To manage well, you need to measure well

by Marketing / Tuesday, 21 August 2018 / Published in Business Intelligence, Business Performance Management

Peter Drucker, one of the best-known and most widely influential thinkers and writers on the subject of management theory and practice, is quoted as saying, “What gets measured, gets managed”

There are 3 steps to measuring how well you are growing and thriving in business today:

Develop a strategy
Set up KPIs to meet your strategy
Measure how well you are tracking against those KPIs

 

 

Develop A Strategy

Planning for and achieving business success starts with setting out a strategy.  Don’t be put off by the word strategy, it’s just a ‘big consulting’ way of saying you need an action plan.  At its simplest an action plan involves the following steps:

  • Assess where you are right now
  • Create a vision of where you want to be in a year, 18 months, three years
  • Set out milestones that when followed create a path from where you are to where you want to be. Each milestone needs to be specific, measurable, achievable, realistic and time-related

Setup KPIs To Meet Your Strategy

As in big business, small businesses need to set KPIs (or Key Performance Indicators) which act as shorter- term goals to aim for. Decide what metrics you want to measure.  You probably want to set out some financial, customer, process and people goals.

  • Your financial KPIs should include things like profit made, cost of doing business, actual revenue as against projected revenue, sales by region and product line etc.
  • Your customer KPIs should include how much it costs you to acquire a new client, customer satisfaction and retention rates and number of customers at a point in time
  • Your process KPIs should measure the number of support tickets and product defects
  • At the very least your people KPIs should look at employee turnover rate, employee satisfaction, and skill sets in various lines of business

Measure how well you are tracking against those KPIs

Once you have established your KPIs, you will need to continuously measure how you are tracking against these goals.  It is easiest to use a technology tool to do this, especially one that enables you to visualize your progress in pictures rather than just columns of numbers.  If you’re like me, and a lot of other people, it is simpler to understand the impact of the numbers if you can actually visualize the differences.  Alternatively, you can analyze the data in your systems manually to see how you are faring against your KPIs.  Either way, you need to be sure to constantly gather the data and put it in your systems.  No form of measurement will be effective without sufficient data.  When you take a look at how you are tracking on a regular basis, think monthly, you may need to make small adjustments to nudge your business back on track to meet your KPIs and ultimately your strategy.

Big businesses are experts at doing this planning and measuring and constantly adjusting to keep on track.  With a little effort and some smart tools, small businesses can be too.

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