…what its Leaders Measure
One of the challenges in today’s business environment is the ability to show measurable progress in whatever endeavor the business is involved in. Entrepreneurs wear so many hats, they struggle with where to focus their metrics. Non-profit leaders get caught up in activities without understanding their measurable impact. Corporate leaders create a false sense of security because all they see of the business is through report-driven metrics. All of this to answer the simple question of “How do you know your business is achieving desired results?”
For me, the best answer has always included using the Balanced Scorecard approach introduced by Robert Kaplan and David Norton in their 1996 book, “The Balanced Scorecard: Translating Strategy into Action”. However, whichever measurement tool and/or philosophy you use, there are two tenets we use in helping clients identify areas of process improvement and quality that belong in any discussion of measuring success. The first involves the process of capturing the whole story based on what is measured and the second involves the sequence of where quality is measured within any process.
When leaders look for validation of progress and/or success, their most convenient option is the pile of reports or data housed in so many systems at their disposal. Technology provides a world where they have seemingly unlimited access to data and information. However, it is the conclusions leaders draw from that information that matters most in understanding their proximity to success. A heavy reliance on objective information limits their effectiveness as business leaders. As an executive leader, I used this simple diagram below to make my point.
We had a plethora of objective measures generating literally pages of information on how we were performing against our own metrics. However, we only had an inkling of what that meant to our clients! Until we added the focus on balancing our metrics with feedback from the clients themselves, the decisions we made had limited value. Combining the voice of the customer with the internally focused metrics, leaders have a more complete story of what is happening such that the decisions they make are more impactful to sustainable success!
How many times do leaders hear and accept the following as they dissect a process issue, “I turned in the contract on time”, “I submitted the order just like the process says” or “I wrote it down just as the client said”. Each of these statements, and many more like them, are true and yet contribute directly to the problem by believing them at face value. The issue is not that the information was provided but whether it was provided correctly and completely so the next step in the process is set up for success. Using an example from my own experience, account executives (sales reps) submit contracts for new deals sold following a process to ensure the contract gets processed accurately so the client is billed correctly. However, when the billing is wrong, the tendency is to look at the billing department when the process started at the account executive. Allowing sales to submit incomplete or incorrect information means the process is dead on arrival. The diagram below is of a simple process (Supplier, Input, Process Actions, Output and User).
Notice the quality measurement points are where the inputs and outputs meet the next step in the process. In the previous example with sales contracts, the only valid place to determine if quality metrics were met would be with the contract administration team who received the sales contracts from the sales team. We switched our thinking and provided a quality report to the Vice President of Sales, so the quality and the quantity of sales orders were measured and reviewed. When the quality of orders goes up, the billing issues decrease and profits increase. When leaders measure quality in the correct sequence, true quality becomes integral to sustained success!
Regardless of industry, type or size of business, measuring progress is a key leadership role and imperative to sustainable success. No matter how much information technology provides a leader, the Voice of the Customer must always factor into the leader’s business decisions. Inherent in those decisions is the Quality of inputs and outputs both internal and external to the business. Keeping these two key tenets in mind will help leaders at all levels make better business decisions!
How well is your business progressing and how do you know?