Measuring to Manage
Which metrics are best and which are most important to measure? What does it mean when we say someone is managing the business? Or, managing the process? Managing the system?
Do we mean they’re accomplishing certain tasks; or ensuring an adequate level of performance?
Do we mean they’re maintaining status quo; or that they’re achieving more?
Successfully managing means something different to each business. In fact, it often means different things to different managers within the same business.
That said, regardless of the definition; the question is always the same: How will you know whether the business/process/system is accomplishing/performing at status quo/better levels?
And that begs the next question; why do you need to know? Seriously, have you ever answered that question for yourself? For your boss? Your customer?
Why do we need to know?
I’m a big fan of starting with why. I could (and probably will) write a whole blog about the importance of having a strong enough why before anything else, but suffice it to say for now, the reason you need a way to know, is: It Matters!
Seriously, it really needs to matter! If it doesn’t matter whether that business/process/system is accomplishing/performing at status quo/better levels, then tell someone there’s nothing to manage and don’t bother measuring it.
Do this quick exercise:
Ask yourself why it matters that you know; then, turn that into a phrase of what you’re managing and the purpose of managing it.
Why does it matter we measure Percent of Orders Shipped On-Time? Is it because it motivates productivity? Or, because it tells us the efficiency of our shipping process? Does it tell us whether we’re doing better since installing that new Order-to-Ship processing system? Or my bonus is tied to staying above a certain level? Or on-time shipments are key to customer satisfaction?
It matters, because… “Percent of Orders Shipped On-Time” tells us how often we’re achieving acceptable performance levels, which in turn, tells us whether we need to take action.
Notice taking action wasn’t one of the reasons considered above. This is more common than you’d think when I ask people why they measure something.
Metrics that drive the right behaviors are well intentioned, and serve a purpose, but they must have more utility than that if they’re to be used to truly manage.
How will you know?
You will know when you measure it in such a way that you get information you can act on; this is the essence of a metric that matters.
78% of orders ship on time. Ok, I now know that 22% don’t ship on time; so what? How actionable is this information? Can I make decisions on just this information alone? Probably not.
So what else do I need to know to take action? The product? The customer? The personnel involved? You probably need to know all of these things, but not for the reasons you think.
You think you need to know the customer, so you’ll know how to manage their dissatisfaction. You think you need to know the product and personnel, so you’ll know what and who to keep an eye on (i.e. manage) going forward. But if managing, in this case, means to take actions that will prevent a late shipment from happening again; is it enough to know the product, customer, and personnel involved?
Well let’s put it this way, if knowing those three things alone would prevent another late shipment, late shipments would have become a thing of the past very early on in the information age.
We take action based on conclusions we’ve drawn from information we’ve received. If you find yourself unable to take action that prevents a future occurrence of a problem, odds are you don’t have the actionable information you need. And without that actionable information, you can’t manage the business/process/system in question.
Join us over the next few months as we explore what it means, and what it takes, to gather and communicate actionable information in the form of metrics. Metrics that help you manage, which if you think about it, are really the only metrics that matter.
Rick Crump is CEO and Principal Consultant at KineticXperience.
KineticXperience, is a KPI Fire Partner and the Executive’s right hand for building solutions with impact.
Contact Rick: @kineticxp or Info@kineticxperience.com