5 Measurements of Success Print E-mail
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Written by Peter Bigelow   
Monday, 30 April 2012 12:17

Survival is not the end-all, be-all it’s been made out to be.

How do you measure success? Or, maybe the question is, “How many ways can you measure success?”

I ponder this question a lot, and in all aspects of life. Possibly the most elusive – or easiest to stray from – is how to measure a business’s success. There are five measurements by which, one way or another, companies in our industry continually seem to be measured. In alphabetical order they include growth, profit, service, survival and technology.

Whenever considering how to be measured, it is equally important to think through who you want to be measured by, or more to the point, whose measurement you value most. The essential constituents can be reduced to four: customers, financial stakeholders, employees and the boss’s conscience (which is easily swayed by the others). My guess is that the first three constituents would rank the five measurements in order of significance as follows:

a. Customers – 1. service, 2. technology, 3. survival, 4. growth, 5. profits.
b. Financial stakeholders – 1. profits, 2. growth, 3. technology, 4. service, 5. survival.
c. Employees – 1. survival, 2-5. Doesn’t matter.

Oh, and whenever I speak with anyone in our industry who owns or is in top management of their company, when you cut through the façade, it all boils down to 1. profits, and 2. survival!

Regrettably, in most industries, survival can never be assumed. That said, it should not be the measurement of success, only the most basic of end-results for achieving the more important measurements. And yet too often – in large public as well as small private companies – fear conquers all and management becomes mesmerized by just surviving.

But what really propels a business? Over time, many companies that provided the best service were unable to do so profitably. Nor does the best technology ensure market success. And profits are great, but record-breaking profits can become hemorrhaging losses in the bat of an eye. So what measurement really matters?

As basic as it may sound, I think it depends on a combination of a company’s existing strengths, customers’ perceived values and the ability to make it happen cost-effectively. But as simple as that sounds, the droning background chatter of investment people, whining suppliers, and techno media often complicate separating “value add” and “just a fad.”

Service and technology are certainly important in a technology-driven service industry. But what separates success from survival is often the subtle, almost immeasurable attributes that enable one company to flourish while others are foundering.

Those little things include rapid response to customer inquiries of all kinds – not just requests for quotes; excellent quality products; and before- and after-sale service and cost controls that focus as much on the little things as the major items. And most of all, a realistic view of where and how your company can assist a customer vs. the desire to beat out the competition.

Measurement has to be reasonable, as in attainable. Measurement has to be desirable, as in worth the effort to track and improve upon. And measurement has to be acceptable, something that customers, employees and stakeholders can understand and become passionate about.

Textbook criteria of measuring things are often less than ideal. Many financial return formulas, or “sequential” growth calculations, or lofty goals like striving for attainment of “world-class” technology are good, but none is really important – or will even work – if they don’t reflect and support the vision top management has for your business. And the vision for your business – the vision that keeps everyone from management to rank-and-file employees enthusiastically and successfully going each and every day – needs meaningful measurements to ensure that everyone stays on track.

This brings up maybe the two most important implied goals of any measurement: achieving success and doing so with enthusiasm. Regardless of what you value, strive for and measure, the reason is ultimately to ensure ongoing success and enthusiasm to improve and achieve success. Clearly no one is going to buy into and strive to improve upon measurements that do not focus on the most important attributes of your business. Equally, the only way that full buy-in can be achieved is if management, at minimum, and optimally the entire organization can enthusiastically embrace those measurements.

But what about those who view simple survival as a reasonable and acceptable measurement? I would argue that they are the ones who most need to identify and embrace reasonable and attainable measurements! Today many companies are prospering. In most cases they are doing so because they are doing what they do well, what their customers value, and are investing prudently – within their financial wherewithal – so to better achieve the measurements that result in success. These companies are measuring the benchmarks, whether growth, profits, service or technology, they believe will improve their success and that they can enthusiastically support. The companies that are embracing survival as a measurement are more often than not just marginally successful and trapped in a downward spiral – and when you walk through their facilities and talk with their management are totally void of any enthusiasm!

This brings us back to how do you measure? All the criteria – growth, profit, service, technology – are good, viable benchmarks that can enable measurement of success or failure. However, they are viable only if viewed as vehicles to both maximize value-add to customers and maximize profit margins and can be embraced as tools that, if utilized effectively, will assist in achieving short and long-term success. Focusing on survival is not going to make any organization successful. And whatever the measurement, make sure it can be enthusiastically embraced by customers, stakeholders and employees, and management is equally passionate about its value as a tool.

Peter Bigelow is president and CEO of IMI (imipcb.com); This e-mail address is being protected from spambots. You need JavaScript enabled to view it . His column appears monthly.

Last Updated on Monday, 30 April 2012 15:28
 

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