Business Analytics & Data Management
3 minute read
Dec 27, 2018
Written by: Brett Ludden
Question: Is your organization staying busy with things that are keeping everyone busy, or is everyone working toward achieving your core business objectives?
If you are focused on those core business objectives, how do you know when you’re headed in the right direction?
Metrics are the answer. When it comes to metrics, know what matters—and measure what matters most.
Most of us have heard this phrase: “If you don’t know where you are going, any road will get you there.” While it wasn’t written with the intention of describing business, it’s a great analogy.
In many organizations, only the more senior leaders know and discuss the core business objectives. That means everyone else is lost in the proverbial forest, staying busy chasing everything that comes up down every road along their path. And when everyone’s attention is everywhere, no one’s attention is where it should be to achieve those core goals.
No one knows where they’re going, but they sure are busy getting there!
In most organizations, this lack of direction isn’t caused by a lack of reporting. It’s not that reporting isn’t in place. The problem is there’s too much reporting! There are too many distractions and not enough focus on the most valuable information—the key information that will tell you when you’re on the right road, headed in the right direction. Too-much-information gets in the way of useable, actionable information.
Metrics can help. Metrics pull various data elements to create a simpler piece of information. You can then leverage that information to compare to past history, compare to competition, compare to targets—to see not only where you are relative to your goals, but how far you may still have to get there.
But remember: Only once you discretely define your core business objectives can you create the right metrics to help you achieve them. When your organization is transparent about its core business objectives, everyone can then structure their reporting to ensure the organization stays on course.
You know your objectives. You’ve shared them. Now you need the metrics to measure your progress. But not just any metrics. The right metrics.
Every objective requires identifying one or two key metrics to inform decision making. Just one or two! Don’t get lost in the too-much-information forest. When you measure only the most valuable information, you’ll be positioned to make the most informed decisions.
How do you make sure you’re measuring what’s most valuable? What you measure needs to be actionable. The metrics need to be tied to things you can do to impact the goal. The metrics should not only tell you whether you’re on track, but also what you can take action on to get where you want to go. When you’re not on track to goal, your first question is: Why? The right metrics might reveal the answer.
Once you’ve established the metrics, it’s critical that you use them. Seem obvious? In my career, I’ve seen too many organizations not using their metrics often enough to effectively guide their actions and decision making. Outline how often you’ll need to review the metrics to inform your progress. Then do it.
If you can’t prove or confirm whether or not you have (or will) achieve your goal, it’s not measurable or effective. Being “best” isn’t measurable. Profitability is measurable. Growth is measurable. Expansion is measurable. You get the idea.
Sometimes the ability to track a goal against real data is difficult. It’s worth investing the time to dig deep and figure out the metrics. If it’s truly impossible, then you need to reconsider and adapt the goal in a way that is measurable. Is being “the best” about achieving a perfect Net Promoter Score? Having the highest profitability per customer? Maintaining customer loyalty and therefore minimizing attrition?
I recommend creating SMART goals. The SMART framework is commonly used for developing goals. It defines a SMART goal by five criteria: Specific, Measurable, Achievable, Relevant, and Time-Bound.
My advice: Regardless of where you sit in your organization, you should understand the company’s core business objectives and know what metrics you can follow that are most likely to help you drive success.
And for additional insight into various reporting philosophies, make sure to check out Forbes Expert Panel on identifying critical business metrics, where CEO Shawn Sweeney is a featured contributor.
Do you know the difference between data and metrics? Data will do little for you until you transform it into the metrics that directly correspond with your firm’s imperatives. Leveraging those metrics to support and inform your decision-making process is what business analytics is all about. Ultimately, business analytics can help you grow faster, be more profitable, and improve nearly every function of your business, from call center operations to customer satisfaction, from marketing performance to product innovation — and more!
Business Analytics & Data Management 3 minute read
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