The Magic of Metrics

I love metrics.  Metrics in business means some specific set of numbers you measure and get measured by, ideally numbers that anybody can understand.  You know you have metrics when you find yourself checking the metrics every morning, every day, or every hour.
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I think it’s a good thing.  It makes a game of it. You get a score.  I’m a person who times myself when I run, and I run very slow, but I still note whether it takes me more or less time on the days I do it.  I like scores.  I like to compete.  I usually compete against myself and my past, but still, I like to compete. 

When I was with United Press International in Mexico City, many years ago, every day when we came into the office we had "the logs" as a metric.  The logs were a scoring of how many newspapers used our story and how many used the competition (Associated Press) story.  When it was a story I’d written, the logs were like a football score.  If more newspapers used my story than the AP story, I’d won.  Scores were like 12-7, 4-3, 20-1, etc.  I still remember the one I won 23-1, a story about a mudslide.  My lead was people "buried in a tomb of mud" and the newspapers liked it.

Fast forward to business today.  Ideally, every person in the company has his or her own metric to watch.  The CEO watches a bunch of them, of course, but the bunch is composed of lots of separate metrics.  The customer service rep counts calls taken, or orders.  The tech support rep counts issues resolved every day.  The product development people watch returns, tech support issues per capita, and issue flow.  The finance people watch balances, interest income, and margins.  The online Web people watch visits, pages, pay-per-click yield, orders, sales volume, and search placements.
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My vision of a company working well is people checking and sharing their metrics.  They are accountable for metrics, and proud when they do well.  The goals are built into the plan, and the actual results are compared against the plan, regularly.  The plan is reviewed and revised and the course is corrected based on, among other things, the metrics.

Of course the metrics have to be the right metrics.  Don’t track somebody on things they can’t control, and don’t accidentally use metrics to push the wrong buttons.  For example, years ago I had a sales manager tracked on  sales dollars alone, who also controlled expenses and pricing.  Sales went up but margins went way down.  That was predictable.  Track a customer service agent on call volume alone, or a tech support rep on issues handled, and customer satisfaction will suffer.

The metrics should also be built around a reasonable plan.  They need to be aligned with the plan, so they tie directly into strategy. 

And metrics have to be tracked.  They are part of a larger planning process in which plans are kept alive and reviewed and courses are corrected as assumptions change.

These days I am particularly happy with the flow of the metrics in my particular job.  Until recently I was responsible for the entire company, the CEO.  My metrics were all over the map.  Sales, profits, cash flow, unit sales, payroll, health, wealth, and the pursuit of happiness, all of which was pretty vague and hard to track.  Today I’m still president, but my job is about teaching, writing, speaking,  and blogging.  And blogging gives me a single set of metrics (traffic, page views, subscribers, etc.) I can watch and enjoy, or suffer, every day.  Like back in the old days, at UPI. That’s cool.

3 thoughts on “The Magic of Metrics

  1. Tim,

    Excellent post. The hardest thing for managers to do, in my opinion, is to figure out which metrics really apply in their particular sphere of control. I've found that most managers in bigger companies choose metrics that are far too vague or ambiguous to be of real use. Any ideas of how to identify effective and well-scoped metrics?

    – Mark

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