Optimizing Your Operations with Purpose-Driven Metrics

Optimizing Your Operations with Purpose-Driven Metrics

Are you a lover of spreadsheets, metrics dashboards, and KPIs—and all that they make possible in your business? Or are you more of a fly-by-the-seat-of-your-pants kind of leader, with a general idea of where you’re headed and a lot of hope that you’ll get there?

Spoiler alert: Hope isn’t a great strategy for achieving your desired future state.

Fulfilling on your vision requires you to know, at any given moment, how close you are to achieving it. If you want to win a basketball game, you need to know the current score. Keeping your eye on the scoreboard throughout the game allows both coaches and players to make strategic decisions about how to optimize the team’s performance and influence the outcome of the game. 

The same principle applies to business. You’ve got to keep your eye on the scoreboard (i.e., your measurements and metrics) to optimize your operations to be as lean, efficient, and profitable as possible. You’ve got to know how well you’re operating now before you can figure out how to operate better. I’m not just talking about your financial KPIs but rather all the pieces of your business that contribute to your overall success and sustainability. Tracking the right metrics allows you to identify—and find solutions for—the gaps in performance that are keeping you from meeting your goals and achieving your desired future state.

The Balanced Scorecard

Total optimization of your business requires a balanced scorecard. The term “balanced scorecard” was first introduced in a 1992 edition of the Harvard Business Review. It captures the idea that metrics must go beyond traditional financial measures and consider other strategic measures to get a more “balanced” view of the company’s performance. The balanced scorecard allows companies to see (and improve) the internal processes that drive the external outcomes. 

The balanced scorecard is especially useful to drive the change management process within an organization because organizational change requires a shift in what and how you’re measuring. If you use old measurements, you will see the same old results, no matter what changes are being made. However, new, strategic measurements will yield new results.

Each organization can develop its own balanced scorecard based on its priorities. A strong scorecard typically includes these four categories:

• Finances: How will you measure the organization’s financial performance and use of financial resources? How will you track sales, expenditures, and income to understand financial performance? These financial metrics may include dollar amounts, financial ratios, budget variances, or income targets.

• Customers: How will you measure success from the customer perspective? How will you collect customer perspectives to gauge their satisfaction with the quality, price, and availability of products or services? 

• Systems & Processes: How will you measure the quality and efficiency of your product, services, or other key business processes? How well are your products manufactured? How will you track gaps, delays, bottlenecks, shortages, or waste?

• Organizational Capacity: How will you measure success through the lens of learning and growth, human capital, infrastructure, technology, and culture? How well is information captured, and how effectively do employees convert that information into a competitive advantage within your industry? How will you track employee satisfaction, development, and retention?

To create your balanced scorecard, you must develop objectives, measures, targets, and initiatives for each category that allow you to view and measure your business more holistically. Once you have this balanced picture, everyone within the organization can make better decisions to drive the future success of your business.

Here are some example metrics you might decide to track for each category:

Purpose: The Missing Metric

If running a Drishti-focused organization is all about keeping every aspect of your business fully aligned with your purpose and core values (and it is), that means there’s something missing from the traditional balanced scorecard: PURPOSE.

This fifth metrics category is an essential part of your balanced scorecard if you want to fulfill your purpose and achieve your desired future state.

• Purpose: How will you turn your WHY and non-negotiables into metrics? How will you know whether you are fulfilling your organizational purpose and staying true to your core values?

Here’s how one of my clients used their core values and non-negotiables to create metrics for their balanced scorecard:

With these metrics, the client recognized exactly what delivery looked like for their entire product promise. Based on their core values of consistency, excellence, and community, the metrics flowed naturally from the core values and non-negotiables that the leadership identified to be most important. Purpose is evident throughout their balanced scorecard.

How to Measure and Report Your Metrics

Once you've established your metrics, it’s time to create a consistent process for measuring, documenting, analyzing data, and tracking progress. What systems need to be in place to collect and record metrics data? How will metrics be collected and reported? Who is responsible for which data? Who is ultimately accountable for the success of each metric? When and by whom will data be reviewed and analyzed? How will you track your progress over time? 

Here’s a basic scorecard builder to help you create effective KPIs for your department/organization and ensure everyone knows who is accountable for each metric.

Reporting can be completed via spreadsheets, dashboards, and other virtual/remote tools. The form of the report is not what’s important. The important thing is that the information is consistently reviewed in regularly scheduled leadership meetings such as weekly or biweekly Agile Flow meetings. Leveraging a consistent process and schedule will keep everyone on the same page about what matters, encourage collaboration and growth, enhance optimization efforts, and allow the team to prioritize and problem-solve together. 

As with all things in business, it’s important to stay agile and flexible with regard to measuring and reporting. The metrics themselves will evolve as your business needs change. Sometimes, for example, a metric is temporary to get to the next phase, then the metric evolves or changes altogether to match the new needs of the business. Revisit your metrics annually (or quarterly if needed) to make sure you are always prioritizing and measuring what matters and that your metrics are aligned with your current goals and strategies. You can also tweak and refine your metrics as needed—just be sure to give them enough time for consistently measuring and reporting before further refinement.

The Bottom Line on Metrics

The key takeaway about measuring and reporting is that using purpose-driven metrics to make decisions and improve outcomes is an essential organizational and departmental capability that cannot be ignored if you are to achieve your desired future state.