Measure what matters
It seems simple and makes sense but many companies struggle to track and measure their financial and strategic performance. At the beginning of the year, as you reset your priorities post covid-19, it is imperative that you understand a range of metrics and measurement tools. Having a weekly scorecard that measures your top 10-15 metrics is critical.
It seems simple and makes sense but many companies struggle to track and measure their financial and strategic performance.
At the beginning of the year, as you reset your priorities post covid-19, it is imperative that you understand the following:
• Lead indicators of financial health
• Key measures that are aligned to your strategic priorities
• Targets for your key measures
• Accountabilities for the key metrics
• Investment required for each metric
• How each metric feeds into the financials of the company
Having a weekly scorecard that measures your top 10-15 metrics is critical. When metrics are off target having clear accountability for someone to build a plan to address and reset expectations and understand impact on the financials.
A very simple scorecard is a very useful tool to drive the right focus across the company. If you have too many metrics, you will lose your focus on the ones that are most critical.
Example metrics:
It is important to use a simple format that calls out variances to targets or prior comparative period. See below example.
A weekly / fortnight meeting to walk through metrics with actions and follow ups is critical to driving the right behaviour. Performance reviews and incentives should be aligned with these metrics to drive the desired strategic/financial results.
At the beginning of 2023 make sure you spend time getting this right. If you need help please reach out to us, we have a lot of experience with building metrics scorecards for companies and help drive accountability across the leadership team.
I believe driver trees are critical to determining your key metrics – please check out our recent article on driver trees here.
Trees that deliver outcomes
It’s possible I am showing my age with this article, but I love driver trees! Also known as KPI trees… Every time I go into a business I build myself one of these. Fundamentally, driver trees help support growth and demonstrate how each business function can contribute to success. Here’s a rundown…
Driver trees help support growth and demonstrate how each business function can contribute to success.
It’s possible I am showing my age with this article, but I love driver trees!
Also known as KPI trees, every time I go into a business I build myself one of these. It helps to support growth and demonstrate how each business function can contribute to the success of the business.
Here’s a rundown.
What can a driver tree deliver?
Understanding the key drivers in the business results in the following benefits:
A better P&L result
A clear view of the metrics you need to measure
Visibility of where material value is derived
Understanding the sensitivity a lever movement has on P&L result.
Executing strategy and helping you prioritise
When building a driver tree, my advice is simple:
Don’t overcomplicate things – just keep it really simple. What drives value in the business? This is what you want all teams in the business to be focussed on.
Be clear on what this value is – P&L result, number of members, value to members? Value is different for all companies, so defining this upfront is imperative as it will drive the overall levers.
Decide what levers will deliver your desired outcome – confirm can it be measured – if it can’t, it can’t be a lever.
Highlight levers that are easy to pivot on – no matter how well versed you are in business, no one has all the answers. So starting off with levers that are easy to change gives you an opportunity to test what works.
Highlight the levers that are difficult to change – get ahead of the eight ball and work out a strategy that will allow you to have some flex in this space if necessary.
Measurement is power – using the concept of measuring what matters that I spoke about last week will help your business choose levers that are easier to action, give you a clear understanding of what’s working and what’s not and, most importantly, can be embraced and developed by your team.
If you’d like to us to share more detail on just how beneficial drivers trees can be to supporting your current strategy let us know and we will gladly send you a sample driver tree that you can manipulate in your context to help drive success.
Our team at Whiteark consists of a network of experts who work with businesses to map their value drivers and identify areas to drive an improved outcome. Whether you’d like advice on building a driver tree, or for hands-on help, we’re here. Get in touch on whiteark@whiteark.com.au.