Metrics tell the story behind your strategy. They give form to your purpose, focusing and aligning your team on concrete outcomes, rather than abstract statements. They are the measuring stick to either reinforce your activities or alert you to adjustments. They indicate your organizational priorities in finite terms.
Take Amazon, for example. Amazon’s strategy revolves around its mission, “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”[i] In hearing this manifesto, many of us would likely nod our heads that Amazon largely succeeds in fulfilling its mission. However, few of us would be able to list the interlocking activities, investments, or strategic decisions that Amazon has made to accomplish its strategy.
Amazon has effectively boiled down its overarching mission into simple metrics. It has taken a high-level, amorphous Initiative and made it measurable through relevant KPIs. How many products does Amazon offer (compared to competitors)? What are its customer service ratings? How many new spaces has it branched into to provide customers a comprehensive retail experience? Amazon’s calculated strategy depends on data and metrics to demonstrate and speak to the efficacy of what they’re doing and help them determine their next moves.
Organizational success, like Amazon’s, doesn’t depend on us being right the first time or all the time — it does, however, depend on our ability to react, adapt, and clearly communicate our strategies. Metrics give us the insights to do so.
How does one go about tying metrics to their strategy? Below is a breakdown of important factors to consider when measuring strategic progress.
Identify Important and Easily Trackable KPI’s
First and foremost, after determining your initiatives, it’s important to identify the key performance indicators (KPIs) you will use to monitor your progress. The right KPIs vary depending on your strategy, so it is important to evaluate your strategy closely, and identify your desired outcomes specifically and clearly. Then, determine the metrics that will tell a story around your desired outcomes.
A KPI dashboard should incorporate a variety of metrics. Commonly used financial indicators such as net profit margin, revenue growth, and cash flow can be good gauges of overall strategic performance.
It’s also important to incorporate metrics to support and reflect the priorities of more specific Initiatives. For example, if a company’s Initiative is to drive customer loyalty, it will want to monitor customer attrition. If a company is seeking to increase organizational productivity, it may incorporate throughput metrics. Pressure test your indicators to ensure they measure a cause and effect relationship between your actions and your outcomes.
When determining what KPIs to measure, it’s important to identify metrics that:
- Relate directly to your desired outcomes,
- Are easy to populate,
- Provide actionable information,
- Combine qualitative and quantitative insights, and
- Use pre and post measures to analyze continuous improvement and ROI for the given result.
Maintain high-quality data
Once you have identified these KPI’s, you must ensure that the inputs you are using to track them are as relevant, accurate, and timely as possible. Real-time data enables real-time decision making.
The process of maintaining data quality may vary from one KPI to the next. For example, it may be easier to measure and monitor some KPIs like financials on a regular basis, whereas employee satisfaction may combine a variety of inputs that are gathered quarterly. Data quality should be analyzed by the information’s applicability, accuracy, relevance, completeness, and timeliness.
Job Scorecards clarify roles, define success measures, and establish KPIs to drive employee success and satisfaction.
Learn more at www.Coltivar.com
Utilize tracking software
To manage data quality across a wide variety of metrics, it can be beneficial to implement a software or platform that provides updates, alerts you to outdated data, and serves as a central repository for your strategy metrics. These tools can facilitate with data aggregation and analysis. Leveraging a strategy-specific software, such as Coltivar Connect, can also provide different views of your data. Understanding your strategic progress from a macro and micro perspective will help inform decision-making.
Review regularly
Our final suggestion is two-part. First, it can be important to review the metrics themselves — are they telling the story you need to know to make quick, critical decisions? Sometimes, metrics don’t align with our outcomes. In these instances, where they fail to deliver the insights required to pivot or progress, the metrics must be removed or replaced.
Secondly, once your metrics are established and you have a process to track them, ensure that you set up a cadence to review your metrics and understand what they are telling you. As simple as it may seem, companies often fail to use the data they collect. Possessing high-quality data is step one. To remain relevant, you must change your decision-making and processes based on the data. Your organization must evolve with the data. By establishing a regular meeting schedule to review the data and discuss strategic decisions, you will be well-positioned to make the changes necessary to seize a data-driven competitive advantage.
[i] “Earth’s Most Customer-Centric Company,” Amazon, April 4, 2020.
