Measure What Matters

I was recently reading an update on the 2009 Baldrige National Quality Award recipients and in the right margin an article title caught my eye. Get the article here. The article was about a North Carolina school district that received the award in 2008 but the subject of the article was really about developing meaningful measurements. The author discusses how this is a key concept in the baldrige criteria and I pondered that for a minute......Really, that's a key concept of business. Every business, regardless of their intentions towards national quality awards, or not, should measure what matters most to their business. In last weeks' post I discussed a business situation in which the measurement did not drive action. Go here for a refresher. This is a key component of measuring what matters, does it draw in resources? Perhaps a better question might be, should it draw in resources? Should a measurement cause a leader to make a decision to dedicate some resources to its improvement? If it matters, the answer would be: Yes. So obviously the decisions about what to measure are very important. The first question should be; Does this matter to our customers? If the answer is yes, then it matters to you too. It should be measured and improved if not meeting needs. The second question should be; if this measurement does not meet the need, are we committed to improving it? If the answer to the first question is yes, then this one should be an easy yes. Sometimes its not though, hence my story from last week.

So how do we determine what to measure? What matters most? The short answer is: Get to know your customer. What matters most to them about the product or service you provide? Go ask them. Conduct surveys, solicit feedback, analyze complaints, talk to ex-customers about why they are ex-customers, and potential customers about their needs and expectations.

Lets be honest. Sometimes its hard to achieve a balanced perspective on whats important. Every business is concerned about costs, and quality, and customer satisfaction, and employee satisfaction to some degree. But how do you balance these sometimes competing concerns to make sure that cost does not outweigh quality or customer satisfaction does not drain the company cofers. Enter the Balanced Scorecard.

The balanced scorecard approach suggests that we view the organization from four different perspectives, establish objectives, measures, targets, and initiatives for each perspective. The four perspectives are: Financial, Customer, Learning & Growth, and Internal Business Processes. These four areas surround the central theme of the business; the vision and strategy. As you can see from the model above, each area interacts with the areas adjacent to it, so improvement in learning and growth has a positive impact on internal business process performance and customer satsifaction. The better we are at our internal business processes, the better we are able to meet our customers needs and improve our financial situation.

Of course, the balanced scorecard is only one approach to measuring what matters. There really is not right or wrong way to do it, just do it. Determining what matters most to the success of the business, developing measures, monitoring performance, and committing resources to improve when necessary are really the keys to success no matter what format you chose.