One of the common themes we hear from leaders who are tasked with implementing the tactics of a strategic plan is that there are too many metrics on which to reasonably focus. Even if the annual goals are tied to the short term and long term strategic plan (that’s good!) here are some of the more memorable comments that have come our way:
- When everything is important, nothing is important.
- When you do not measure what is important, what you do measure becomes important.
- With too many moving parts with conflicting needs to focus upon – what are the true priorities?
We get clues on the importance of metric prioritization from the disciple of Six Sigma. In a Six Sigma project there is usually a primary metric which is used to keep score. This primary metric should directly impact the customer. Additionally, the primary metric should have standard characteristics (tied to the main objective) and be measurable and tracked graphically and visually on a routine basis over time.
The primary metrics we normally see are some combination of Quality, Safety, Volume, Profit and Customer Satisfaction, all of which are frequently all treated as primary. Even if the various goals are weighted differently for incentive compensation, there is no truly distinct ranking; they are frequently treated in practice and on corporate scorecards as equally important.
A secondary metric on the other hand, is a metric that we do not want to sacrifice at the expense of the primary metric. Therefore, the main goal of an organization will be to move the primary metric, but ensure that secondary metrics do not deteriorate or stay constant. In this way, leaders are clear on which metric is most important and how the other metrics influence and are influenced by the primary metric.
Questions to ask in establishing metrics:
- Is the chosen metric truly the most important?
- Is each metric in the hierarchy measurable over time?
- Do we have too many metrics to chase, keeping our leaders from focusing primarily on the most important?
According to Janneke van Geus, Google’s head of insights & analytics. “The biggest misconception is the perceived need to capture and measure everything and anything. A common belief is that if you capture every type of metric, it will magically tell you what works and what doesn’t. Unfortunately, that is not how we get to insights, and would be comparable to having to find a needle in a haystack.”
Too many metrics may be worse than no metrics. They require large amounts of resources to track, and they produce huge amounts of data that call for substantial time and effort to analyze. This is all useless if it doesn’t lead to meaningful insights and actionable recommendations.
If you need help determining what metrics your organization should track, or how to effectively analyze them, schedule a consultation with our team today.