Measure What Matters

This is part 2 of our “How to Execute Strategy” series.

“What’s measured improves.” – Peter Drucker

No truer words have ever been spoken and Peter said a lot of great things, relevant in business and life. Think about measurement in your personal life and the results.

Measure

Finances: How good are your friends at saving who never review their spending or plan how to spend?

Fitness: How fit are the people who never get on a scale and wear sweatpants every day?

Measurement matters and what gets measured gets done. Ever been playing a pick-up basketball game and notice the change when someone decides to begin the “game” and start keeping score? All of a sudden the game matters and performance changes dramatically. We are all moved by measurement, that is why we always keep score in business, but there is a problem with all the measurement we do in business (and in life) today.

Far too often we are measuring the lagging indicators. What is a lagging indicator? It is a measurement of something that has happened in the past. The profit and loss statement that you got in the middle of this month is a measure of what occurred last month. When you got on the scale this morning? Yep, it is an indicator of what you did yesterday or last week?

To get real improvement in life and business we’ve got to start measuring what matters. What matters are the things that cause the outcome you want to occur. Sales calls and deals closed lead to increased revenue. Reduce the calories you consume and exercise to increase your caloric expenditure and you get the results you want on the scale! These causal measures are called leading indicators.

Here is an example from “The 4 Disciplines of Execution”. The Savannah Morning News needed to close a serious revenue gap. They needed more sales, but their focus was spread across so many initiatives that they had taken their eyes off the main product.

Everything changed when they started practicing discipline 2 – Act on the Lead Measures. In their weekly meetings, the employees committed to hit a certain number of new customer contacts, reactivation calls, and upsell offers. What happened? The newspaper quickly began to make more sales and closed the revenue gap.

I’ve seen this discipline work beautifully in businesses and in personal lives. Want to increase the romance in your marriage? Try a weekly date night. The practice of the date night will increase your focus on your spouse, which will lead to the romance. A perfect leading indicator (& a great reminder for me!)

So far in our “How to Execute Strategy” series we’ve covered discipline 1 (Focus on the Wildly Important) and discipline 2 (Act on the Lead Measures). Next week, we’ll tackle how to keep a compelling scorecard.

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Picture courtesy of http://en.wikipedia.org/wiki/Measurement

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