“You can’t manage what you can’t measure”

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A quote often used and with various theories on its origin, some attributing it to Dr. Deming although others claim him to be misquoted. Irrespective, the simple reality is that a lot of executive management is done “to make the numbers”; which is fine so long as the numbers you’re trying to make are still […]

A quote often used and with various theories on its origin, some attributing it to Dr. Deming although others claim him to be misquoted. Irrespective, the simple reality is that a lot of executive management is done “to make the numbers”; which is fine so long as the numbers you’re trying to make are still relevant.
Industry measures like churn and average basket size all grew out of historical models and operating principles, but today we’re in a rapidly changing environment where some of these historical principles are being overturned. For instance we have the long tail that challenges the traditional view of the market, and the importance of customers is changing from a simple basket size or repeat purchase model with the advent of cross selling within an ecosystem.
While companies who wish to be agile and change the rules of the game might be suitably led from the top, execution can be hampered by the slowness of change in the way businesses measure themselves, coupled with Market analysts still wanting to see traditional measures to gauge underlying performance which can rapidly translate to impact on the share price. Maybe we’ve seen the consequence of not having these measures to fall back on. Was the dotcom boom and subsequent bust based on not really understanding the underlying measures that these businesses needed to conform to? Having one hand on the fundamentals of a business, even when trying to change, seems to be a pretty sound foundation, but an organisation should not let these dominate, they should be scrutinised and reassessed, and they should reflect how the business needs to be, not how it once was.

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