KEY #1: KNOW WHAT PERFORMANCE IS FOR YOUR BUSINESS Sounds a bit basic, huh? But this is the part where people don’t want to take the time to do it, even though it’s critical to the rest of the process. And let’s face it: if you can’t define high performance for your business, you sure can’t measure it!
So where do you start? Start by thinking about the products or services you offer to customers every day. This is important, because clients are the final ‘high performance’ designers for their company’s output. What they want? (Here’s a hint, listen to the recurring complaints when they don’t get it!).
for products
- Customers want it on time.
- Clients love it
- Customers want the right amount
For Services
- Customers want kindness.
- Customers want to be understood, listened to
- Customers want problems addressed the first time
There are others, of course, but you get the idea. The point is that your starting point for metrics is the end of your business process: what customers actually pay you.
KEY #2: KNOW THE DIFFERENCE BETWEEN A PROCESS MEASUREMENT AND AN OUTCOME MEASUREMENT Once you know your clients’ desired results, you can calculate the actual measurements for them. As already mentioned, that really has to be done first or you can’t find the process measures to support the results. It might be a good idea to explain this a bit more.
An Outcome Measure is a measure at the end of the process. It is built from the desired result that the end user of the product or service wants. What are some well-known examples of an outcome and the measure that follows from it?
walmart
- Searched result: low price Measure with: price
- Searched result: high quality Measure with: % Returns, Sales Volume
FedEx
- Searched result: the best and fastest service Measure with: market share (people will buy it if you do it right)
- Searched result: reliable delivery on time Measure with: % late deliveries
Intel
- Searched result: high quality Measure with: market share, sales volume
- Searched result: reliable product Measure with: % problems, sales volume (secondary)
- Searched result: availability of the product Measure with: new business volume
lincoln electric
- Searched result: high quality Measure with: sales volume, market share
- Searched result: innovation Measure with: % customer retention, new business volume
By the way, if you’re wondering how “sales volume” could be a measure of whether Federal Express service is fast, here’s the train of thought: … Fed Ex knows from customer feedback that speed is a main requirement of your service –> since the hub concept is embedded throughout your business, a certain speed of response is guaranteed, so –> if people continue to buy (and even buy more) your services – -> must meet the prompt (sufficient) service result requirement. Not too hard to do, huh?
Well, here’s another one. Lincoln Electric is so competitive that international competition has never made significant inroads into its US markets, there is no competition from Japan or anywhere else. How do they maintain that status when every other industry in the country seems to be overrun by global competitors? The answer is innovation. Lincoln identified innovative products and their supporting feature “meeting changing customer requirements” as key to its competitive advantage. They focus a lot on innovation and customer feedback, and if they get it right, they’re not going to lose customers. Therefore, the measures % Customer Retention and Sales Volume are decent measures of a good result.
A process measure is a bottom-up measure that acts like an alarm system: before the product moves forward, it tells you that everything is right or wrong, before it reaches the end of the line and ruins the result.
What are some common process measures?
- Cycle time: tells you how long it takes to do something or if you are on time
- Completeness: Tells you if all parts are attached (or in a document, complete). As mentioned earlier, process measures allow you to catch problems before they reach the customer, and they are important.
KEY #3: FOR MEASUREMENT TO BE WORTH IT, REPORT ONGOING RESULTS TO THE PEOPLE WHO MAKE IT
You have people involved throughout your business that produce your product or service. They know the steps involved in getting it right (after all, some of them have been making it for years). They can make a big difference in the results your business produces if they have a way to spot problems before they get too far ahead. For that reason, giving them access to process measurements will allow them to monitor their own area. Reporting on outcome measures, on the other hand, will let them know how things are going overall, and they can often find ways to improve results by working upstream (in their area), but only if they are told how things are going. results.
Therefore, finding ways to keep your people up to date with company progress through measurement and reporting is beneficial, and can be done for any company.
