How does an organization decide to implement a performance management system? To answer this we can learn a lesson from the Malcolm Gladwell, a social scientist and author of the The Tipping Point, who describes how changes in mind-set and perception can attain a critical mass and then quickly create an entirely different position of opinion. Let's apply Gladwell's thinking to the question of whether the widespread adoption of performance management is near its tipping point or whether we will only know this in retrospect after it has happened.

Gladwell observed that to determine whether something is approaching the verge of its tipping point, such as an event or catalyst, it should cause people to reframe an issue. For example, just-in-time production control reframed manufacturing operations from classical batch-and-queue economic order quantity (EOQ) thinking to the method based on customer demand-pull product throughput acceleration. So, is performance management reframing issues and nearing its tipping point? To answer this, we should first acknowledge that performance management is not a new methodology that everyone has to learn, but rather it is the assemblage and integration of existing methodologies that most managers are already familiar with. Collectively, these methodologies manage the execution of an organization's strategy.

Multiple Tipping Points of Performance Management Components

Since performance management is comprised of multiple methodologies, all interdependent and interacting, what is profound is that we are now actually experiencing multiple and concurrent sub-tipping points all at once. Ultimately their collective weight is resulting in an overall tipping point for adopting performance management. These tipping points are:

• The Balanced Scorecard (BSC) - Thanks to successes on how to properly implement the combined strategy map and balanced scorecard framework (and there are plenty of improper implementations), executives are now viewing BSC differently. Rather than BSC being a rush to put the massive number of collected measures (the so-called key performance indicators, or KPIs) on a diet to distill them down to the more relevant few, executives now understand the strategy map and BSC framework as a mechanism to better execute their strategy by communicating it to employee teams in a way they can understand it and then aligning the employees' work behavior, priorities and resources with the strategy.
  
• Decision-Based Managerial Accounting - Reforms to managerial accounting, led by activity-based costing (ABC), may have once been viewed as just a more rational way to trace and assign the increasing indirect and shared overhead expenses to products and standard service lines (in contrast to misleading and flawed cost allocations based on cost-distorting broad averages). Today, reforms such as ABC are now being reframed as essential managerial information for understanding which products, services, types of channels and types of customers are more profitable or not - and why. There is a shift away from cost control to cost planning and shaping because most spending cannot be quickly changed. This means better capacity and resource planning and less historical cost variance analysis. Executives recognize that cost management is an oxymoron, like "jumbo shrimp" in the supermarket. You don't directly manage your costs, but rather you manage the quantity, frequency and intensity of what drives your process workloads. ABC places focus on cost drivers with optical fiber-like visibility and transparency to view all the currently hidden costs with their causes.