Lately, we have been inundated with questions concerning the topic of Metrics. What a buzz term!
The first question that we often get is: “What in the world is a ‘METRIC’? Is it something from Europe or should this warrant a medical procedure? Neither!
A METRIC is simply a ‘measure of something’.
Think of the thermometer on your patio. It produces a METRIC that we call temperature. It is one isolated number that, absent other weather metrics (numbers), provides no ‘weather context’.
When you add the current barometric pressure, dew point, wind speed and direction, sky condition (cloudy or clear), time of day or night, you can get a reasonably good picture of what’s happening, weather-wise, right now. In essence, it’s a snapshot of current conditions.
If you were given the foregoing information, could you determine a trend, make a value judgment (good or bad) or forecast future developments?” No Way! The above statistics (excuse me …. Metrics) merely tell you ….. ‘What Is’, nothing more.
We see parallels to this in our daily professional pursuits. For instance, Business Aviation operations regularly report their hours flown, fuel burned and passengers accommodated.
Consider these questions:
- Can you determine, on their face, if the numbers are good or bad?
- Why are these stats relevant and to whom?
- Is the quality of the operation improving or declining?
With mere activity reports, we have no way of knowing the relative plusses or minuses.
You might be thinking, “Now wait just one minute, I have months of those stats and can report, precisely, what happened for the past five (5) years!” That’s great, now what are we going to do with the stats? You might say, “Well, I can spot trends like rising or falling demand.” You are absolutely correct. Changes in ACTIVITY can be detected. But, here’s the Bottom Line ($$$) Question ………….. “Why does it matter?” Humm!
Consider the impact of showing your operation was actually ADDING VALUE (ie, improving profitability) to your Host Enterprise?
That’s what “Value Creation Metrics” are all about. They are exceptionally important and absolutely vital to your long-term success.
We have helped many diverse organizations clearly identify where and they add value to their host organizations. Some are easier than others, but we haven’t been stumped yet.
All of us initially begin at the “No Clue Metrics” stage, then onto “Activity Based Metrics”, followed by “Value Creation Metrics”. Next is the next quantum leap to “Predictive Metrics”. PM’s can be really remarkable, producing a very significant WOW FACTOR, actually forecasting future outcomes.
Yes, this involves some element of “Crystal Ball”, but these forecasting tools can be amazingly accurate. The “High Rent” term for this technique is “Modeling”.
“Modeling” will help you forecast your operating results given a certain set of operating conditions. Thus, if you don’t like where the ‘trend vector’ is headed, CHANGE SOMETHING!
Dr. Albert Einstein (Yep, the E=MC2 guy) defined “INSANITY” for us—”If you keep doing what you have always done AND you are expecting a different result—an all-expense paid trip to The Funny Farm awaits you.” So, the Metric that has the most value is the one that helps you understand the future before it occurs—Predictive Metrics.
Well designed metrics are incredibly important to the Leader of any organization. We can help you with your journey in and through the “World of Metrics”, just as we have many clients in very diverse circumstances and industries. We Guarantee It!!!
We are only a phone call away. Our first conversation is Always On Us!