Metrics in business help us understand where we are and measure progress. It helps answer questions such as: How do you know that your business is on track or needs a course correction? Is the business making enough progress? Is time used wisely, or would a different approach work better?
My son is taking A-levels and my teenage daughter GCSEs next year – interesting times! How do they know if they are on track? A number of topics make up each subject. If they study and test their knowledge on each topic then they’d expect to do well. They might try out different techniques and see which works best for them. One approach might take less time and give a better result. That same approach might not work for another person who might have a different learning style. The point is, measuring progress and what works best, is how we know we’re on track and using our time wisely.
This is part-two of a three-part series of “Seeing through the business fog”. This blog looks at having a feedback loop to make sure you’re on the right path. Earlier in part-one, “Business Direction – Framework for SME Success” we looked at the importance of building a framework around your business direction. The final part “Go to Person – there’s a dark side”, explores how to avoid being over a barrel or putting undue pressure on staff.
Measurements make more sense when designed as a business system. Our guide, Business System: An Essential Guide to Growth, will help you design a robust system for better results.
Let’s face it, at times it can be tough to keep going when we don’t know if we’ll succeed. We all feel good when we win or encouraged when we’re on track. It’s reassuring to know we’re making progress toward our goal. Sometimes we need a gold star. In the past, a gold star was from someone we trusted, that knew the journey, and could tell us we were doing alright.
Now we’re running our own business, we need to figure out what’s good progress, celebrate and do more of the same thing. Just as a teenager might feel overwhelmed with the thought of taking an exam, knowing we’re on a journey and making progress can help us feel less anxious and more in control. Having the right metrics in business will motivate the team. Metrics that measure progress toward the business goals, giving a countdown and providing encouragement.
Is the ladder against the right wall?
Stephen Covey’s “First Things First” talks about thoughtful goal setting. He says “Sometimes the goals we achieve are at the expense of other more important things in our lives. It’s the ‘ladder against the wrong wall’ syndrome”. It’s great to set targets for sales or growth, yet without balanced goals, success is likely to be short lived. As you think about metrics in business, it’s wise to think about what you truly want to achieve. The team will naturally focus on what’s measured, so make sure the focus is where you want it to be.
In part-one I talked about our walk-up Scafell Pike. We’d planned our route; we knew roughly where we wanted to be at different points in the day. When there was a decision to make, we’d check the map. When we stopped for a rest, we’d check our progress against the map. We tracked our progress. We were also assessing other things. Were we getting too cold, or wet? Were we drinking and eating enough? Was anybody suffering from any injuries or sore feet? Was everybody in good spirits? If it had been sunny, we’d have checked our sunscreen and for signs of burning. In short, metrics in business include everything that’s important for the team’s success.
There are two types of measurement, lead measurements and lag measurements. Going back to our teenagers, passing an exam is a lag measurement. You don’t know if you’re on track until you get the exam result. The problem with lag measurements is that you don’t know if you’re on track until it’s too late. Lead measurements tell you if you’re on track to achieve the goal. Time spent studying a topic or results of topic tests are lead measurements.
Teachers use these to assess progress and spot shortfalls early enough to do something about them. Students that focus on achieving lead measurements don’t need to worry about passing the exam, they will be prepared and highly likely to do well. Similarly, metrics in business focused on lead measurements will keep the business on track. The business doesn’t need to worry about achieving the goal, only on achieving the lead measurements that will result in success. You might want to check out how Narellan used lead measurements to increase sales by twenty three percent and save thirty percent on their marketing budget in “How can information technology help a business”.
We’ve seen the value of having a metrics in the business, for motivation, course correction and giving team assurance of reaching goals. You can use measurements as you go along to find out what’s working well or spot shortfalls earlier enough to do something about them. You have to be clear about what you’re truly trying to achieve and measure what will get you there.
For some, it might be difficult to picture how all the parts of the business work together to achieve success. Others may struggle having enough time and motivation to create the right metrics & focus that work for them and their business. A few want help to move faster to grow and scale. If that’s you, and you’re ambitious to scale your business, then we can help you to create a digital view of your business so that you can shape your future and create metrics in your business that will take you there.
If you’d like to explore the ideas in this article further or need help and advice, please contact Rogan at firstname.lastname@example.org – to arrange an informal chat.
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