No matter what business you are in, keeping a competitive edge is essential. Being able to evaluate your performance and extrapolate the next steps is essential to a successful business model. Just like a judge at the Westminster Dog Show, you will need a host of metrics to scrutinize a good performance.
So what is the key to winning in the dog-eat-dog world of business? Tracking and analyzing of metrics, of course. Your metrics can create focus and alignment in your company by providing clarity to what improvement looks like. Although be warned, they can also lead a company astray if not carefully selected.
5 Common pitfalls to avoid when choosing metrics:
Historical conventions translate into blindly following conventional wisdom or history without giving thought to the implications. In an ever changing business climate, you stay on top by being adaptive and responsive. A Westminster judge is not going to vote for the posh poodle just because the previous two winners were poodles.
Simplistic metrics means taking only at face value what data gives you. Just because the data is easy to track does not mean it will lead your business to the front of the pack. For example, in a two day dog competition with many different breeds of dogs, easy to obtain metrics like weight and height, would not be enough to help you discern a deserving winner.
Complex metrics are contrived metrics that combine data from many sources. If your goal is to shape company behaviour to increase success, then it is imperative for people in the company to understand how the metric was created and trust the data source. Otherwise they may be skeptical of the metric. The metrics for Best in Show are transparent for all involved. This is imperative when you are dealing with dogs of all shapes and sizes. The dogs are first judged within by metrics within their breed. As the competition continues grouping is based on the jobs the dogs were bred to do.
Too many metrics, also known as data overload. Typically, this occurs when you are working with dozens of key metrics because they all mean something, but they may not all deserve to be called “key”. This is why grouping and filtering down is important. If you a had to choose the winner of Westminster on day one with all 2,500 contestants present, that would be overwhelming!
Vanity metrics are just what you think they are. These are the metrics that make your organization look good, but don’t necessarily tie to important or relevant outcomes. The dashing dachshunds might look dapper on the runway but how well did they perform in the other areas of competition?
By avoiding these pitfalls, you can create data products that will lead your team to meaningful decisions and actions. Accurate tracking of data and analysis is the key to your company unleashing its earning potential and staying ahead of the competition.
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Excerpted with permission from the publisher, Wiley, from Data Fluency: Empowering Your Organization with Effective Data Communication by Zach Gemignani, Chris Gemignani, Richard Galentino, Patrick Schuermann. Copyright © 2014.