We could not possibly write a book on the Lean Extended Enterprise and leave out the topic of performance measurement. Executives fully understand how to gauge the enterprise's financial performance. They have a strategic plan and know what needs to be done. The financials provide periodic information about profitability, cash flow, return on investment, dividends and equity, asset utilization ratios, market value, revenue growth, margins, market penetration, and a host of other critical business metrics. Performance measurement is the needle and thread that tie together strategy and execution and turn the Lean Extended Enterprise Reference Model into reality (Chapter 2). It enables companies to achieve alignment and integration (Chapter 8) throughout the organization. More importantly, it allows people to measure the right things so everyone can tell if things are getting better. The all-too-familiar disconnects occur in the details of the organization because there is poor alignment at the operational level. We have observed celebrations for hitting a particular performance target that was totally meaningless, like variances or indirect labor/direct labor (IL/DL) ratios. Sure, the target was hit, but there is no clear rhyme or reason between the target and people's actions. Was it deliberate or was it an accounting adjustment? We have seen luncheons to celebrate the length of time teams have been together. (You guessed it. The obvious question What have they done lately? is always skirted.) As someone once said, "Our measurement system is about as meaningful as rewarding an anorexic person for not...