Business Metrics - Introduction

Business Metrics – Introduction

Arguably one of the most important concepts behind engineering, design, management, quality-control, leadership, world fame and even ordinary everyday life, is the humble feedback loop.

It’s such a simple concept that we’re usually blissfully unaware of it, but it represents – albeit by a technical term – the common sense of learning and adjusting from experience. Having watched my two children grow up, there is certainly no doubt that our brains are immensely good at learning, improving and optimising automatically. We’re all (mostly) good at gathering feedback from our peers, our critics, our environments and our endeavours, and we manage these various cues by influencing our actions and behaviours. Many experiences can be observed with our five senses and perhaps some intuition, but when our natural detection abilities start to break down, the age-old adage should come to mind: “if you can’t measure, you can’t manage”.

Let’s consider the 3 parts of a feedback loop:

The actual process

The measurement at the outputs (against expectations)

The implementation of measurements, and consequent changes to the inputs

The actual process can take any shape, size or form. If we were to return to the kids, eating porridge with a spoon represents a fairly substantial process. The outcomes (aka outputs) could, for fun, be quantified as the ratio of porridge consumed to porridge smeared, or time taken to empty the bowl, accuracy of the hand-to-mouth process, or even nutrition over time. The inputs could then too be thought of as the speed-of-spoon, consistency of the goop or size of spoon. While most inputs can be subtly adjusted, occasionally changes may need more radical forms – for arguments sake, the introduction of handcuffs and syringes!

This is the exception however – one seldom chooses to introduce step changes, preferring rather to see incremental improvements resulting from incremental changes, tweaked in the right direction based on reliable measurements.

Fortunately, running the operations at a software development house like White Wall Web doesn’t often involve porridge, but there is an almost infinite array of processes which need to be improved in order to extract efficiencies, deliver value and maintain our competitive advantages. Over the last few years the truth of measurement being the key to management has been obvious – from understanding the real costs of smoke breaks through to recognising the trade-offs of implementing Scrum and its associated stand-ups, planning meetings and necessary overheads. Our sales side is now obsessing about lead times and conversion ratios, while our product support team is focused on creating capacity reports and utilisation statistics.

Have we arrived? No. Has it been easy? Like pulling teeth. Worth it? Of course! The journey of identifying, establishing and implementing the measurements is of almost equal value to the actual metrics, because their origins and impacts on the larger processes are understood. By watching the changes in measurements, we’re now able to make changes to the inputs – people, approaches, discussions, meetings, paradigms and even cost rates – aware all the time of how these many small and individual factors influence the bigger picture. And just as the impressionists demonstrated – the beauty of the big picture lies in many correctly placed, correctly coloured little details.

Follow our Series on Business Metrics as we introduce to you the key factors to successful measuring.