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How do you measure up? Let me count the ways…

A Few Good Measures Can Set the Stage for Success

By Courtney S. Dade, CEO, Chief Strategist, CSD Marketing and Consulting, LLC

So, you’ve set a course for your Fresh Start—refreshed your vision, mission, values, goals, strategies, and action plans. How can you know that you’re making sufficient progress on those new big hairy goals you’ve set for yourself or your business? How can you describe the contribution each of your employees, partners, or vendors is making to the success of your business? How can you know if you’re on target to meet financial goals for the month, the quarter, and the year? How can you quantify for clients their return on the investment they’ve made on themselves through your business? How can you report to the foundation the impact your organization has been able to make because of the grant they awarded you?

By using a few good measures.

Organizations use many kinds of measures. A Key Performance Indicator, or KPI, is a quantifiable measure that’s used to evaluate the success of an organization, an employee, a project, or an initiative to answer the question: Is it or s/he measuring up? Are performance objectives being met? Are funders, investors, or customers satisfied?

Your choice of KPIs could be influenced by the customers you serve, the industry you’re in, the organizations you’re competing with, the length of time you’ve been in business, the locations in which you operate, or, most importantly, your organization’s goals. In fact, if I had to pick only two factors to consider for measures, I would center my measures around the customer and my organizational goals.

Indicators by any other name would be as sweet…

Amanda McCluney breaks down 11 kinds of Key Performance Indicators that can be used to analyze the health and success of your business in her 2017 BrightGauge Blog article, “A Quick Guide to 11 Types of KPIs,” updated in July 2020.  That’s not to say you should put in place a super complex, voluminous measurement program. Only measure what will drive performance and tell your story to customers and stakeholders:

  1. Quantitative Indicators measure something with a numerical value.
  2. Qualitative Indicators measure a characteristic of a process or business decision.
  3. Leading Indicators are used to predict the outcome of a change in a process and confirm long-term trends in data, and express what might happen, not what definitely will happen.
  4. Lagging Indicators measure results at the end of a time period to reflect upon the success or failure of an initiative.
  5. Input Indicators measure resources used during a business process.
  6. Process Indicators measure the efficiency of a process and facilitate helpful changes.
  7. Output Indicators measure the success or failure of a process or business activity.
  8. Practical Indicators consider existing company processes and explore the effects of those processes on the company; they may be unique to your company or work processes.
  9. Directional Indicators evaluate specific trends within a company, i.e., metrics moving in a positive direction, negative direction, or maintaining.
  10. Actionable Indicators measure and reflect a company’s commitment and effectiveness in implementing business changes; they determine how well a company can enact their desired changes within specified timeframes.
  11. Financial Indicators are measures of economic stability, growth, and business vitality.

Are you staging a balancing act, or toppling over?

Way back in 1992, before I was born (JK, but really, before my brother was born…), Robert Kaplan and Fred Norton introduced a performance management concept called the balanced scorecard. I think Kaplan and Norton wisely associated the sports analogy of a scorecard with the discipline of performance measurement to discourage the thought of some overly fussy, complex, and time-consuming measurement framework, where the act of measuring itself can become the goal, rather than the information gleaned from the measurements, which is where the true value lies. As for the balance, Kaplan and Norton implied that too often companies focused on profit as the bottom line, when, to drive long-term success, they should be considering a balance of measures.

Source: The Balanced Scorecard—Measures That Drive Performance by Robert S. Kaplan and David P. Norton, from Harvard Business Review, January–February 1992

The balanced scorecard links performance measures across four perspectives, shown above.

  • How do customers see us? (customer perspective)
  • What must we excel at? (internal perspective)
  • Can we continue to improve and create value? (innovation and learning perspective)
  • How do we look to shareholders? (financial perspective)

When it was introduced almost 30 years ago, the balanced scorecard was considered somewhat revolutionary, because company performance measurement systems were often built by financial departments, and measures were primarily financial in nature, or focused on measuring whatever specific actions companies wanted employees to take. Then some companies wanted to focus on operational instead of financial goals. Kaplan and Norton suggested that a scorecard that put strategy and vision at the center was necessary. Goals were established with the assumption that people will take the actions and adopt the behaviors necessary to achieve those goals. A balance of measures is selected to pull people toward the overall vision.

The balance scorecard has grown into an industry, with organizations like the Balanced Scorecard Institute, which builds scorecards for companies, and certifies professionals to teach and build balanced scorecards for their own or other companies. Additionally, from the original balanced scorecard work, a strategy mapping process evolved that engages senior management teams in showing the connection between vision, mission, desired outcomes, measures, strategies, and operations. Finally, and importantly, though it was originally applied to the business world, the balanced scorecard has been adapted for use by public government, where the constituent or stakeholder perspective sits on top, with financial stewardship, internal processes and organizational capacity completing the scorecard.

Ready to create a cascade of change?

Regardless of what kind of measurement system you select, you should make sure it clearly connects to the overall vision of the company and simultaneously informs and motivates the work of individuals throughout all levels of the organization. A friend of mine always says there’s nothing more lonely than leading when there’s no one following you. (He’s a choir director, so, in his case, it’s not only lonely but musically tragic!)

One way to accomplish this is through cascading measurements. Think of your highest-level goals—lofty, long-term, and stretchy enough to be almost unattainable, that would likely make great wall hangings to motivate frontline employees, but not necessarily communicate what they can accomplish themselves in a month or quarter, even, by the day-to-day functions they perform. It’s up to the organizational leadership to help all staff see themselves in those visionary goals. And you can do it by thinking about measurement the same way you think about operationalizing your strategic plan.

If I want X in 5 years, what’s my annual goal? If I need to get somewhere in 1 year, what’s my quarterly goal, and so on. To create cascading measures, think about what it takes to get X, in every facet of your business, and then start to shrink that down—from enterprise-wide to individual departments, to the teams within those departments, to the individuals on that team. Then align the measures that show how they contribute to your organization’s higher-level goals.  

If you’re a sole proprietor or smaller business, it’s simpler but still important to create a system of measures that allows you to track incremental progress—weekly or monthly targets—and gradually get “bigger” in your thinking—quarterly or semi-annual progress checks, so that by the end of the year you know specifically how you progressed, and you have material for the story you want to tell about that journey.

The example above shows how an individual might track real contributions to self-improvement and community involvement, which is also relevant when tracking corporate wellness and responsibility programs. The measures shown in blue could be taken to another level “down”, identifying the actual organizations at which volunteering and mentoring occur. It all depends on the kind of story you want to be able to tell.

What’s your story going to be?

Just remember that measurement is less about the act of measuring (process) than it is the information that’s produced (the outputs from that process) to make possible the story that it tells (practical, directional, and actionable). It’s all about the story! The story can impress and compel funders and investors—whether it’s your track record of success, or the gap in your budget that, when filled, will produce meaningful impact or greater (shareable) profits. The story can satisfy the current customer and entice the new one to reap the benefits of that success. Equally important, however, the story ensures that there are NO SURPRISES by top management or the entrepreneur when it comes to making progress in your business.

So, what’s your story going to be? Do you know how to identify KPIs that will create the information necessary to tell it? Do you know how to use that information to tell stories with various angles to various audiences? We’re no Shakespeare, but CSD Marketing and Consulting can help you. We can help you set the stage, in terms of identifying the measures you want to create to monitor operations, gauge progress, and communicate promise and success. And when each act of your show is complete, we can help you take the information you’ve gleaned from your performance and turn it into a story for your various audiences and constituents, creating or strengthening your brand identity.

At CSD Marketing and Consulting, we want to help you communicate your success, your needs, and your promise on a bigger, broader stage, regardless of how small your small business may be. Contact us today, and let’s start co-creating!

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