Metrics: How to Improve Key Business Results.
by Martin Klubeck.
About the Author.
Martin Klubeck is a strategy and planning consultant at the University of Notre Dame and a recognized expert in the field of practical metrics. He holds a master"s degree from Webster University in human resources development and a bachelor"s in computer science from Chapman University. He is coauthor of Why Organizations Struggle So Hard to Improve So Little and numerous articles on metrics. His pa.s.sion for simplifying the complex has led to the development of a simple system for developing meaningful metrics. Klubeck is also the founder of the Consortium for the Establishment of Information Technology Performance Standards, a nonprofit organization focused on providing much-needed standards for measures.
About the Technical Reviewer.
Russ Cheesman is a senior information technology professional and consultant with experiences in all phases of the System Development Life Cycle. Much of his career had been devoted to enabling IT solutions for business problems and/or opportunities. He has served as an IT manager and pract.i.tioner in many industry sectors, including banking/financial, manufacturing, construction, retail, pharmaceutical, telecommunications, and health care. Mr. Cheesman, in recent years, has been practicing business performance measurement and management within several IT and health care organizations through the use of business strategy, balanced scorecards, metrics, key performance indicators, and business a.n.a.lytical systems.
Mr. Cheesman was happy to serve as the senior technical reviewer for this book and related concepts on metrics, and looks forward to its release and subsequent value to all those individuals, groups, and organizations that desire improvement, continuous maturation, and peak performance.
Acknowledgments.
The purpose of an acknowledgment, as I understand it, is to let those people who helped make this achievement possible know that I didn"t forget their contributions. This ch.o.r.e makes this easily the most stressful part of writing a book.
I don"t want to forget any of my friends or colleagues who helped me by reviewing, critiquing, or suggesting edits to the work as it was in progress, especially: Don Padgett, Danita Leese, Leah Lang, Keith (Mac) McIntosh, Marin Stanek, and my brother Irving. Thanks for the short-notice reads. Thanks for the kind words. And thanks for being there.
Of course, Russ Cheesman has to be thanked for his work as my technical reviewer. Although Russ and I disagreed as often as we agreed about metrics and their use, when asked for a recommendation, I immediately thought of Russ for the job. His honest and pa.s.sionate position, his large knowledge base, and his expertise made him an easy choice. Thanks, Russ, for your hard work, your many suggestions, and your honest appraisals.
I want to give a special thanks to Michael Langthorne. Not only were you my most dependable reviewer, but your early and consistent encouragement to take this journey, on my own, was instrumental to me starting and finishing this work. I appreciate your help, guidance, and gentle but steady shoves very much. Thanks. I truly could not have done this without you.
I also want to thank Jeff Olson, Kimberly Burton, and Annie Beck. Although you made up the Apress editorial team, and were "just doing your jobs," I can"t say I saw you that way. I greatly appreciate your help. You were honest, consistent, and fair. You were focused on producing the best product possible for Apress while showing sincere concern for my position as an author. Someday, if the chance ever arrives, I"m buying the first round.
Last, but as the saying goes, not least, I want to thank my family. Especially my wife, Kristine. This time around, you successfully feigned interest in my progress, if not in the work itself. I appreciate the effort and I love you dearly. Alyssa, thanks for your help with the fairy tales and allowing me to use your art work for the book. I look forward to seeing your name on more jacket covers. I love you.
And a final, special thank you to you, whoever you are, reading this book. You are special-you must be because no one reads the acknowledgements unless they think they"ll find their name listed. So you must be one of the rare people who read books from cover to cover. That means you may also be the type of reader who will use the material within these pages. You may also be the type of person who will share your thoughts, likes, and dislikes. So, here"s to hoping I hear from you and thanks in advance for any feedback you choose to share. I hope this book helps you navigate the sometimes dangerous waters of developing metrics.
______________________________.
Note: While I have worked hard to provide you, the reader, with real examples (real situations, interactions, experiences, measures, and data), I had to temper that effort with protecting the privacy and data owned by others. To this end, I have, where necessary, blended and combined individuals into composites. I have also done the same with data. As you will read, I fully believe that data is "owned" by the provider(s) of that data, so I have protected the ident.i.ties and data of those whose experiences I used for much of this book.
Metrics: The Basics.
An Introduction.
Of all the possible organizational-improvement tools, metrics stands out for me as the most requested, misunderstood, feared-and useful. Defining metrics from a high level requires that I give you the What, Why, When, Where, Who, and How.
What.
Metrics can be defined in many ways. I spend the beginning of the book offering a common language for defining and using metrics. For me, metrics are a means of telling a complete story for the purpose of improving something. Usually, the idea is to improve an organization. Sometimes, though, you will want to focus on improving a process. In the end, anything you improve should be able to align back to improvements that help the organization.
Metrics are a tool for improvement. By their nature, metrics use different levels of information (data, measures, information, and other metrics) to tell a story. Although I always strive to make this story comprehensive, it"s nearly impossible to capture everything. In most cases, I try to capture enough of what"s important to help with the improvement.
Metrics affect the improvement effort by helping you determine what was wrong in the first place, how well your efforts have worked (did you improve and did you improve as much as you wanted?), and what the new environment looks like after the change. I say "change" because improvement requires change. It doesn"t have to be drastic. It could mean that you do something new, you stop doing something, or you do something differently. But, improvement doesn"t come about without some change.
Albert Einstein said, "The definition of insanity is doing the same things, the same way, and expecting a different result."
The following are just a few of the things a metrics program can help you do: Improve company "health" in a variety of areas Improve customer satisfaction Improve product/service value Improve employee satisfaction Improve process efficiency Improve strategy, planning, and execution Provide a basis for change What to change When to change How to change Lay a foundation for understanding your organization by providing insights into strengths problems.
weaknesses.
opportunities.
Metrics are about change for the purpose of improvement. At least that"s how I use them. I offer in the pages to follow a means for developing a metrics program for improving a large area of an organization. I also offer guidance on how to develop individual metrics to improve specific things. I"m an idealist, and you"ll see that reflected in my belief that metrics can be a powerful tool for improvement.
Why.
Why metrics? To improve. I know I"ve already stated that. But, why metrics specifically? Why not use any of the other methods du jour (TQM, Six Sigma, Balanced Scorecard, etc.)? The funny thing is, any of the methods you choose will require you to use metrics-or at least the components of metrics (data, measures, or information). As a foundation, these improvement methods want you to first measure your existing state so that after you implement the methodology for improvement, you will see how well the improvement procedures worked. All of these methods also want you to measure the amount of time, money, and effort that went into the improvement effort. But none of that will actually help you improve the thing you want to improve!
Metrics help you in some basic ways that make it an important tool for improvement on its own accord. Metrics will provide insights into the thing you want to improve-be it a product, service, or process. This insight is valuable to those doing the job-fulfilling the need or providing the service. It helps them see their efforts in a new light, often in a more complete picture. It will help them find ways to improve. It will also help them see the benefits they"ve reaped. It will provide cherished feedback that the team can use to make continuous improvement a reality (instead of the latest catch-phrase).
Metrics also provides insights for upper management. It allows the team leader to market the improvement effort to those who control the funding. It shines a light on your efforts so you can gain support for the improvement efforts.
It also allows you to share your efforts with your customers in ways they easily understand. They gain insight to how things are changing for the better. Look at any new product release (I especially like Apple"s semi-annual announcements) and notice the amount of metrics sprinkled throughout.
Metrics provide insight. They also provide a level of legitimacy to your argument. All other things being equal, data is a tie breaker. If you and another department have competing requests for resources, the one with data wins.
When.
Ideally, you"d not undertake a metrics effort of any significant scale until your organization could show that it was not suffering from organizational immaturity-the inability to take on enterprise-wide change. But, that"s only a prerequisite for implementing a program organization-wide. If you are in charge of a department or unit and you want to implement a department-wide metrics program, you only have to ensure that your unit is capable of the change. If you provide one or two services or products, you shouldn"t have a problem implementing a metrics program. Remember, metrics are only a tool for improvement, so you"ll need to implement other improvement tools along with metrics. Metrics can tell you where to focus your efforts. Metrics can tell you how successful your efforts are. But metrics on their own are not a set of solutions.
Chances are very good that you already collect data and measures. You may have automated tools that track, collect, and even spit out reports full of data and measures. You may feed information into an annual report. You may already fulfill requests for specific measures. Depending on your industry, there may be well-worn standards that have been used for years (if not decades). These are not necessarily metrics per my definition, nor are creating such standards the intent of this book. Those data and measures are reported, but not used. They aren"t used to improve a process, product, or service.
It may be time for you to start using your information for your own benefit. It may be time for you to develop a metrics program. The major question you have to ask is, are you ready, willing, and able to change? Do you want to improve?
You"ll learn in this book that part of the "when" is collecting information on the thing you want to improve before you attempt to make it better-just as good researchers do. So, the when is before you start, during, and after your improvement efforts.
Where.
The metrics program should reside with the owner of the data. I spend 80 percent of my workday developing metrics for others. I coach my customers through the design, creation, implementation, and maintenance of the metrics. In many cases, I also produce and publish their metrics. But I happily tell anyone who asks that I don"t own any of them. I am just helping the owners produce them. They are not mine. My greatest successes are when I can transfer the maintenance and publishing of the metrics to someone on the team who owns the metric. I then transition to a consultant role, helping them use and improve the metrics. This transition takes time-normally because of either a lack of skill or resources. But having the owner of the metric take over the production, maintenance, and publishing of them is always the ultimate goal for me.
So the metrics need to eventually reside in the data owner"s domain. That can be on their office walls. It can be on their shared computer drive. It can be on their web site. That"s where it belongs. But metrics show up in other places like annual reports, monthly meetings, and public web sites.
The publication of metrics will be up to the owner. The decision of where it will be published should be a careful decision based on the use of the metrics and the need for others to have access to the information. The more mature the organization, the more comfortable it will be sharing the metrics. Many organizations are not mature enough to share metrics with their peers, their customers, and definitely not the public.
Who.
I fulfill part of the who question on a daily basis. I am the producer of many of the metrics my organization uses. I am also the lead designer, collector, a.n.a.lyst, and publisher. But as stated in the Where section, I am always looking to transfer as much of this as possible to the metrics owner.
Who are the owners? As I will explain in detail within this book, the owners of the metrics are primarily those who are delivering the product, service, or carrying out the process. But ownership can be spread across the entire organization, depending on how you define the item being measured.
The key here isn"t so much who owns the metric but in who doesn"t. Don"t exclude the frontline worker. Don"t think the metric belongs to the CEO or upper management. If the metric is reported at those lofty heights, it doesn"t mean they should only reside there. Remember the purpose of metrics. Unless the CEO and top managers are the ones improving their processes (and they rarely directly deliver products or services), then you have to include as owners the people carrying out the work-the ones that will be responsible for making the improvements actual work. How much harm can be done if upper management finds out that a department was using metrics for improvement but hadn"t shared them upstream? Some. But now imagine how much trouble can arise if a department finds out that upper management had been reviewing metrics about their processes, services, or products and they didn"t even know. Will that significantly harm the organization? I"m willing to bet it will.
If upper management wants metrics on a department, unit, process, service, or product, all of those involved should be included in the distribution of those metrics. They should also be involved in the design, creation, and publication of them.
The simple answer to "who?" is this: everyone in the organization, with the frontline workers being the primary "who."
How.
Well, that"s what the book is for. I offer you a comprehensive set of guidelines for developing a metrics program or specific metrics for improvement. I call them guidelines because "rules" would mean that I"m offering the only right way. As with most things, there"s more than one right way to develop metrics. The language, processes, and tools I offer are a result of more than twenty years of experience. That experience was full of successes and failures. I learned from both and am happy to share the results so you won"t have to fall into the same holes I did. And if you"re already in one of those holes, my advice is simple: stop digging.
What You"ll Find Inside.
Having a common language for metrics and its components is an essential foundation for the conversation we"ll engage in throughout this book. While putting this book together, and while thinking about all of the tools you can use to make your a.n.a.lysis and publishing of metrics easier, it struck me that there is another important distinction between metrics and other tools for improvement. Besides the definitions of data, measures, information, and metrics, I want to share another view of what I believe metrics are.
First and foremost, for me, metrics are in and of themselves tools for improvement. Even when using metrics to keep track of progress or predict future trends, metrics should be seen as a means for improvement. But that"s not enough to distinguish it from a ma.s.s of other tools out there. I"ve used many tools to develop improvement programs or to solve organizational problems. Total Quality Management, the Capability Maturity Model, Lean, and Lean Six Sigma are a few. Each of these improvement methodologies also uses data and measures. Six Sigma uses data throughout its processes, not only to measure improvement but to determine what to improve. There are also measures of success and goal attainment. There are even measures which turn ordinary wishes into SMART (specific, measurable, attainable, realistic, and time-bound) goals.
Many of the tools designed around metrics are for statistical a.n.a.lysis. These powerful tools can be used to determine relationships between different data, causal relationships, and even determine the accuracy of data.
But "metrics," for me, are much more and in some ways a bit less than a statistical a.n.a.lysis tool.
Metrics are not a statistician"s dream or an a.n.a.lyst"s favorite tool. The school of statistical a.n.a.lysis is much larger and deeper than I plan on digging. A common disclaimer I offer when teaching on metrics is that I am not a statistician, nor will the course include statistics. In these ways, metrics are a bit less.
But metrics are in many ways much more than statistics. They are a means of telling stories, and of providing valuable insights. Metrics are a tool for pointing out the correct direction to take when at a cross-roads-a cross-roads between one improvement effort and another.
Metrics, for me, are the cornerstone of an organizational development program and/or a tool for answering the most important organizational questions.
It is these minor distinctions between metrics and other measurement-based tools for improvement that make this book a necessity. There are courses on statistics (one of my colleagues came to metrics by way of being a statistician), books on various a.n.a.lytical tools, and software tools developed for this purpose (SPSS, MiniTab, and Sigma XL, to name three). But there is little written (well) or taught about the use of metrics. This deficiency has been partially addressed by Kaplan and Norton with their Balanced Scorecard methodology and by Dr. Dean Spitzer"s book Transforming Performance Measurement (AMACOM, 2007). I intend to take their efforts to their logical and necessary next step-making the design, creation, and use of metrics practical for anyone.
Metrics will make it possible for you to use data, measures, and information to improve your organization and lead to the key business results you need to be a success.
I hope this book helps you to develop metrics that in turn help you improve your organization. Regardless of the size or mission of your organization, metrics can be a powerful tool for improvement, and this book will make metrics as simple as possible.
Establishing A Common Language.