When developing a goal or action statement, we frequently promote the S.M.A.R.T. acronym, which defines an effective goal as one that is Specific, Measurable, Actionable, Responsible and Time-bound. We have included a very useful video link that describes this approach to executing strategy. For this newsletter, let’s delve further into measurement as it is an important management tool for executing strategy.
Howard Olsen, co-founder of OnStrategy, (the company that developed OnStrategy) is a lead market researcher and strategist for our consulting services arm. With a Ph.D. in international business and marketing, as well as an MBA and a CPA, Howard provides our clients insight on effective interpretation and use of data. He shares his insights regarding measurement below.
Q: What are some key aspects to consider when assigning measurement to strategic goals and actions?
A: Traditional approaches to measurement have been financially-based, which recant history instead of reflecting something holistic about an organization. Measurements can be predictive to some degree and determining if any industry comparisons exist is an important step to developing metrics, making companies more competitive, as well as aiming for internal improvements.
A great resource for this kind of data is www.kpilibrary.com. When determining any metric, make sure it is one you can stay with for a period of time for benchmarking purposes.
Q: What are some common pitfalls that seem to prevent companies from translating measurement into action?
A: Many times, companies do not take stock of what kind of data can be easily collected. A thorough understanding of measurements currently being collected in any organization is a proper place to start. This helps to ensure that any additional data system that develops will correspond and correlate metrics that make sense. Interpretation of the data that develops must be consistent throughout the organization, with a clear understanding of how the data reflects existing (or non-existent) processes.
Q: What is your recommendation to companies that can’t seem to find the right metric to measure?
A: Convene a group of employees that will be clearly impacted by what is to be measured. Many times they will be able to provide additional insight. You can also establish a proxy that will measure accomplishments or track the momentum related to accomplishments that collectively signify success of a related goal. In addition, a proxy represents what may be needed but currently is not available or not readily available.
Just as you cannot fly an airplane with only one instrument, much is the same for organizations. Multiple metrics/indicators drive holistic performance. Base your organization’s performance with measurements that meaningfully capture customer relationships, processes and internal organizational growth as well as the financial picture. This is a great way to structure strategic approaches and set up key performance indicators.
“In God we trust, all others bring data.” – W. Edwards Deming