Date: 14th June 2018
In my last blog, I wrote about the need for quantifiable data to be able to measure various aspects of your business so you can manage it effectively.
Today we’re taking this concept a step further; writing about metrics and how essential it is that you measure, manage, analyse and review your data before you take action.
So, what do we mean when we talk about metrics? It’s described in commerce circles as “a quantifiable measure that is used to track and assess the status of a specific business process”. Or, more simply, it’s about building an understanding of the data which comes from your business in order to improve its performance. Metrics can be used to analyse key influencers such as customers, employees, investors and staff.
I recently went to a seminar given by Graham Wheeler, the Governor of the Reserve Bank. He spoke for an hour and his whole presentation was based on this topic. In the case of the Reserve Bank of New Zealand, which has lofty macroeconomic goals like the rate of inflation, there are a multitude of metrics that can be used to fulfil their obligation to the key stakeholder, the NZ Government. For the Reserve Bank metrics such as inflation, terms of trade, interest rates, immigration, construction and housing all have an influence on decision making.
Fortunately most of us don’t have the weight of the entire country on our managerial shoulders but we do have businesses to run. We also have more metrics at our disposal than ever before. Whatever sector you operate in the amount of data available is staggering if you know where to look – or if you’re prepared to mine your own.
However not all businesses take advantage of the opportunity. In the case of the tourism industry, I recently read a hard-hitting headline in the media which read ”Tourism in Data Drought”. The writer, Amanda Cropp, suggests that tourism is “flying by the seat of its pants” (in other words, guessing). She claims a failure to gather useful information is putting the industry at risk. Further she notes “the industry needs better data on visitor flows and travel patterns which is crucial for managing growth, for handling pandemics, biodiversity risks and natural disasters.” She then makes a very pertinent local comment; “you need data to predict growth so you can build appropriate infrastructure.”
WOW! Suddenly the value of metrics becomes local and can affect us all; house prices, ability to get the right staff, prevent traffic gridlock, dirty water etc.
Metrics are essential, not only to business but also to everyday life. If we ask the right questions and know what to do with the answers, we’re in control of our future. Powerful stuff.
So what are we really taking about here? For a successful business we need to be able to compare our business with bench marks and goals. To do that we need to use metrics.
Or as I pointed out in my last article:
Not all metrics are useful for every one – so you need to choose the ones that best suit your industry and your place in it. For example:
Value Add Metrics:
Devising a system can be time consuming and complex but the rewards can be life changing. In your specific business, a good start would be to look at the following 10 metrics and keep a close eye on them (credit: Forbes Magazine)
Just the act of monitoring these metrics and understanding how they effect the overall performance of the business will give you powerful insights into the opportunities at your disposal.
P.S. This article is part of my Secrets of Success series, aimed at helping business owners and entrepreneurs with some of the key components of business success. The insights I wish I’d had at the start of my business career. I hope that by passing on these little gems of knowledge I can give you some support and help you along the pathway to growth and prosperity.
Posted in: Secrets of Success Blog