Good metrics vs. worthless ones, part two
In my last post, I hammered on the idea that a metric is not a goal. I got a little bit of pushback on that, so let me briefly reiterate my point.
If I wasn’t clear enough (which is entirely possible) on the idea that metrics are important, well… Goodness. They’re critical. As Drucker famously pointed out, what gets measured gets done. (Which by the way, is not actually what he said. Drucker said, “What gets measured gets managed.” But then again, the idea of “what gets measured gets done” might actually go back to a dude named Rheticus – the sole pupil of Copernicus. But I digress.)
The key idea is that metrics have a secondary value, at best. The primary value lies with the actual goal – the desired outcome that the metrics are trying to serve.
So, if we can agree on that, then it’s time to move into some metrics-related best practices that I have uncovered over the years.
Let me begin by saying that all of the classic concepts are still valid/true. Great metrics are accurate, on time, benchmarked, strategic, credible, used, shared, blah blah blah. Not that I want to make fun of it, but I hate to drone on about what (I hope) is obvious to you.
So, here is my first best practice: great metrics validate the goal.
What do I mean by that? Picture something like measuring how many demonstrations a sales person gives to potential clients. Sadly, I see this metric all of the time. If it was a great metric, it would show the value of giving a demo. But it doesn’t. Not at all. It simply measures if something that the salesperson called a demo (and maybe even the customer called it a demo) occurred.
The purpose of a demo is NOT to simply show your product off. It’s to explore and validate the requirements of the potential customer. It’s to create a 2-way dialogue between that customer and your sales person. Maybe even pull in other folks from both sides of the table. But you aren’t measuring that. You’re measuring the number of times a rep scheduled a demo – which often turns into a monotonous, painful “watch me show you every feature/benefit possible” demo.
Which is not the behavior that was originally wanted.
Which actually invalidates your goal.
See what I mean?
A great metric will validate the goal, speaking to the heart of the desired outcome. Instead of measuring the number of demos, measure the number of times that the demo worked. Measure the number of times that requirements were validated with a demo or the number of times that a demo opened the door to the next stage. Use the metric to reinforce the goal, to illuminate it. Not hijack it.
My second best practice is this: great metrics provide an insight that leads to action.
Nothing is more worthless that a piece of information that you can do nothing with.
Days without a safety incident, anyone?
Seriously, I jumped on this last time, but it is such a classic example of what I am talking about. Beyond trying to achieve new records, there is nothing that I can gather from a metric like days without an accident. Are we safe? I have no idea. Are we at risk of something bad happening? I couldn’t tell you. Are people engaged and looking out for each other? Maybe, maybe not.
And we see it in other parts of our business all of the time.
Like, what is our current revenue when compared to last year at this time? Tell me – what insight do you get from that? And more specifically, what action do you want me to take? If you say “work harder…”
Great metrics will drive toward an insight.
And this is where it gets a bit trickier. Because getting insight from a metric requires that you are measuring the right thing. Which implies that your goal is the right goal. That you have actually taken the time to diagnose what the problem is – and that your solution to that problem is getting measured. And that you made a legitimate goal out of it.
But if you are not actually measuring the solution to a problem, what are you measuring? Why is the metric so important? And please don’t say because we have measured that very thing for decades.
Which is why we have metrics overload. We have dashboards full of metrics where EVERYTHING is important – so none of it is. We overwhelmed any and all possible insight that could have been identified. Because the goal was not to generate insight. It was to collect and report numbers.
My third best practice is this: great metrics collect lagging, leading, and leadership data.
Let me explain.
Let’s say you want your sale people to sell to the C-suite more. Lagging data (what is produced at the end of the process) would be the overall number of C-suite sales. You could also go after C-Suite revenue or profit. Leading data (what is produced during the process and leads directly to the lagging outputs) could be the number of C-suite interactions. Or perhaps the percentage of overall sales in a rep’s pipeline that are C-suite interactions. Leadership data (what is done by the leaders of the people being measured) would be what the sales managers are doing to ensure that the sales reps are producing the right outcomes in the right way. You could measure the number of times reps are coached on C-Suite interactions. Or maybe the number of joint sales interactions with C-Suite buyers (be careful with this – you could be guilty of invalidating the goal by making the manager hijack the sales conversation to hit a different metric).
The essential principle is that you are layering the role of leaders into your measurement equation – which isn’t done often enough.
Look at it this way, what would you think if you saw that C-suite revenue was low and C-suite interactions were up? You could think a lot of things. But what if you also saw that sales manager coaching was non-existent? I think you’d be a bit more equipped to get things on track. Fast.
Adding in a leadership metric makes a massive difference in both the level of insight you are getting on performance, but also in the very energy that drives performance to begin with. You create accountability and emphasis on teaming – even if the teaming is one-to-one, manager and player.
And yet, too often, we have no idea (beyond simple anecdote) if our leaders are the root cause of the problem – or the key to success. Unless having engaged leaders is not a goal of your organization…
So, there you have it. Three of the best darn best practices I know of. Let your metrics:
- Validate the goal
- Provide an insight that leads to action
- Collect lagging, leading, and leadership data
What metrics-related best practices do you have that I may have missed?
I mua. Onward and upward.
By Tim Ohai
(Originally posted 4/29/16 on timohai.com)