Metrics of success: You can't improve what you don't measure

I was sitting in a meeting last week with one of the companies that I am working with. It was clear that the team was struggling to agree upon the “definition of the situation.” 

By that I mean that there was no consensus on either the key milestones that were most integral to the company’s success or the primary challenges the company needed to overcome to realize its potential. This prompted me to ask what the “metrics of success are.” The team couldn’t answer, leading me to quote a truism of business: you can’t improve what you don’t measure.

In business, there is strategy and there is tactics. Strategy is the big picture, the long term game plan. Tactics are the little picture, the step by step increments for getting from Point A to Point B.

To determine if the tactics are working, it is important to identify the key indicators of success in as qualitatively quantitative terms as possible and track them rigorously and religiously, making them transparent to the organization. This ensures intellectual honesty within the team and creates dissonance when what the team is asserting is out of sync with the metrics of success.

While obvious metrics of success are sales relative to sales goals, other metrics can pertain to number of customer wins that are in production or reference-able versus problem accounts. They can track number of qualified leads generated or press mentions. Similarly, if your company’s strategy is to up-sell existing customers to get them using other products in your portfolio, then metrics would explicitly track number of up-sells in a given month. Alternatively, you might be tracking percentage of wins versus losses when facing your best competitor in head-to-head situations.

 

To be clear, less is more when it comes to defining and tracking metrics of success since at a certain point too much data dilutes focus. 

So what are your company’s metrics of success?

Related Links:

1. Hold a Picture in your Pocket:  Cognitive dissonance and manifesting change.
2. On Intellectual Honesty:  See things as they really are; act on that knowledge.
3. The Five Keys to Business Success: The most important drivers to entrepreneurial success.

Comments

[John "Z-Bo" Zabroski]

Thanks Mark. Great post.

One point worth making is about querying those datasets you are collecting. Knowing what metrics are valuable isn't enough. The database administrator needs to know what these metrics are so the database can actually execute these queries and give you back your metrics. I know, that is a technical aspect, but it is necessary. What is these reports need to be real-time? You tell your employee that you would like to see data about product sales figures across all customers. It is better if you can get that report in your hands ASAP and begin planning around it. I'd imagine this is only more relevant for a start-up that needs to switch plans on a whim and go where the market is being defined.

I only say this because I've been thinking about taking the series of actuarial exams. My goal is to prove to myself I can do actuarial quality work. Really, I'd like an enterprise quality open source web analytics tool. However, just knowing statistics isn't enough. It is necessary to think about the structure of the data, or real-time reports just won't be possible.

[marshal]

Good site - you\'re a pretty good writer.

[dirk]

Very nice work, admin :) Good luck!n