You get what you measure for
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I was taught that saying many years ago. You get what you measure for. If you measure only for profit, you may have fewer but profitable sales. If you measure for sales volume, you may not get the profit you want. If you measure everything, you will run out of time!
Choosing what you measure is critical to long term success. Just as critical is to make sure you re-evaluate those measurement targets to make sure you are measuring what is relevant at that time.
In a startup business, number of users / customers and cash flow break even are two critical measurements. In a more mature company you probably want to measure profitability and return on invested capital. Deciding what to measure when is the key.
- Measure those things that sustain you. Revenue, gross margin, profit.
- Measure those people who sustain you. Customer renewals and satisfaction.
- Measure those who enable you. Vendor or partner satisfaction, employee productivity.
- Measure those things that create growth in your business, new customers, new product success.
You need to find a balance of enough relelvant measurements without overloading. You also need to spread out the job of measuring to everyone on your team. The act of measuring the business will hopefully more fully engage team members in what is important.
- Mike Colwell