Miss the first post in this new series – Alphabet Soup of Success? Click HERE and go back to the beginning.
For the past 18 years, my “day job” has been as a strategic consultant. Any consultant worth their salt knows that in order to measure success you must have a benchmark – a basis for comparison.
I chose the image of a building block as my “B” today, as metrics and measurement are literally foundational to success.
Every business needs to measure different things.
Service businesses, such as consulting firms, measure time invested with each client and the cost of that time. Manufacturers measure quality, time and cost of each component as well as the finished goods. Every business needs to be measuring their cost of sales, as well as the margin on your profit. I also favor measuring revenue generated per employee (including those not responsible for sales) and cost per employee.
Knowing your key performance indicators (KPI) – those things that make or break your business on a daily, weekly, monthly basis is crucial.
Set your rewards to align with accomplishment and exceeding of your KPIs.
What gets measured, gets accomplished. What gets rewarded, gets repeated.
It is common to benchmark one’s business processes and performance metrics to the best in your industry, but don’t forget to look outside your industry. Innovation may be happening somewhere else and by looking at the benchmarks of other types of companies, you may be able to improve your overall profitability.
Tomorrow’s letter is C. And everyone that knows me knows that we have to talk about CHANGE with a Capital C.