The 3 most important business metrics
Updated: Jul 23, 2020
I am a private pilot. During my years of flying I have taken hundreds of hours of dual flying instruction. One of the best experiences I had was flying with retired Air Force General and a former Thunderbird Pilot, Mr. Hank Canterbury.
What struck me the most about flying with “The General” is how simple he made everything. As a result, he took what can quickly become overwhelming and made operational. For example, how to land. He had three metrics: Speed, Altitude, Decent Rate. If you had all three in correct position, you were going to land right on the numbers. And for your final landing checklist, three actions: Landing Gear (down), Propeller (forward), Mixture (rich).
Now there might be 20 or 30 additional actions or metrics to consider – but if you have these six elements in correct position, you were highly likely to have a positive outcome.
Since I am an operations generalist, I look at the financials (the scorecard) and how the company executes (how the scorecard got that way). To execute effectively, you need three things:
Competency and Accountability
Processes: Do your people know what to do? What is the state of your IT / Systems infrastructure? How are problems solved? How do issues get escalated? Are there metrics are in place to know if you are performing?
Competency and Accountability: Do you have good, enforced HR policies? How is your training? Are bonuses derived from objective and subjective measures? How and why are employees promoted? Those metrics I asked about earlier - are they known and used by all or just a few?
People: How easy is it to get hired? What career aspirations do employees at all levels have – and can they going to realize them at the company? Do employees have time to innovate? Do they have whiteboards? Are they engaged?
John Wooden (legendary UCLA coach) once said that one of his few regrets was that he was not a good strategist - he just did the same thing over and over again. With ten NCAA titles in twelve seasons - four of them undefeated – it would seem that execution was the strategy.
For many companies, operational execution is the problem. But if your processes are in place, your people are held accountable and they are engaged, yet you are still not creating desired profits - maybe you need the help of a lawyer or marketing expert.