Wednesday, 2 June 2010

Why measuring matters

What we choose to measure makes a big difference to what we finally achieve. In business it is financial results: sales revenue, profitability or share price. In sport it is goals scored, distance run or races won. But these “lag indicators” can only measure the success of past actions, they cannot predict future success. Measuring the things that contribute to the final result is what keeps you on course, and guides future success.

Before I sprained my ankle I was training to run a half marathon. Running 13 or so miles seems like a very big challenge to me, even though it would be easy for many people. Although I cannot control the final outcome (success/failure/jubilation/humiliation) I can control the “lead indicators” along the way such as number of kilos lost, overall distance run in a week, number of times I train in a week or attending running club. None of these things on their own will guarantee me success in the half marathon, but week by week they will increase my chances – even with the occasional injury.

The sales pipeline is one business equivalent. The number of people who enquire about your product or service as a result of marketing campaigns might be the lead indicator. Or the number of visitors to your web site who view more than 4 pages. Or the number of sales conversations you have in a week. Or whatever. Taken in isolation none of these things guarantee healthy financial results, but they are excellent progress indicators.

So measuring the right things really does matter - whether you want to run a marathon, or enjoy financial success. The key is choosing the right measures, and being consistent in monitoring progress over time. And if some of your measures turn out to be not as instructive as you anticipated then change them; they are there as helpers on the journey and not the final destination.

13 comments:

  1. Caroline

    Sorry about you ankle hope not too sore.

    Had an hour plus today on our strategic measures including pipeline and how these relate to our objetives, who keeps score, who is accountable, who and what decides a target.

    Agree they are not the destination however they describe it and make it real, vision is great but does need some grounding in some way even if never quite achieve.

    Be great to chat further on this sometime

    Robert

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