at the current one. Treat a new channel strategy or new technology as the last stage, not the first.

Joe's team in the source shows the starting point. Frank, the sales leader, is incented on volume. Joe is incented on cost. Lou, the controller, steers every conversation to cash. Each is rational in isolation, and together they stall corporate progress. The author's first move is research: nine out of ten companies are stuck, and in Communications Equipment (n=94) only 13% improved operating margin and inventory turns together for exactly three years, and 2% for four. A portfolio for Joe's team would take year-over-year revenue growth from Frank's world, operating margin from the profitability group, inventory turns or cash-to-cash from Lou's world, and a complexity measure. All four sit on one scorecard that all three leaders own. Joe's cost goal now has to be read next to the other three. The author's test is to model how growth slowing (medical device growth fell from 10% to 5% to 4%) and rising complexity make the same operating margin and turns harder, then set targets as explicit trade-offs. Only once the team holds the balance does it consider a new frontier.

• If a proposed target improves one metric and you cannot name the paired metric it may hurt, then do not approve it until the paired metric is on the page.
• If operating margin and inventory turns have not improved together for three consecutive years, then treat the company as plateaued. Fix balance and resiliency first and defer any move to a new frontier.
• If growth slows, then expect more organizational tension over metric improvement. Tighten the conscious trade-off discussion and do not drop the portfolio.
• If complexity rises (more products, higher service expectations), then re-model operating margin and turns before reaffirming targets, because the same levels become harder to hit.
• If an incentive rewards only a function's own number, then it competes with the corporate scorecard. Realign it before blaming execution.

• Reading metrics in isolation, as Joe does. The tell: one function reports gains while corporate operating margin and turns do not move together.
• Equating efficient with effective, meaning highest productivity per employee or lowest cost per case. The tell: cost wins that coincide with out-of-balance cash or service results.
• Unconscious trade-offs. The tell: complexity has grown through proliferating products, but no one has modeled its effect on the metrics portfolio.
• Funding projects instead of the portfolio. The tell: pockets of progress and focus on singular metrics, but no sequential improvement on the combined metrics.
• Churning the metric set and leaving incentives functional. The tell: corporate goals are discussed at quarterly and annual meetings, but bonuses follow functional targets.

• ▸Metric and Frontier dimension: name the corporate-level metric and tag it growth, profitability, cycles or complexity.
• ▸Corporate vs functional check: confirm that no single function owns the outcome.
• ▸Paired trade-off metric: name the metric most likely to move against this one.
• ▸Baseline and years of consecutive improvement: record the current value and how many years it has improved alongside its pair.
• ▸Industry 'what good looks like': state the end-state reference you are aiming at.
• ▸Modeled impact of complexity or slower growth: note the expected effect of product proliferation, higher service expectations or slowing growth.
• ▸Conscious trade-off decision: state which metric you will accept moving less, and why.
• ▸Target and review cadence: set the target and the leadership-team review date.
• ▸Incentive alignment: list which functional incentives must change to support this metric.

1. 1Audit current incentive structure by function and name the metric each leader is paid on: in Joe's team, Frank the sales leader is incented on volume, Joe on cost, Lou the controller on cash. Write these down side-by-side to expose the conflict.
2. 2Reframe the goal from a single local metric to a system output. Instead of Joe's BHAG of '77' (inventory in isolation), ask which corporate output—strength, balance, resiliency—the incentive should serve, and test whether the current metric moves it or fights it.
3. 3Select two or three actionable metrics that represent the whole system, not five to seven at once. Apply the test: 'action' and 'able'—can leaders take action, and are they able to move it together. Start moving them jointly.
4. 4Translate each metric up and down the organization so it is defined for both the plant-floor operator and the COO. If a metric cannot be stated for both, it cannot align behavior.
5. 5Rewire incentives cross-functionally so no team is rewarded for a local win that damages the system—stop paying operations for cost while paying go-to-market for value; make them share the value equation (benefit over cost).
6. 6Build a guiding coalition with a shared vision and align functional metrics to a corporate metrics framework, then set joint targets that drive the incentives.
7. 7Refine and adjust the metrics and incentives over time as complexity rises; treat it as an ongoing journey measured in millimeters, not a one-time reset.

Joe's company runs a growth strategy with 37 percent of products on allocation—demand outstripping supply, processes unreliable—yet Joe sets a BHAG of '77' to attack inventory in isolation. The problem is his incentive structure: Frank is paid on volume, Joe on cost, Lou on cash, so each leader optimizes a local metric and the system is thrown out of balance. When they cut inventory drastically at the end of the recession, customer service collapsed—the tell that they managed one metric in isolation. The essentialist move is to ask why inventory is the BHAG at all when 'reduce items on allocation' better represents the system output the growth strategy needs. Aligning incentives here means Frank, Joe, and Lou are no longer rewarded for volume-versus-cost-versus-cash trade-offs pulling against each other, but jointly against a cross-functional target on the Effective Frontier. Joe's own admission names the failure: 'we are not incented to make progress on what you call the Effective Frontier.'

• If a metric can only be improved by hurting another function's number (cost up = service down), then it is managed in isolation and the incentive must be redesigned as a system trade-off.
• If operations is incented on cost while sales and marketing are driving value, then stop—value is benefit over cost, so both sides must be incented on the same equation together.
• If a metric cannot be defined for both the plant-floor operator and the COO, then it is not actionable and cannot align incentives.
• If you are choosing more than five to seven metrics, then you have lost focus; narrow to two or three you can move together.
• If good news travels fast and bad news moves slowly, then your incentives are rewarding reporting over honesty—wait for a crisis and it is already too late.

• Attacking a single metric in isolation because it feels easier (Joe picks inventory over the harder allocation goal). Tell: a defiant fixed target like 'my BHAG of 77 stands' with no system rationale.
• Leaving functional incentives intact while talking corporate alignment only at quarterly meetings. Tell: leaders 'want to do the right thing' but admit 'we are not incented' to move the system output.
• Choosing correct metrics but assuming choice alone aligns people. Tell: metrics get defined then nothing changes—only leaders' actions drive alignment, and none is taken.
• Measuring too many things and being unclear which matter. Tell: long dashboards, no shared target, tension and arguments between sales, operations, and finance.
• Functions overstating their own performance and alignment. Tell: IT overstates both its performance and partner alignment; finance stays insular to alignment problems.

• ▸Function / Leader: name the role and person (e.g., Sales/Frank).
• ▸Current incented metric: the single number they are paid on today.
• ▸Local optimum behavior: what this metric makes them do.
• ▸Conflict flagged: which other function's metric this damages.
• ▸System output it should serve: strength, balance, or resiliency target.
• ▸Shared cross-functional target: the joint number replacing the local one.
• ▸Floor-to-COO definition: state the metric for the operator and the COO in one line each.
• ▸Actionable check: can they take action (yes/no) and are they able (yes/no).
• ▸Review cadence: date to refine and adjust as complexity rises.

1. 1Start with the strategy, not the process map. Write the business strategy and operating strategy in one page (the passages: horizontal processes must be 'aligned end-to-end against a business strategy'). Without it, no process has an end-to-end outcome to optimize.
2. 2Pick the metrics that define the end-to-end outcome. Choose a few that represent all elements of the complex system: growth, profitability, cycles (cash-to-cash, inventory turns, order cycle time), and complexity. Manage them simultaneously as a portfolio, not individually.
3. 3Name the cost/service/inventory trade-off the process must manage. The source states an intrinsic relationship among cost, service, and inventory and a battle of cost versus cash at the intersection of operating margin and inventory turns. Write the trade-off down so each function sees it.
4. 4Identify which functions touch the process and compare their current KPIs with the shared outcome. Look at the bulletin-board test: if posted metrics are ROA, lowest material cost and manufacturing labor cost, you have functional metrics and the process is vertical.
5. 5Assign shared ownership and shared data. Put one cross-functional team on the process, working from one set of numbers; use network simulation and modeling to let leaders see how metrics interrelate and hold data-driven discussions on 'what is possible'.
6. 6Realign incentives and evaluation. The criteria used to measure, evaluate, compensate and promote people must change too, or the silos survive. Tie individual targets to the shared end-to-end metrics.
7. 7Translate the metrics up and down the organization so they are actionable from the plant floor to the COO, and facilitate group dialogue before locking a goal rather than setting it in isolation.
8. 8Review on a multi-year cadence. Expect iterative progress by small increments, with continuous alignment as mergers, new markets, channels, product lines and volatility change the system. Do not over-engineer: metrics will never be perfect, and watch for adverse behavior they cause.

The passages compare Sonoco Products (about $5B, paper packaging) with Owens-Illinois (about $7B, glass bottles). Both supply CPG, both were squeezed on margin by commodity prices and tough upstream suppliers, and both pursued growth. From 2000 to 2013 OI invested three times more in R&D than Sonoco, yet Sonoco delivered five times the growth with half the inventory and five times the resiliency. The five reasons listed: clarity of strategy, alignment on a metrics portfolio, consistency of leadership, management of complexity, and strong horizontal processes. The related findings: higher performers emphasize cross-functional processes with shared metrics, and do better when manufacturing reports to supply chain. The lesson is that spending more on a function did not beat a process that works end to end. Read your own company against the five reasons before funding more functional investment.

• If your KPI board shows only functional measures (ROA, lowest material cost, manufacturing labor cost), then treat the process as still vertical and redesign the metrics before the workflow.
• If a leader proposes a single-metric goal (such as cutting inventory), then test it against cost, service and inventory together; in the passages, inventory cuts after the recession hurt customer service, and 37 percent of products were on allocation.
• If incentives still reward functional results, then changing the process will not hold; revise measurement, compensation and promotion criteria first or in parallel.
• If the team disagrees about what is achievable, then use network simulation and modeling to run a data-driven cross-functional discussion rather than debating opinions.
• If you are tempted to perfect the metric set before acting, then stop; metrics will never be perfect and over-orchestrating has an opportunity cost, so move forward and monitor for gaming.

• Optimizing one function's number in isolation (e.g., a BHAG on inventory). Tell: a service or reliability problem appears elsewhere after the cut.
• Declaring the goal without engaging the group ('this is a business, not a democracy'). Tell: the team leaves a meeting stalled and low on energy, with no shared ownership.
• Redesigning flow but leaving old metrics and rewards. Tell: silos persist and executives defend turf with ever-changing performance metrics.
• Using 'aligned and agile' loosely without definitions. Tell: leaders repeat the terms but cannot say what changes in day-to-day operations.
• Confusing efficient with effective, building a brittle, efficiency-tuned process. Tell: it cannot respond when markets shift, and redesign is needed to regain potential.

• ▸Process name: the cross-functional process (e.g., S&OP, risk management, CSR).
• ▸Business and operating strategy: one-sentence statement the process serves.
• ▸End-to-end outcome: the shared result to optimize rather than a functional efficiency.
• ▸Metrics portfolio: the few metrics across growth, profitability, cycles and complexity.
• ▸Trade-offs: the cost, service, inventory and cash tensions the team must manage.
• ▸Functions involved and current functional KPIs: list each, noting where it conflicts with the outcome.
• ▸Shared owner and shared data source: who is accountable and which single data set is used.
• ▸Incentive changes: how measurement, compensation and promotion are revised to match.
• ▸Review cadence and gaming watch: when the metrics are reviewed and what adverse behavior to look for.

1. 1Fix the corporate baseline before you approach any partner. Chart the four metric families the source uses: Growth (year-over-year revenue), Profitability (operating margin, COGS, EBITDA), Cycles (cash-to-cash, inventory turns, order cycle time, days of receivables, days of payables, production cycle time) and Complexity (growth in products or channels). A network design built on one metric repeats the mistake of managing a single number in isolation.
2. 2Separate functional metrics from corporate metrics, and write down which incentive each function carries. In the source, sales is incented on volume, operations on cost, and the controller on cash. Partners will inherit whichever conflict you leave unresolved, so name it first.
3. 3Make the complexity trade-off conscious. Product proliferation, platform complexity, rising service expectations and new channels all push down the operating margin and inventory turns you can reach. Model that effect for the corporate system, as companies do when they design factories, instead of absorbing it unconsciously.
4. 4Form a cross-functional guiding coalition before opening partner conversations. The source places 'Building the Guiding Coalition' and 'Educating the Organization to Take the First Step' directly under the 'Managing What You Can't Control' discussion of value networks. Put sales, operations and finance in the room so partners see one company, not three agendas.
5. 5Choose one collaboration target with trading partners. Pick a specific metric you cannot improve alone (the source's framing is that metrics improve by working collaboratively with trading partners) and state the partner, the metric and the trade-off you will accept on the other axis, such as cost versus cash.
6. 6Write the market-driven outcome as a network-level statement, not a function-level goal. Verizon's example: 'any inventory item in the network to service any order for any channel.' That sentence defines what suppliers, distributors and channels must share and act on.
7. 7Use planning and alignment mechanisms as the connective process. The source lists sales and operations planning, risk management and corporate social responsibility as routes to balance, resiliency and alignment in market-driven value networks. Test each as a way to align partners, and keep the ones that move your target metric.
8. 8Advance in small increments and keep redesigning. The source holds that change happens in small steps, that the metrics system must be redesigned as complexity rises, and that best performers make a series of conscious choices to move to the next level of the Frontier only after achieving balance and resiliency at the current one.

Verizon Wireless, quoted in the source via Anne Robinson, shows the design problem. Ten years earlier there were two phone options, a candy bar and a clamshell. The product then became a fashion item and then a platform for life, and the company is adding same-day delivery, omni-channel service and new services. Robinson expects even greater micro-segmentation of inventory policy and states the goal as any inventory item in the network serving any order for any channel. She says plainly that the metrics cannot stay the same. Joe, the fictional executive, faces the internal version of the same pressure. Rapid market change creates tension between sales and operations (and finance) and leaves him with 'too much inventory of the wrong type.' Applying the method: Joe's team would first lay out growth, profitability, cycles and complexity, then name the volume, cost and cash conflicts among Frank, Joe and Lou. Only then would they pick one partner-facing target. The source does not give partner-level mechanics for this case, so treat the sequence as an application of its logic, not a documented result.

• If functional incentives (volume, cost, cash) still conflict internally, then fix the corporate metric alignment before asking partners to collaborate.
• If complexity (products, channels, service levels) is rising and you have not modeled its effect on operating margin and inventory turns, then treat your current trade-offs as unconscious and model them before setting partner targets.
• If a proposed partner initiative improves one metric (for example inventory) but you cannot say what it does to the others, then reject or redesign it, since the Effective Frontier is a system of finite trade-offs.
• If your outcome statement is written in one function's terms, then rewrite it as a network-level outcome, as in Verizon's 'any item, any order, any channel'.
• If the organization is stuck at balance, then take a small, deliberate step to the next level of the Frontier instead of a leap, and do so only after balance and resiliency hold at the current level.

• Optimizing for efficiency over effectiveness: pushing cost or productivity onto partners. The tell: the cost metric improves while cash or inventory turns deteriorate, and the company drifts out of balance.
• Treating partners as the fix for an internal misalignment. The tell: sales, operations and finance send partners contradictory requests, and quarterly meetings discuss corporate goals while incentives stay functional.
• Letting complexity drift. The tell: product and channel counts rise, the same operating margin and inventory turns become harder to reach, and no one can say what the potential of the system now is.
• Running a single-metric initiative with partners. The tell: a success story built on one number, such as inventory, with no view of the trade-off on the other metrics.
• Starting only after a failure. The source notes the first stimulus for change is often a missed earnings call or end-of-quarter surprise. The tell: partner redesign launched as an emergency response with no coalition behind it.

• ▸Partner and role: name the supplier, customer or distributor and where it sits in the network.
• ▸Corporate baseline: record current growth, profitability, cycles and complexity figures for your company.
• ▸Functional conflicts: list each function's incentive (e.g., volume, cost, cash) that touches this partner.
• ▸Complexity drivers: list the product, channel and service changes affecting operating margin and inventory turns.
• ▸Collaboration target metric: name the one metric you cannot improve without this partner.
• ▸Accepted trade-off: state which other metric you will let move, and by how much, in exchange.
• ▸Network-level outcome statement: write one sentence in the form 'any X to serve any Y through any Z'.
• ▸Alignment mechanism: choose S&OP, risk management or another process to carry the shared decisions.
• ▸Coalition and next small step: name the cross-functional owners and the first increment with a review date.