HiTech IT and Tech
Metrics matter, but only the right ones
10 Apr 2020
“Metrics can tell you what is going well and what is not, but they often don’t tell where you wanted to go.” - Adapted from a quote from Scott Gursky (game designer)
In the epic of Mahabharata, Sri Krishna guided Arjun at various stages in the war. While several incidents are widely celebrated, one theme I haven’t read enough about is his contribution to the success of Pandavas by showing them the right path and then continuously keeping an eye on ‘what matters’. It’s the same in organizations and businesses of today.
Organizations, teams, people will do well what you track. Consequently, tracking the wrong metrics will lead you in the wrong direction. And, it happens a lot. Only astute business leaders don’t take their eye off from ‘what matters’.
Many Board meetings and Leadership Review meetings are wasted getting surprised by undesired business performance. MIS reports spew a lot of information that can be presented in a very celebratory fashion. While this sometimes prevents meetings from going sideways, more often than not, it leaves a sense of dissatisfaction and distrust in the business, the systems and the leadership of the business itself.
The financial owners, shareholders and promoters of the business (represented by the Board) deserve the ‘correct and honest’ view of the business if they have to be effective. To be able to do this, they need to:
- Understand and agree on the ‘destination’. (Where are we going?)
- Identify the 3-5 metrics that truly indicate performance and progress along the route to the destination. (What do we need to monitor to stay on course?)
- Review the business performance along with the right 3-5 metrics. (How are we doing on the relevant metrics?)
- Drill down in metrics that show a lag or underperformance. (What are the root causes of the shortfall – which product, which channel, which initiative, …?)
- Discuss clear options to bring things back on track, or make the metrics look even better? (What if we did this? How would this <metric> change if we changed <that>?)
Sadly, MIS systems don’t enable this as they often just become overbearing representations of underlying data being collected. What one needs are few, short and sharp visualizations that give one the ability to drill down on root causes and discuss the way forward based on intelligent ‘what if’ analyses.
If the driver is not looking at the right dashboard in the car, sooner or later, it will crash. Sometimes despite no fault of the driver. The owners of the car, i.e. the investors, private equity owners, shareholders and the Board, should define the right dashboard before it is too late!
Authored by (at the time of writing):
Madhur Singhal, Leader, HiTech IT and Tech Practice
Are you looking to grow faster than the competition? Write to us below.