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Defining The Right Metrics: Are Your Current Metrics Eroding Or Creating Value?

By Amandeep Singh Munial, Integration Leader - International Region (Europe + APAC), eBay

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Amandeep Singh Munial, Integration Leader - International Region (Europe + APAC), eBay

A Forward-looking and Strategic Business Leader, Amandeep is always improving the organization for the future, and a Holistic Transformation expert, who thrives for business strategy and results, Culture & User Experience, and has a track record of building high performing teams.

The Overlooked Opportunity

The whole world is talking about Innovation and Creativity, which are essential for the future. On the other hand, when it comes to measuring performance and success, we seem to be stuck with the same metrics which probably every other company in the very industry would be using.

On one hand, there is a data revolution – Big Data, Analytics, and many others, while on the other hand, the metrics that create meaning from data are overlooked. All the data without the right insights has no value. It is just like a huge mass of water in our oceans, yet we are struggling for water to drink.

My experience with several companies across industries, both Indian and Multinational, I believe that the muscle of identifying the right metrics has not been exercised enough. There lies a colossal opportunity.

Purpose is Good. Shared Purpose is Better

Each function in an organization has a purpose. For the larger organization to be more successful, all the functions need to work towards a shared purpose, a common goal. For example, if Strategy and Customer Experience do not work towards the common Business Outcomes like Top Line Growth, Customer Retention, their operations will not be synergistic. The included info-graphics represents an analogy of how synergistic behavior will create far greater value consistently than antagonistic one.

The Business of Metrics

Metrics help drive Strategy and Execution, communicate what is important and its progress to the larger organization and help in optimization or improvement in general. If metrics across functions are aligned with the Business Strategy, we will be able to deliver far better outcomes. Let me take an example, NPS (Net Promoter Score) is very commonly used metric across the world. However, not many organizations look at it with the strategy lens. If the strategy is to propel growth through new buyer acquisition, then NPS should be measured also for the First Time Buyers, whereas measured for Repeat Buyers if the objective is to increase share of wallet. While NPS at an overall level can help you gain an understanding of progress and opportunities, the organization can miss out on delivering a great synchronized performance of various ‘artists’.

“It is high time that organizations start building this muscle, which has tremendous power to synergize the efforts across the organization and better understand the effect of our actions”

New Outcomes Demand New Metrics

With the evolution of our own thought process on the health front, most people know that measuring just Weight and/or BMI isn’t enough. They are looking at additional measurements like Basal Metabolic Rate (BMR), Body Fat Content and many more. This helps redefine how we look at health in a more holistic way. Similarly, if we want better outcomes, we need to identify new metrics. ‘New’ here does not mean new-to-the-world, but metrics you have traditionally not used to determine the success of your work. If your organization is still using only Service Levels, Average Handle Time or anything as such, it is time to look outside to identify what would Business and Customer Success for Customer Service look like.

For example, if one of the business goals for an Insurance Company is to increase customer retention rate, continuing to measure Lead Time of Claim Settlement will give limited results. But if we measure Renewal Rate after Claim, we would know how well we serviced the claim, in a way that made the customer come back.

Finally, Back To The Basics

I hope by now, we are aligned on the need to identify metrics more closely aligned to the business strategy. But there is still one muscle that needs to be exercised to identify a really good metric. The info-graphic shows characteristics of a good metric. I am sure you will keep this in mind while evaluating your current metrics and identifying new ones.

The first two are relatively straight forward. So, allow me to move to the third one – Robust. It means – not be easily influenced by external factors. Let us take a personal life example. Suppose I want to reduce my monthly expenses and I have shortlisted reduction in fuel costs as the focus area. If I continue to measure Monthly Fuel Expenses, and the fuel prices go up, my metric will get negatively influenced. Additionally, I should measure Monthly Fuel Consumption (in Litres) to understand if I am burning lesser fuel or not.

Bringing in the last point in addition to Robustness, in the same example, to reduce fuel costs, let us say I have decided to change my driving behaviours like reducing sudden acceleration/deceleration. If I continue to measure Monthly Fuel Expenses or Monthly Fuel Consumption, I might not be able to understand direct impact of change in my driving behaviour. But if I also measure Mileage (kmpl), it will give me the right feedback. Having the right metrics will help in course correction faster, which in turn will help in achieving the larger objective faster.

To sum up, I would like to quote Peter Drucker, ‘What gets measured, gets done’. The problem, however, is that we continue to measure the same things over years. So, we continue to get the same outcomes. It is high time that organizations start building this muscle, which has tremendous power to synergize the efforts across the organization and better understand the effect of our actions. Once you start making this change, you will start seeing the organizational culture transform in sync, that will make the teams deliver great performances, quarter after quarter, year after year.

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