How to Measure “Success”
I started watching a documentary the other day on Netflix called Losers. The premise of the show is they tell the story of professional athletes that competed at the highest level but then ultimately came up short. These athletes ultimately turn that athletic defeat into triumph in life. It’s a very inspiring show and worth watching.
The concept of the show got me to thinking about how success in business is usually measured, and is that always the best way? Often when the topic of reporting, and data collection and creating key performance indicators (KPIs) comes up, it’s difficult to nail down exactly what needs to be measured.
The athletes in the series started out trying to obtain a very specific goal, and in business we often replicate this in what we are trying to measure with reporting. The athletes thought the initial goal they were striving for, such as a gold medal, was the best goal to help them reach success. The real turning point and lesson we can use is that they ultimately became more successful when they adjusted their focus to a new goal. We sometimes think we are measuring the important things but when we look
deeper past the initial data and really analyze the data we can see the root cause and this should drive us in a new direction.
For example, let’s say we are measuring on sales by product line. This is a very common and very helpful KPI. But it might not always show us the whole picture and as a result we might be missing out on an opportunity that’s right in front of our nose.
Let’s say that sales are low on a certain product line so after a year or so it is deemed a “failure”. But as you start to dig into the data you see that the product has a higher profit margin by percent than any other product line. Then as you start digging even deeper into the data, you notice that sales are particularly high in certain geographic areas, but those weren’t the areas that you initially targeted, so the product isn’t being sold in other areas with similar demographics. After re-arranging some marketing and distributing to a new set of target areas, within the next year the product is one of the highest selling lines with the highest margin of all your products.
While that’s obviously a very generic and antidotal example, the point is that just because something appears to be a “failure” doesn’t mean that it really is. So, it’s very important to make sure that when we are talking about KPIs and reporting that we are focused on the right things and the important things.
When deciding on what to measure and how to measure it, the concept of the Five Ws is actually a great way to start mapping out how you’re going to truly measure success.
Who – What stakeholders need this data, and who is going to be responsible for collecting/entering the data? Which parties ultimately own the outcome of the data?
What – What specifically are you trying to report on. Decide on the metrics that are going to be important but think larger picture than just regurgitating data.
Where – During the process, where specifically will the data be collected or where will it be derived from? Understanding this helps to find gaps early in the process.
When – Based on the processes, when will data be collected and when will it be reported. This can have a huge impact on accurate information if figures aren’t timely or if there is confusion about when data is accurate.
Why – Finally, and probably the most important is the why of it all. What are you wanting to learn from this information? Think past things like “I want to see total sales” or “I need to measure on-time delivery” and get to the root of why those are important, and from there you’ll start to see the data under the surface that you would have otherwise missed.
The final takeaway is that you need to proper information in front of you to be able to identify when a failure is really a failure and not just a potential missed opportunity.