You can measure almost anything in your business, but if those metrics don’t serve a real business objectives, they are just numbers with no real meaning. Measurement is a means to an end, not an end in itself.
I have seen extreme cases where organizations either measure so much or they don’t measure anything at all. Both extremes are dangerous, because it de-focuses people from doing the right things.
A lot of business leaders. quality consultants and improvement experts are obsessed with fancy metrics that may not have direct relevance to the business objectives. Whether measuring a project or a business, here are a five steps to map your metrics with your business objectives:
Know your goals: Identify what are your strategic, tactical and operational goals. Understanding your business challenges and goals is the first most important step. If you don’t know why you are measuring something, you will get numbers and you won’t know what to do with them. It won’t help.
Identify metrics: What metrics can effectively help you meet your goals? For example, if you reduce your defect rates, you can keep your customers happy. Reducing overrun on your project can have direct impact on your bottom lines. You get the point.
Identify impact: Some metrics directly impact the goal, while others may have an indirect impact. Identify whether identified measurement has direct or indirect impact. A great way to do this is to draw a two dimensional table with business objectives horizontally and measurements vertically. Map the impact and you will have a great view of your business goals and impact of those metrics.
Establish operational procedures: You can now establish processes and methods to collect the data, frequency and consolidation mechanism. This is also a great way to ensure that all your operational processes are aligned to perform in a way that it satisfies at least one or more business objectives.
Don’t forget the “invisibles”: My earlier post “The Invisibles in Business Performance” touched upon one of Deming’s seven deadly diseases – “Running a company on visible figures alone” and listed out some areas of your business that cannot be measured, but can have direct impact on your business. Striking balance between managing these invisible aspects, managing by visible numbers and focusing on people seems to be the optimal route to manage the business.
As I mentioned in my earlier post – “With visible figures alone, a business is run. By managing the invisibles together with the visible figures, a high performance, sustainable and scalable organization is built.”
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Note: My book ‘#QUALITYtweet – 140 bite-sized ideas to deliver quality in every project’ explores the people, process and leadership aspects to build a constantly improving organization culture. Check it out if you haven’t already!
Bonus: Read my post (How to) Have a Great Monday! – and have a wonderful start into the week!