Key Business Metrics and Milestones

“What’s measured, improves”  — Peter Drucker

The difficulty with most strategies is not the content of the plan or the accuracy of the data, but the execution.  Most strategies fail due to poor execution.  As I have mentioned in previous posts, there are a number of reasons for poor strategy execution. (see 2011 Posts: Best of Strategy Execution )

Our philosophy of metrics can be summed up in the following statements:

  •  “If you don’t keep score, you are only practicing”
  •  “A strategy without metrics is just a wish. And metrics that are not aligned with strategic objectives are a waste of time.”
  • “Be careful what you measure—you might just get it.”  That is, by measuring something, you are declaring to your managers and employees that an activity is important.

One of the hidden barriers to effective strategy execution is the lack of metrics that are specifically related to the strategy and the strategic objectives of the company.  Most organisations have dozens and dozens of metrics which are reviewed frequently by the senior team as well as other metrics at the functional, departmental and project level.  The interesting part about a number of these metrics is that they were developed under earlier strategies  and have been kept, and then added to, even though they may or may not reflect the current goals and objectives of the organisation. Sometimes having poor metrics is as bad as no metrics at all, since metrics tend to drive what executives focus on.

Rely does an organisation take out a blank sheet of paper and come up with a current list of metrics, ones that actually are derived from the strategy they are supposed to measure.

Clear, concise and relevant metrics serve multiple purposes within the strategy implementation process:

  • Governance: Metrics allow us to manage and govern the overall focus, attention and resources we give to certain business activities.
  • Reporting: This is the most commonly identified function of metrics. We use the Line-of-Sight Execution Roadmap™ metrics to report performance to ourselves, our employees and other stakeholders.
  • Communication: This is a critical but overlooked function of a metric. We use metrics to tell people both internally and externally what constitutes value and what the key success factors are.  People don’t easily understand value, but they readily understand metrics.
  • Opportunities for Improvement: Metrics identify gaps (between performance and the expectation). Intervention takes place when we have to close undesired gaps. The size of the gap, the nature of the gap (whether it is positive or negative) and the importance of the activity determine the need for management to resolve these gaps.
  • Expectations: Metrics frame expectations both internally (with our personnel) and externally (with our customers). Metrics help set customer expectations. For example, if we say that we deliver by 9:30 a.m. next day, we have formed both a metric (i.e., did we meet the 9:30 deadline) and an expectation. We will satisfy our customer if the order arrives by 9:30. We will disappoint otherwise.

A CEO… should be tracking and managing by the numbers; the nonfinancial numbers. By the time financial results turn downward, it is far too late to act. Financial numbers measure the past and lead to “rearview mirror management.”                    -James Heskett

Tight Lines . . .

John R Childress

john@johnrchildress.com

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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5 Responses to Key Business Metrics and Milestones

  1. Pingback: 5 Essential Steps to Successful Strategy Implementation » Talented HR

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