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Running a Business by Metrics
Metrics are measurements used to determine the effectiveness of a business's strategic plan, but should not drive daily operations or cause a business to constantly change its practices. If metrics show the plan is not working as intended or was incorrectly defined, the plan may need revision with leadership approval. Do not overreact to short term misses, as staying the course could still lead to long term improvements if the plan is properly executing overall. Drilling into the data can show if long term goals are on track, in which case the business should continue its path despite any short term metric variances.
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Running a Business by Metrics
- 1. Runninga BusinessbyMetrics Many businesseswere knowntomanage theiractivitiesbymetrics (MBO). Metricsare a measurement of the effectivitytoyourstrategicplan. They are a tool and not the driverto how to execute adaily businessmodel. Metricsare useful indetermining yourwhetheryourstrategicplanisworkingbut businesspracticesshouldnotchange dailyorweeklytocompensate formetricimprovement. We all knowthat metricsare reviewedanddemandsare floweddownto improve certainelementsbutwe cannot notfall preyto changingour mode of operationandvaryfrom our strategic plan. If metrics indicate thatour planisnot executingproperlyorwas mis-definedduringplandevelopment,thenwe may needtore-groupandrevise ourplan. However,strategicplansare derivedviamultiple perspectives andwithconcurrence of ourleadershipteam.Itisunlikelythatthe planistotallyflawed but a redirection afterrepeatingresultsdon’tmeetourexpectationsmaybe necessary. Don’toverreact to short termmisses. There are times youmuststay the course to redevelopyour businesseventhoughmetricsmaystate otherwise. Drill downintothe dataandif the metricsvalidate that the longterm improvementsandenhancements are beingmet,continue the path. Itmayindicate that the risksassociatedwiththe planwere notrealizedatits conception andthe nexttime you formulate youryearlyplanyouwill nowunderstandsome of the unrealizedimpacts. Staythe course if the planis executingproperly. While the worldseemstorecognize shorttime goal attainmentheavily, youmust drive the businesstonewlevelsbystepchangesandinthe longtermyouwill succeed.