“The way to get started is to quit talking and begin doing.”
–Walt Disney
Information is good. Information provides us with the means to improve. Turning data into information is revealing. Gathering data is important. Identifying the right metrics to gather the right data to provide the right information is common sense.
Business owners who think that their companies cannot improve are fooling themselves. Improvement is a journey, not a destination and as the competitive and business landscape changes, so must all companies in order to not only survive but to also thrive.
There should be a balanced set of metrics that all businesses use, but unfortunately, this is not always the case. Many businesses rely solely on financial metrics to measure the health of their company. Financial metrics only measure one aspect of a business and often the only time other metrics come into play is when problems arise that affect finances – such as customer satisfaction, employee turnover, process bottlenecks, or organization change. At that point, someone will identify the need to discover “why” and “how” these things are negatively affecting the company.
There are two very important aspects of gathering data and turning it into information that should be considered. The first is being dedicated to actually doing something with the information that you gather. Knowing is one thing, doing is something else entirely. The second is ensuring that you are gathering the right information for your business.
Doing – There are many ways to gather data, present information, and uncover problems and issues within a company, but all of that is useless if there is not an actual plan to utilize the findings. There not only has to be a desire, but there also has to be buy-in from every level within the organization. If the CEO thinks it’s important, that’s good, but if the rest of the executive team, managers, and staff don’t think it’s important then it becomes a halfhearted effort which yields no useful results.
Once there is buy-in, then there has to be a clear strategy and communication plan. The purpose of measuring is to improve, not to point fingers. The majority of problems are process issues, not people issues and that needs to be clearly communicated to the employees. Additionally, it must be communicated clearly that the information gathered is actually going to be used to improve and/or fix the problems that are discovered.
Finally, every level should have input into the information and data that is going to be utilized. Not all important metrics come from the executive team, but rather from the people that are actually knee deep into the everyday processes. This helps obtain buy-in, but also affords everyone the opportunity to have skin in the game.
The lack of a clear strategy and implementation plan is like sitting on hold for an hour with customer service hearing the repeated message, “Your call is important to us.” Clearly, my call is not that important to them. If the CEO says it’s important, but doesn’t clearly communicate it or implement it, the endeavor is not that important.
Gathering the right data – How do you know what the right data is? If no measurements were established initially, then it’s difficult to know what to measure now. Here are three considerations:
Glaring symptoms – Increased employee turnover. Inability to gain new customers. Loss of current customers. Increased processing time. Customer complaints. Employee complaints. All of these are glaring symptoms that are the result of a larger, potentially deeper problem. Unfortunately, sometimes these glaring symptoms are evident for months but never addressed until they become much bigger problems. Identifying issues before they become problems is a much more desirable scenario.
Ask the janitor – Do you want to know what the major problems are within a company? Ask the person on the lowest rung of the ladder. That person may not literally be the janitor, but it will be the person who lives and breathes every aspect of the process. In many cases, that person is the process, which is even a bigger problem, but that’s a discussion for another time and place. The point is, instead of trying to figure out what’s going on from the executive suite, get down in the trenches and see what’s actually going on.
Use the strategy – Your strategy is supposed to drive your business. And the understanding and implementation of that strategy will help identify the metrics that are needed to run the business. So ensuring that the entire organization/company understands the strategy; ensuring that the right leadership team has the credibility and communication skills to implement the strategy; ensuring that the organization structure and the activities within that structure are intimately tied to the strategy; ensuring that all of the employees are working at and toward implementing the strategy; and finally, ensuring that everyone is on the same page regarding the core competency of the company are all areas where measurements can reveal where there are problems associated with what the company says it is doing and what it is actually doing.
Information is good. Metrics are important. The purpose of metric use is even more important. The desire to improve is the most important aspect of “doing.” Those business owners who believe that their company doesn’t need to improve, are living in a fantasy world. Unfortunately, reality will eventually set in and then they will be forced to face the reality of not only fixing problems they ignored but also the reality of the increased cost of fixing those problems. Most business owners “know” that they have problems. It’s taking the next step to actually “doing” something to identify and address them that’s the difference between action and reaction.
I like the ask the janitor part. In a past job I was sent into to stores that we called focus store. They had high turn over, low sales, customer complaints and were not profitable even though they were in great locations. I was sent in without any information about the store. I would always start by working on the floor with the part time people. In about two days I had a pretty good picture of what was going on and what to do to fix it.
Thanks for posting Larry. I have always found that if you talk to the people in the trenches you get a different and mostly realistic assessment of the situation.
I’m designing a course on how decisions and improvements are driven by balanced score cards. It’s one thing to know what a good balanced score card is like. It’s another to know what makes it good. And it’s quite another on how to itemize the steps that need to be taken to make it good.
We run into too many people that think just because they know something, they can do it. Though knowing is half the battle, it’s not the whole battle.
Excellent points Chris. I wish you well with the course. It is something that is sorely needed.