Trending
Measuring for sake of measuring is a waste of time. In order for measurements to be a valuable part of an effective strategy, they need to be more than passive content that’s mostly used for identifying problems.
To be successful, we need to know what we’re measuring and why, use clear and simple measurement tools, and clearly communicate processes and results. And, here’s the key, measurement is a process for improvement and shouldn’t be used as a way to beat ourselves or our team up.
To help you avoid common pitfalls, here are some helpful hints for making the most of your measurements.
Measurement should clearly relate to goals. Since goals can be complex and you’re often operating with more than a single goal, this can be tricky but is essential and starts with strategic goal setting. For example, focusing exclusively on short term profits can reduce efforts towards critical factors like investment, innovation, satisfaction, effectiveness, and growth. Corporate strategy and sports teams demonstrate this by reducing long term focus on growth to meet immediate needs.
“Regression to the mean” is a well-respected and valid tool you should be utilizing. While it sounds complicated, the term is just used to describe the statistical tendency for data to trend towards an average. For example, the average U.S. male is five foot nine inches tall. Estimating the average height of men after viewing a bunch of 6-foot athletes is disruptive. However, we do this exact thing regularly when it comes to measuring the stock market, the weather, and sporting events.
The 80-20 rule generally works. 80 percent of your efforts generally account for only 20 percent of your results. However, the flips side of that means that just 20 percent of your customers and products can be prioritized to produce 80 percent of your success — and that’s pretty cool.
You need both objective and subjective measurement. We tend to rely on quantitative measurement because it is believed to be more reliable, consistent, and, valid. While true, we need to make sure we’re looking at subjective measurements as well. Qualitative measures like effectiveness, quality, prioritization, and satisfaction can be just as – if not more – important to the success of your business.
Perceptions and bias can greatly affect measurement. Selection and sampling can affect the measurement process. So can our own internal biases and perceptions – without us even being aware of it! Our perceptions are frequently based on recent events. We tend to ignore simple cultural situations like weather, group history, and success. My simplest recommendation is to avoid being the last to speak to a hungry audience!
Measurement must consider change. We’re often slow to modify measurement activities. COVID and the associated years must be considered when analyzing data moving forward. For example, 2020 and 2021 data can be outliers in any trend analysis. Without considering the change in external circumstances, we’re likely to draw incorrect conclusions from the data. Economic, political, and social changes can also alter results. For example, the aging of our population, the popularity of remote work, Zoom meetings, and increased income inequality are having dramatic impacts on consumer behavior and the economy. The real question isn’t whether things will change — it’s whether you will change with them.
Don’t eliminate outliers. Risk tends to scare people. Our first thought is often that we’re going to lose money. In reality, many low probability alternatives have huge payoffs and limited risk. For example, young people should embrace risk in their early career efforts since job turnover rates are high anyway. Even as you move up life’s ladder and start investing, the mentality remains the same and your portfolio should include some high-risk investments. This concept plays out regularly among gamblers – who pursue the best odds, not the lowest ones – and sports statistics that now include 3-point shots, fourth down conversions, and bases stolen.
Different efforts are required for considering alternatives and decisions. Effective solutions are limited by the alternatives considered. Making decisions is based on establishing criteria and eliminating alternatives. Thus, developing alternatives requires open and widening efforts.
A relationship does not mean cause and effect. Ice cream sales and violent crime are related. However, extreme heat- not the two factors themselves – are the cause. Nevertheless, variables like weather, demographics, and the economy can be related to any number of factors. Resist the urge to automatically assume causal relationship where there is none.
Understand the diversity of data distribution. Typically, we just assume that data is distributed normally – with a high midpoint and fairly equal higher and lower numbers. If you’re measuring something like height, this is pretty accurate. When you start measuring more complex things like wealth, things get more complicated. Understanding the diversity of data means considering the impact that issues like change, disruptions, and uneven growth have on results.
Is your measurement valid and accurate. Not everything can be measured or always be effective. For example, for decades the measurements used to create baseball statistics neglected to take the Negro League into consideration — and, therefore, presented inaccurate data. Recently, this has changed and stats now include the Negro League and include discussions about how many no-hitters Satchel Page (since many were previously unrecorded).
Understanding the strengths and weaknesses of your measurement is critical to success. There are a number of tools that can help mitigate the challenges.
- Historical or similar data can sometimes serve as a surrogate
- Simple estimates can provide a range of solutions
- Comparing the consequences of different alternatives can show the implications of different solutions.
In summary, measurement is an opportunity to improve performance and shouldn’t be feared or neglected. Set goals, use clear and simple tools, utilize the process for improvement and take comfort in the fact that even if you don’t reach your goals, you’re further along than where you started.