You Manage What You Measure

Introduction

Imagine I’m an active angel investor. I have money to invest in startups and I’m interested in learning more about your company. At some point in our conversation, I’m going to ask you the following question: how do you know if your company is improving?

What am I really asking here? Take 60 seconds to think about your answer and write it down.

With this question, I’m trying to find out if you’re measuring those things that matter most to your business. If you don’t measure it, you can’t manage it. If you can’t manage it, you can’t improve it.

Most people will answer with their month-over-month revenue growth, or their customer retention rate, just to name a couple. Okay, fine. What was your revenue last month? What is it this month? What was it yesterday? How many customers do you gain each week? How many do you lose?

manage-what-you-measure

Benefits

The power of measuring is often under-estimated because it seems so simple and obvious. For the same reasons, it’s under-utilized. Here are just a few of the benefits to measuring what’s important to your business.

The Main Thing: Stephen Covey once said, “The main thing is to keep the main thing the main thing.” Measurement is a great way to do this.

Focusing management teams. It’s easy to get distracted. Routine use of measurement systems brings teams back to what matters.

Leverage. Sound measurement systems provide leverage. They allow one manager to manage more.

Remote management. Great for managing remote teams.

Steven Covey

What to measure and how often

  • Deciding what to measure and how often is the work of the management team.
  • Deciding what not to measure is just as important as it is to decide what to measure, if not more so.
  • Not the same for every company

Examples

The WIP Report

  • Job shop environment
    • NOTE: Most software Dev Teams work in Job Shop environment.
  • DAILY count of tickets between work stations. (Work In Progress)
    • Identified where work tickets weren’t moving
  • Dramatic benefits
    • Reduced lead times
    • Simplified management
    • Reduced inventory carrying costs

The DAILY Report

  • Extremely effective in aligning everyone on the management team very quickly.
  • It started as one side of letter-size paper with plenty of white space.
  • Over time, it became both sides of legal sheet packed with information.
    • People who initially resisted became fans quickly.
    • Gave managers the sense that important metrics were being watched.
    • Increased their sense of being “informed.”
    • Helped prioritize management topics.

Tips for Success

  • Be consistent. e.g. If you publish Daily, don’t skip days.
  • Be accurate and relevant.
    • Don’t publish data that is questionable, irrelevant or questioned by anyone on your team.
    • Don’t publish monthly data in a DAILY report.
  • Incorporate into day-to-day management
    • Use them frequently with management teams. Don’t let them become irrelevant or ignored by your team.
  • Start small and build.
  • Show trends rather than just snapshots. People like to see progress.

Quotes

A collection of quotes from thought-leaders on the relation between management and measurement:

“What gets measured gets managed.”
Peter Drucker

“If you can’t measure it, you probably can’t manage it. Things you measure tend to improve.”
Ed Seykota

“What gets measured gets improved.”
Peter Drucker

“The main thing is to keep the main thing the main thing.”
Steven Covey

 

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