Measuring Your Future

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Author: Mark Wardell

Article source: http://www.wardell.biz/. Used with author's permission.

Strategic (or performance) indicators are your company's score card. They let you know how well you are doing at any given time. Most business owners know there is value hidden in their numbers, but few actually take the time to do anything with them. Why?

In considering the most useful metrics for Wardell Professional Development, we began, as most people do, with the financials. It seemed like a logical place to begin because the numbers were already being tracked. We just needed to formalize the process. Then, as time went on, we added numbers from other departments to give us a more rounded picture of our business.

The process worked, but no one was particularly excited about it. The numbers were meaningful, just not meaningful enough. So over time, we found ourselves paying less and less attention to them.

I knew something was wrong. After some discussion, it occurred to us that most of our metrics looked backwards. Our income statements, for example, represented a financial slice in time that is dead and gone. Even our customer satisfaction surveys told us how our customers used to feel. The information was old the moment we received it. What we needed, were forward looking numbers. You can't predict the future, but we felt this type of information could greatly benefit our decision making process.

Reasoning that predicting the future is really more about understanding the odds, we came up with a simple definition. Forward looking metrics are those that vary in relation to future metrics. Prospecting activities, for example, are measurable today, but they have a direct impact on future sales. All things being equal, more prospects equal more sales. So at Wardell, we now know how many new prospects we speak to, the estimated dollar value of potential sales to those prospects, the average length of time it takes for a prospect to become a client, and most importantly, the odds of turning those prospects into clients.

As we continued to sort through our list of performance indicators, we often found that small shifts in our thinking, rather than reinvention, was the order of the day. The question we kept asking ourselves was, "how does this number vary in relation to a future number?" For example, customer satisfaction surveys became forward looking tools once we measured and understood their relationship to our client retention numbers.

Once our metrics were in place, the greatest lesson we learned was that they needed to be shared. By keeping them locked away in the ivory towers of management we were missing out on a huge benefit. We realized that if we wanted to empower our people to make independent decisions, we needed to give them the tools for measuring the results of those decisions. The numbers suddenly came alive for us once we made them public and began incorporating them into our regular staff meetings.

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