Measuring Outcomes, KPIs, Indicatiors, Results, Performance, Growth

The traditional outcomes of revenue, profitability, and cash are the ultimate measures of a successful business.  When you graph them out over time, as you move from left to right, they should be moving up.  If they aren’t, you need to be concerned. If they are moving down, you are in trouble.

Outcomes should be measured religiously and diligently.  All the various ratios of these numbers that help you stay on top of things need to be looked at and considered regularly.

But you need to measure something else as well.  Outcomes are poor early warning signals. They are always computed after the fact. They are lagging indicators.  You need to track and graph the drivers of those numbers.  Figure out the leading indicators.  What are the activities and ratios related to indicators that produce the outcomes?

You don’t want to consider only the core processes of the business. You want to focus on the projects and initiatives being put in place that improve the processes. If needed, introduce new ones that drive the desired outcomes.

Figure out the activity, that if done well and done often enough, on every process that delivers the outcome it should be delivering.  Figure out the ratio that tells you the same. Once you figure it out, track that activity or ratio.

If you don’t, your focus on outcomes only might end up being deadly for you.

Think about picking up a copy of Rock & Sand and/or the Rock & Sand Video and Strategy Tools to help you figure this out.