The Fourth Industrial Revolution is driving rapid change, reshaping businesses and industries. In the face of this giant transformation, when was the last time you evaluated your business metrics? While executives understand the massive shift, many do not feel pressured to alter their business strategies. They innovate in some aspects of their business, while in others — often the metrics used to measure business success — they maintain the status quo.
Why are metrics so important? The metrics you use guide strategy and paint a picture of your company’s performance and strategic priorities.
If your business or industry is in a period of transformation, it is time to review your metrics. Even if your business has not yet moved into transformation, it’s a pretty clear bet it will soon. Many industries, once seemingly unshakeable — financial services, travel and tourism, car services, and so many more — have found themselves open to disruption,and have transformed almost instantly after the entry of new, more nimble competitors.
Many companies do evaluate their business metrics on a regular basis, but many leaders choose not to look at their benchmarks, instead sticking with what’s worked in the past. Admittedly, there is an intimidation factor at play: Defining new metrics can be a difficult task, particularly if your company is experiencing rapid growth and change.
Another issue facing businesses today is that customer expectations have leapfrogged service levels for many businesses, and the metrics that ensured that your customers stayed loyal in the past may not work anymore. Having an honest, realistic view with your management team about the driving issues for your customer base can help to triangulate these issues properly and determine new metrics to better support your business moving forward.
Customers experiencing transformations often question why changing their metrics is so important. They’ve had a measurement for success that they can use to assess their current performance, and more importantly, to measure current against past performance. But when your business changes, especially when undergoing long-term transformation, it is critical that your metrics are aligned with the current state of your business.
When customers ask how we manage our business internally for success, I give this advice: Make your metrics match your ultimate business opportunity. Think big and be smart about where your company is now and where you plan to take it in six months, one year, five years. No matter what your business, it’s more important than ever that you measure success in the right way for your company. Metrics unaligned with the current state of your company and your vision of where your business is moving to will not support success for your stakeholders, employees, or partners. When metrics aren’t aligned with the business, you can’t evaluate performance properly. What are the true drivers of your business? Focus on those, and make sure the metrics are there to measure and manage those areas properly. And if you’re really not sure, engage help. One of the most common processes that our Advisory Services manage is to re-gauge the metrics for any given business based on industry best practices and market knowledge.
This whiteboard session sums it up well: Traditional business metrics might be outdated, and examining your business with outdated metrics can provide an inaccurate view of the bigger picture. The video uses Tesla to explain how company performance varies based on your metrics. For example, viewing Tesla as a part of the electric car market results in a lower amount of market share than viewing the company as a luxury car brand. Tesla’s performance is influenced by the perspective of the industry being considered, and how Tesla leaders define their metrics is critical to meeting and exceeding their goals.
And finally, from a cultural perspective, remember that your metrics ultimately affect not only your performance outlook and business process, but also your employees. Joe Nigro, CEO of Constellation, points out that from an employee standpoint, “Everyone needs to know how each metric fits into the big picture...why and how we’re measuring something, and how it’s relevant to performance.”
Metrics guide success. Isn’t it time to give them the attention they deserve?
Thimaya Subaiya is COO, Success Cloud, Salesforce. Follow him on Twitter @ThimayaS.
Want more information on how you can get help in creating the right metrics for your business? Click here to get strategic and technical advice from Salesforce experts.