When it comes to Metrics, Less is More

Sitting in your vehicle, you are positioned to see the road ahead and your dashboard is in clear view to help you manage your speed, direction, the critical functions of your automobile, and even your preferred choices of music for travel. In other words, the dashboard provides you with a forward-facing set of data to guide your trip. If you had no dashboard, you’d be guessing at every turn.  Well, the same holds true for businesses that are emerging from the pandemic and preparing for the road ahead.

Think about Ford Motor Company for example. Years ago, when the company decided to make their strategic goal, “Quality is job one,” they translated their performance into Six Sigma performance standards which were intended to influence all of the company’s forward-facing work. In other words, their metrics were intended to impact all organizational performance standards into the future.

Metrics are designed to elicit specific behaviors that, in turn, are expected to contribute to the execution of your strategy. When metrics are selected thoughtfully, they will indeed support your strategy. But ill-chosen metrics, selected without thought for unintended consequences, will derail it: a dramatic example is Wells Fargo, where relentless focus on cross-selling performance ultimately led field employees to open 3.5 million accounts without customer consent.

In 2020, the pandemic crisis brought to the forefront the importance of relevant dashboards and the means to measure business performance in real time with reliable data. When everything goes well, executives can look past ill-fitted metrics, because they know their businesses intimately and may excuse what otherwise may be considered poor measurement practices.

Dashboards become more unwieldy over time because it is easy to add new measures as the business expands, but most executives feel uncomfortable removing metrics - so they just add up, like sediment layers. Dashboards become too complex to be useful, and that’s when some of the most critical metrics can be ignored. In a crisis, metrics suddenly become a rare and precious commodity. Under pressure and faced with greater uncertainty, executives need data to manage risk; without the right metrics, they are forced to make decisions based on incomplete information and the results only serve to compound the problems they may be facing.  It becomes a vicious cycle of reacting to variables and not being certain of the outcomes.

The dashboard our clients use is called Line-of-Sight which measures our clients’ execution capabilities. Line-of-SightSM assesses execution vulnerabilities in 5 key areas: strategic understanding, leadership, activities and structure, human capital, and of course, balanced metrics. In 2020, the effect of the pandemic became strikingly clear when we assessed our clients’ vulnerabilities: in nearly all our initial execution assessments, metrics were the weakest execution factor. It turns out that our clients rapidly and effectively pivoted their strategy, but metrics lagged behind that pivot, leaving executives to pilot their companies partially blind.

As we help clients enhance their execution capabilities in 2021, metrics are on the top of the list. Improvements include simplifying dashboards to focus on the most critical aspect of the business strategy, stress-testing metrics to make sure they provide leading vs. lagging insight into performance, and making them prominent and easy to access so that metrics drive the right behaviors for execution. A good dashboard will keep you facing forward and looking at the right things – not the other way around.

To learn more about enhancing your own execution, please reach and we will initiate an assessment of your execution capabilities.

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