So, how do you (or others) measure your business’ success?
Any evaluation of overall performance is a function of expectations. Our approach to evaluating business performance is to thoroughly understand before discussing evaluation.
Expectations are often captured in forecasts. Alignment of understanding can be tested when we fall short of forecasts: The response to: “This is a new service; maybe the market isn’t ready yet,” could be: “Our forecast may have been off with respect to the existing market for our services,” OR “It sounds like you are making excuses.”
To understand performance, we have to examine and analyze three areas:
- DIRECTION (these are expectations toward the overall aim or purpose)
- CONSTRAINTS (these are expectations for doing the right things and avoiding the wrong things)
- MEASURES (these are often quantified expectations for forward progress)
Shared understanding of these areas helps to align activity toward performance.
Note on accountability: Partners and investors bring expectations that can be imposed. The above clarity is useful in discussing and establishing goals and measures to which management will be held accountable.
STEP 1: Gather perspectives; form a shared understanding about what drives business performance
Caution: This is an exercise in getting to important fundamentals. The most valuable parts of these conversations start with “Here’s the thing…”
STEP 2: Gain acknowledgment of this understanding; highlighting areas that align (and don’t)
Caution: This is not about getting “buy in” to a certain view. Everyone one is entitled to their understanding of the situation. Some of these understandings hold a greater logical rigour than others.
STEP 3: Look at measures/constraints; emphasize those that align; eliminate/modify ones that don’t.
Caution: This is iterative and experimental in nature. Both constraints and measures establish important expectations about what and how people work toward success.
The end result is a shared understanding of some of the basics of the business, around which to align.
- Let’s make sure that we are all headed in the same direction.
- Let’s make sure that we are not compromising anything important in moving in that direction.
- Let’s get on the same page about the best way to measure of progress.
Inevitably things will change and feelings of misalignment will return. Circling back to the original understanding can fast-track some of the conversations we have already had or provide reason to re-open some of those discussions.
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