"You can't manage what you don't measure." This popular quote is attributed to Peter Drucker and sounds like something he'd say, but according to the Drucker Institute he didn't actually say it. He did, however in one of his books say ?Work implies not only that somebody is supposed to do the job, but also accountability, a deadline and, finally, the measurement of results ?that is, feedback from results on the work and on the planning process itself."
The point of feedback is accurate execution. What I mean by that is it's great to have a plan, but if you don't measure outcomes, you never know if you succeeded or failed in what you set out to do. This is one of the reasons that Agile development practices have become the new normal. Agile creates a culture of measurement and frequent and regular feedback loops.
Businesses have a lot of financial metrics used to measure success at a macro-level. This helps provide feedback when overall performance is trending well or poorly, but it is not sufficient. When I talk about getting started with measuring your business, what I'm really talking about is instilling a culture of measurement so that every time a new initiative, program, or project kicks off, the first slide shows objectives and the second slide sets forth how success will be measured after and almost more importantly during the course of the effort.
This approach is underscored when we are talking about big changes like digital transformation in hyper competitive sectors like financial services. According to one McKinsey Study: ?If banking follows the glide path of similar industries, banks that excel at digital brand building, advanced analytics, and machine learning will see outsize gains in customer experience, revenue, and efficiency.? (You can read the whole article here: (https://www.mckinsey.com/industries/financial-services/our-insights/for-us-banks-a-time-for-transformation))
But how do we measure the success of something like digital transformation?
Amazon understand. Their outsized success in dominating online retailing is directly attributable to their intense focus on measurement. The user experience and customer journeys are constantly adapted to drive the last possible increment in order conversions, order size, and customer satisfaction all the way from initial search through product delivery (or even use).
Chances are, your organization already doing some measuring on a programmatic and on-going basis. Marketers may extensively use A/B testing to optimize user experience on a customer-facing website, but the finance department may not even have KPI's associated with invoice processing. The warehouse or factory may have sophisticated measurements driven by six-sigma or lean programs, but the IT and HR folks aren't measuring how long it takes to onboard new employees/contractors so they are productive. Technology is often implemented to solve for organizational process problems, but even in areas of an organization where they have measurement as part of the culture, technology solutions are still mostly viewed as one-and done efforts and the impact of the technology implementation on processes within the business is not measured.
What would change in your business if you insisted that every initiative had clear, measurable KPI's established upfront and the measurements were defined along with regular evaluation cycles? I'm betting you'd find that fewer initiatives would take off, but those that did would either deliver value more swiftly or get shut down early. Fail-fast is part of the agile mindset and a long-standing approach to risk mitigation by professional project managers. Unfortunately, if you don't bake measurement into your program from the outset, it can be difficult to determine whether an effort is failing and you'll continue wasting resources.
The more competitive your industry, the less you can afford to wait to determine if major initiatives will pay off, and thus the more essential measurement becomes. Adopting a mindset of measurement forces the question of how to define and quantify success, ultimately leading back to a clear articulation of business value to shape your initiatives.