A couple of weeks ago, I wrote an article about paying attention to the “little things” in your business so that you can prevent them from becoming big problems. The focus of that was to create a quality culture within your organization that allows you to be proactive in your management style to prevent minor issues from becoming crippling issues. How do you know what “little things” you should focus on first. After all, they are little things. Not every little thing can snowball into a crippling issue. While you should strive for excellence in your organization’s delivery model (service or product), you cannot pay attention to all things all the time.
So how do you find the “cinnamon” that is a minor issue now but can turn into a larger issue soon? Most people gravitate towards immediate symptoms before developing a proactive culture for the longer term. You equate this to getting a physical. If you are going to start a fitness routine, most, if not all doctors, would tell you to get a physical first, particularly if you have not exercised in a long while. The same is true for your organization. You want to assess your organization’s performance at some level before you start making changes. For one thing, we go back to the question of where do I begin? If a go for a physical, I may find out that I have high cholesterol. The doctor may tell you to focus initially on cutting down on fatty foods and also get more cardio exercise. Conversely, the doctor may tell you that your sugar levels are high and that you need to cut down on carbohydrates more than fat and also increase cardio. Where you begin is dependent on how well your body is currently performing. The same is true in your organization.
I counsel my clients to focus on customer interface areas within your organization. Look to the areas where your organization interfaces with a customer, either internal or external. It sounds overly simple but too many organizations forget that they exist because of customers and if their customers perceive that there is a problem, THERE IS A PROBLEM. This is especially true for your internal customers.
Too many internal organization functions don’t realize they are part of the larger organization’s service/production to an external customer. There is no better explanation of this than Simon Sinek’s “Golden Circle” explanation. If you have not heard of this, I advise you to go onto YouTube and search for the video. I can’t do justice to it. However I will say it is critical that your internal functions need to know the “why” your organization exists and why their role/performance/interaction with other company personnel has an impact.
So, if your customers are not leaving you in droves and if your boss or subordinates are not coming to you every morning with a recurring issue, you probably need to set up a quick overview of your organization to see how well you are doing. This is often where many managers get too overwhelmed to continue moving forward.
Where do you begin?
I often counsel my clients that now is the time to break out your company’s business plan. You remember that document. If you are like many organizations, you and/or your leadership put it together at the end of the last business or fiscal year. Again, like many companies you never look at that document until you are up for another “off site” or “retreat” to create a new one. However, the business plan should be a worn out document that you review often by yourself and with your team. In that document, you should have some strategic goals and/or objectives. Now ask yourself, which goals or objectives apply to your business line? Do you have any performance measures in place to demonstrate you are meeting your portion/share of those goals or objectives? That is where you start. If you have measures and/or metrics already, all you need to do for your organizational “physical” is to really evaluate your metrics and see how you are measuring up to how you said you were going to do. If you are ahead or behind of where you thought you would be, you need to ask “why” and continue to ask why for each answer until you can get to a cause.
Here is an example:
The company is behind in revenue for the quarter. Why?
Revenue is below target because sales of the new widget are lower than forecast. Why?
The widget sales are lower than expected because market x and y are less than expected. Why?
We don’t know….bingo, that is where you begin to investigate.
If your metrics are not robust enough to show you this level of detail, you need to reconfigure them to do so. You also need to actually use your metrics in a proactive way. Too many organizations measure activity. We produced 10K widgets this year. We sold 10K widgets this year. We hired 500 people this year. They point to these numbers and say they have a robust metrics reporting system. Actually they have a log of activity. Activity measures that don’t have context don’t give leadership enough information to make decisions.
Let’s use the example from before:
Step 1: Big Picture – If all I knew was the quarterly revenue, I have no idea if I am good or bad. So knowing overall revenue to overall target gives me big picture snapshot of how I am doing against my forecast.
Step 2: Comparative Analysis – If I don’t know how my revenue is compared to my competition, I have no idea if my problem is with my company or with the overall market. Knowing the state of the market is important in narrowing down solutions.
Step 3: Drill down metrics: If I can’t drill down easily into my metrics to see where deviations from performance forecasts are occurring, I need to get more fidelity in my reporting to do so. By drilling down to individual markets or company divisions or products, etc, I can see where the deviations occur and focus solution activity those areas that need it.
It sounds simple enough but I am often surprised how these fundamental concepts are lost in organizations and federal agencies today. My clients point to activity measures they have and say they have a robust metrics and reporting system. I often ask them when was the last time they used their “metrics” to make an informed decision that actually had a marked impact on performance. Most of the time they shake their heads and admit they never had.
If they have used their system to make an impactful decision, I ask them, was it before or after you noticed you had noticeable deviation from your performance goals. Almost always they say after. That is because their metrics and reporting systems were not developed to provide leading indicators to larger issues. Highly performing organizations have already identified their “cinnamon” issues and built watchdog measures into their systems so that they see when the root cause/”cinnamon” issue starts to occur and then they can address it before it becomes a debilitating issue.
When I work with my clients, I help them create a framework for their metrics and dash boarding system that links all the way back to their organizations strategic plan and their annual business plan. A well thought out metrics and reporting system that is analyzed and evaluated often allows managers to manage and leaders lead. If I can know how my organization is doing and why it is performing how it is, I can address performance issues before they become degrading issues.
Next time we will talk about how to set up a well thought out metrics and reporting system that has your “cinnamon” built into it.