Mastering Business Analytics: The real MBA for career success, Step-by-Step
Metrics: Are we there yet? (Under construction!)
Do we need course-correction ... or something more sweeping?
This is the third leg of the fundamental triangle / triad. In short, Metrics ties Tactics and Strategy back to Endgame. (It does NOT tie back to Strategy as that would provided no perspective on whether our strategy was correctly chosen in the first instance.)
Metrics tie operating results (broadly defined) back to the firm's Endgame (not Strategy) to provide a basis for assessing executive wisdom in strategy selection, managerial effectiveness / tactical choices, as well as operating efficiencies.
Is our goal/objective being communicated in meaningful ways TO EVERYONE in the organization? A shopfloor worker is NOT likely to respond to a metric framed as ROI or NPV. In fact, one cannot even count on division presidents of large multinationals to always get it right.
Appropriate high-level Metric "units" are ROA, NPV, CFROI, must be "translated" into meaningful bases for communicating to and assessing each level of the organization. For instance, ROI has little meaning (and even less susceptability to betterment) for the typical shopfloor employee. The same applies to middle-tier employees. Sales personnel would likely respond far better to unit sales or percentage dollar year-on-year improvement than IRR.
"Nobody ever 'growed' a hog by weighin' it." Whether southeast Kansas or farm-country world-wide, the "validity" of this comment is globally acknowledged. It, however, collides with another universal truth: "What gets measured, gets done."
Since we're interested in, "getting things done," we'll tend to err on the side of "weighing." We shall, though, avoid either errant or excess weighing ... and THAT will make a world of difference.
Here's an extended example covering all that we've talked about in the basic review. It should help to pull together any loose ends which you might have.
Going deeper with Metrics: more.