Every organisation should consider measuring their actions and impacts. It’s easy to come up with ideas about what could be measured, but defining truly effective and informative metrics can be challenging. Here are the most important aspects to consider.
Good metric works in four ways
Good metrics can be tested in four categories. Every metric should fulfill these four prerequisites in order to produce reliable data to act on. The categories are:
Avoid the common pitfalls of measuring
It’s easy to come up with metrics that first might seem adequate and well-grounded. However, most of the time the problem lies in the fact of not really knowing what is going on.
An organisation can measure the amount of marketing emails sent to customers every month, but if they don’t know how many of those emails were actually read, the metric is not good. They only end up with information about the number of emails sent, but with no information about how many readers they got.
"A good metric always produces information about the actions that happen in relation to another value."
Another popular metric is to measure how many followers or friends or likes an organisation receives through social media. However, this is only a popularity contest unless you can get those followers actually do something for you. As Melonie Dodaro puts it in The American Business Journal: "It’s too common to see businesses buying their way to more Facebook and Twitter followers but what’s the use of having them if they don’t want what you have to offer?" Like in many cases, quality goes before quantity.
Every organisation has an infinite amount of different numbers to be measured and collected. However, a smart organisation concentrates on the metrics that truly bring valuable and actionable information for them. Like we all know, these actionable insights are in the core of gaining competitive advantage in todays business world. If you want to broaden your understanding around this topic, take a look at our blog series about the VUCA framework.
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