Wednesday, June 22, 2011

Metrics – Results or Drivers

There’s an interesting, yet short article on thedigitalnirvana, and I’m going to show you the title and the first paragraph, then provide a link to the complete article.

Metrics – Results or Drivers

By Richard Losch on June 14th, 2011

We all know how important metrics are to successful business. The sayings, “What you don’t measure won’t get done”, and even, “If it didn’t get measured, it didn’t happen”, have become proverbs. Monthly reports of detailed financial statements and key performance indicators are common in large and small companies alike. For business people, this is our report card. It is the basis for “ranking” ourselves, both inside and outside our company. With all this emphasis on measurement and metrics, why do so many organizations seem unable to change and improve their businesses, or see issues coming?

You can read the complete article by clicking on this link:

Joel’s comments:

Tracking metrics (measuring the performance of your business using various numbers and statistics) is certainly an important thing to do. Virtually all companies prepare balance sheets and profit and loss (income) statements (some prepare cash-flow statements, but not all do that). And, getting a grip on your progress, income statement wise, is essential. Accountants refer to income statements as “report cards.” Accountants refer to balance sheets as “snapshots, in time, of your financial condition.”

However, while those two reports are extremely important to prepare and review on a routine basis (hopefully, you are looking at this information on a monthly basis), they are, most certainly, not the “only” reports (metrics) you should be looking at.

Around the early part of 2007, we noticed that sales from some of our engineering firm customers, in particular those involved in “civil, site, survey and land planning”, were beginning to decline. We decided, at that point, to put together a list (culling out from our master customer list) of a bunch of engineering firms who offered those services, kind of an “index” if you will. Inasmuch as engineering firms who provide civil, site, survey and land planning services are on the front end of design / development / construction projects (and are often hired, directly by project owners even before architects are hired), we felt that tracking monthly sales - specifically to those firms - would provide us “trend” information that could help us “predict” future revenues for our “overall” A/E/C industry sales. As the year progresses, the numbers that we got from this index grew worse and worse. When owners stop hiring engineers to do land survey work and to do land-planning design work, it is an absolute given that the entire A/E/C industry will feel that, negatively, not too long afterwards. And, that’s exactly what happened. To me, the most important use of metrics is the information metrics provide that enables action plans to deal with what’s coming.

If you are a reprographer, I would urge you to track this metric. Your firm is bound to have several, if not a bunch of, engineering firms who provide civil, site, survey and land planning services. Metrics are not only useful for catching negative trends, but are useful for tracking positive trends as well.

By the way, one of our largest engineering firm customers who offered those types of services went completely belly-up, about two years afterwards. But, since we sold our company before that happened, we (the prior owners) did not suffer from that belly-up.

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