O5.005 (Processes Under Control) FINE TUNING YOUR METRICS - WILLIAM EASTMAN

Today we start the process of moving from a generic measurement model to something that accurately describes what is happening and therefore the ability to predict future outcomes.

INTRODUCTION
There are several areas related to building a business that become neglected because its absence is hard to detect - at least until its too late and you are doing a post-mortem.

On Monday, 30MAY21 we covered what is needed to achieve a alignment between people and the goals of the company. Today we are taking one element of that - Results & Performance Metrics and building it out.

OBJECTIVES

1. How to start a process of moving from generic to accurate measures of your business.

WHAT DO YOU NEED TO KNOW
Quick Review of Balanced Scorecard
It is based on the reality of business - Financial Performance is not a cause but an effect of other parts of the company. Our sequence is to start with Customers (current and future) and determine what are the critical metrics. It appears we are working backwards however by starting with metrics it is easier to identify what needs to happen.

Once we know what customers wants and how to measure, next it has to be Made and Delivered. If we are successful at providing what the customer wants, what are the internal processes required to deliver it?

Last but not of lesser importance are People. The reason it is last in the process - it is easier to attract, hire, develop, and compensate when we know what People are supposed to do. Think of this way - compare 2 competing companies. One has great people with no infrastructure and the other has great processes with average people. Long term - which will win the competition?

The last issue of importance is creating Dashboards for people in the firm so they know what is important and how well they are performing. This information is rolled up the organization to management and the owner into Scorecards to track real-time performance of the business. This is when you create Financial Performance.

C + O + P = F

The Following are the key topics covered in previous shows:

• Episode E.009 Measurement Skeleton
• Episode E.010 Measurement Drill Down (Marketing & Sales)
• Episode E.011 Creating Production & Service Delivery Metrics
• Episode E.012 Creating People Metrics
• Episode E.013 Creating Results Metrics​​

WHAT YOU NEED TO DO

1. Familiarize yourself with the key metrics in each Scorecard area.
2. Determine if you want to adopt it as is or develop your own. Just don't stray to far. The template has worked everyplace implemented.
3. Using the generic list or your own, translate it into language that makes sense to you. Beware of too many measures. We use a 4 by 3 model - 4 Scorecards with 3 Dashboards in each for simplicity or 12 total. The rule of measuring is do it and keep it simple. It is better to start with few and when you determine there is information missing, then add.
4. Take each Scorecard Metric and make the it and the corresponding Dashboards part of the Operational Plan (Performance, Profit, or Renewal).
5. Test it for the next 4 months and at the end of September see if it (1) has improved performance, and (2) what questions are left unanswered.
6. Add or subtract Dashboards and test over the 4th Quarter (October through December).
7. Repeat for 1st Quarter of 2022.

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