Most business owners understand the importance of measuring success through analytics. Insights gleaned allow companies to thrive in an ever-changing business landscape by allowing them to:
- cater directly to customer wants and needs
- achieve maximum efficiency
- innovate with the confidence of market success
According to the Harvard Business Review, the key to a thriving business is selecting the right metrics to measure. Doing so will allow business owners to understand, track and manage the cause-and-effect relationships that control the performance of their company.
Select Your Statistics
Define Your Direction
Decide on an overall objective that will drive the company for the coming year. Determining the correct objective is crucial to business success as it determines capital allocation. For many companies, creating economic value is a popular governing objective. Economic value is defined as the highest amount a consumer is willing to pay for a product or service in a free market economy.
Use Cause and Effect to Assess Drivers
To be effective, you need to produce statistics that can reliably reveal cause and effect. When identifying drivers to reach your governing objective, both financial ones like sales and costs, and nonfinancial ones like customer satisfaction and product quality, must be included in the mix. All drivers are variable so continual assessment is imperative.
After assessing the drivers, it’s time to explore ways in which your employees can get on board and help move the needle. Find a way to connect the attainment of the governing objective to employee activities. Providing employees with good communication and the opportunity to get involved will reap rewards beyond the effect on the company objective.
Evaluate and Evolve Your Statistics
Once you have linked employee behavior to the governing objective, monitoring and reevaluation are a must. Just because your value drivers are effective today, they may not be tomorrow. As the drivers of value change, your statistics must follow suit. The days of companies going with their gut and following the crowd are over. As a matter of fact, knowing the right metrics to measure gives organizations a definite marketplace advantage.