Business performance is measured as the ratio between business potential and the actual results. To increase your performance you should increase productivity up to the maximum capability of your organization. If this capability is not enough to reach the wanted position in your selected market place, there will still be a gap between capability and potential business. No matter how many carrots you give to the organization, you have to re-design your ways of working to reach the potentials of your business.
A good starting point for any ambition to increase business performance is to monitor status and set targets. But if you only measure productivity and defines targets in relation to this, you may never make good business as the capacity gap will stay too big. Given your strategic aims and wanted business position you have to identify performance targets. True performance targets are the ones measuring company as a “black box” seen from the customer perspective (or other important stakeholders like owners).
To be able to understand where improvement should be made in the Management System you have to monitor both capacity gap and productivity. If your productivity is not good enough, add carrots (do more with what you have). If your capacity gap is too big, re-design ways of working (do things differently).
It has been seen before and will most certainly be seen again that companies with a fantastic productivity goes out of business as their capabilities does not match the needs to reach and maintain sustainable business.