In the business world, hearing the term "strategic planning" is common. It works like a map, indicating the path a company must follow to reach its goals. However, what good is a map if we don't know how to interpret it or if it doesn't give us the necessary details?
This is where metrics come in
Metrics are quantitative measures that provide a numerical representation of a particular variable or action. Which allow companies to evaluate the performance of their strategies and make informed decisions to improve their results. In the business context, they are vital to evaluate the performance, productivity, effectiveness and efficiency of processes, strategies and actions.
It is therefore essential that companies prioritize their strategies using metrics, as this allows them to track and understand their progress, identify areas that need improvement and take corrective measures when necessary.
But, before we continue, do you know the difference between metrics and indicators?
Metrics, as explained earlier, are quantitative measures that represent raw data, usually linked to the operational level of companies. Some examples:
Block time (number of days an activity was stopped);
Number of bugs (errors found);
Total items sold;
Total quote requests;
Throughput (number of items delivered by teams);
The indicators are usually calculated measures, being represented in most cases by percentage. They are commonly used at tactical levels in companies. Examples of indicators are:
ROI (Return on Investment, used to know how much the company earned with the investments made);
Average Ticket Value;
Conversion to Sales;
Billing per person;
Turnover Rate (turnover);
Now, returning to our central theme: Metrics, we need to keep in mind which ones will be defined, prioritized and, consequently, monitored. Companies can set clear, measurable objectives for their strategies, allowing them to focus more precisely and know exactly what they need to do to achieve those objectives. Additionally, metrics can be used to measure the effectiveness of different tactics and identify those that drive the best results.
Another important advantage when prioritizing strategies based on metrics is the ability to quickly make adjustments and corrections. When companies monitor their metrics regularly, they can identify problems or opportunities and take corrective action or make strategic changes, allowing them to quickly adapt to shifts in the marketplace and continue to see positive results.
This is because by creating a culture of monitoring planning with a view on metrics, we improve the internal and external communication of the teams. When metrics are defined and monitored regularly, everyone in the company can track progress and understand how their actions contribute to the overall success of the company. This can lead to greater transparency and trust between teams and help the company communicate with customers, investors and other stakeholders more clearly and reliably.
That is, they help companies to remain aligned with their short, medium and long-term goals. And when companies have clear and defined goals, metrics can be used to measure progress towards those goals, ensuring companies are always focused on achieving them.
A very practical example in relation to this alignment of objectives is the possibility for companies to evaluate the Return on Investment (ROI) of their business strategies. Metrics are important in determining ROI because they provide a way to quantify a company's financial performance against its investments. In this way, companies can assess whether they are getting an adequate return on their investments and make strategic adjustments when necessary.
So to efficiently prioritize metrics consider the following points:
Identify key metrics: choose the ones most relevant to your goals and objectives and that will give you the best insight into your progress.
Set goals: Set clear, measurable goals for each metric. This will help you track your progress and determine if you are on track to reach your goals.
Monitor Progress: Regularly track and monitor your metrics to understand how you are progressing towards your goals. This can be done through: regular check-ins, dashboards or other tracking tools
Analyze Data: Analyze the data collected from your metrics to identify trends, patterns, and areas for improvement. This can help you identify opportunities to streamline your processes and improve your bottom line.
Use Insights to Prioritize: Use the insights you gain from your analytics to prioritize your work and make data-driven decisions.
Continuously refine: Continuously refine and adjust your metrics and goals based on your progress and results. This will help you stay focused and aligned with your goals and make the necessary adjustments to stay on track.
Foster a Culture of Continuous Improvement: Encourage your team to embrace a culture of continuous improvement and use metrics as a tool to drive better results. This can help build a culture of accountability and drive better results over time.
By following these steps, you can effectively prioritize your work based on agile metrics and drive better results for your team.
In addition to the steps outlined above, there are some additional considerations to keep in mind when prioritizing based on agile metrics:
Engage the Team: It's important to involve your team in the process of identifying and setting goals for your metrics. This will ensure everyone is aligned and working towards the same goals.
Focus on Actionable Metrics: Not all metrics are created equal, so it's important to focus on metrics that are actionable and can drive meaningful change.
Be Data Driven: It's important to make decisions based on data, not intuition. This will help ensure that your priorities align with your goals and that your efforts have the desired impact.
Review and refine regularly: Regularly reviewing your metrics and refining your approach is essential to continually improving your results. This will help you stay focused, make adjustments as needed, and get better results over time.
By taking these additional considerations into account, you can further streamline your approach to prioritizing based on metrics and driving better results for your team. A company that does not use metrics in its planning is running some significant risks, such as:
Lack of clear direction: without defined metrics, the company may not have a clear sense of direction or well-defined goals, which can lead to random and inconsistent decisions that do not contribute to sustainable growth of the company.
Lack of understanding of performance: Without metrics, the company has no reliable way to measure its performance or assess whether its strategies are working. This can result in a loss of efficiency and effectiveness as the company cannot identify opportunities for improvement or correct problems in a timely manner.
Waste of resources: Lack of metrics can lead to decisions based on intuition or personal preferences rather than data and facts, which can result in inefficient use of resources and wasted investments on initiatives that do not offer significant return or impact.
Loss of competitiveness: without metrics, the company may find it difficult to assess performance against the competition and, therefore, may miss the opportunity to identify best practices and opportunities for improvement to maintain or increase its competitiveness. That is, it will have difficulties in adapting to changes in the market or in the business environment, causing a loss of opportunities and an inability to deal with threats and challenges that arise.
Lack of innovation: Without clear metrics, a company may struggle to measure the effectiveness of its innovation initiatives and identify areas for improvement. This can lead to a lack of innovation and an inability to stay ahead of the competition.
Lack of transparency: Without clear metrics, the company may struggle to communicate its performance to shareholders, investors, customers and other stakeholders, which can affect confidence in the company and the ability to attract additional resources and investments.
In short, failure to use metrics in planning can have significant consequences for a company's success and sustainability, including lack of direction, lack of understanding of performance, wasted resources, loss of competitiveness, and lack of transparency. That is why it is so important to monitor metrics for planning, which allows companies to identify areas where they are spending resources unnecessarily or not obtaining satisfactory results, allowing them to reassess and reallocate their resources more efficiently.
In this way, prioritizing strategies in metrics is an essential practice for companies to be able to evaluate their performance, establish clear and measurable objectives, take corrective measures quickly and be more efficient in the use of their resources.
But remember that the metrics need to make sense in the context of the companies environment, and not just based on the individual decision that has a preference for a certain metric.
Finally, prioritizing strategies in metrics is critical for decision-making. When companies have reliable and accurate data about their performance, they can make more assertive, evidence-based decisions about where to invest their resources and how to adjust their strategies to achieve your goals.
Revision: Fernanda Baqueiro