Instrumenting the Business

Instrumenting the Business

Instrumentation is the measurement and control of process variables. Just as instruments help you understand how well your car is running, instrumentation helps you understand how well the business is running. If something can be measured, it can be improved. The goal of instrumentation then is to provide visibility into what is and is not working so adjustments can be made. For example, is the company booking enough deals to achieve its revenue target? Knowledge of a shortfall far enough in advance allows you to make adjusts to rectify the problem.

Instrumentation, sometimes called dashboards or scorecards, provides companies and people with a common definition of success. Instruments are the format for measuring performance. They ensure people and teams have alignment, clarity and focus around shared priorities and strategies. They help operationalize activity around key performance indicators (KPIs). They also drive consistency and move the organization toward operational excellence. Each commitment, objective or target is the person’s or team’s promise back to the company.

It is important not to over-metric the organization, but to identify the right targets to drive the business forward. For example, revenue, pipeline, close rate, etc. The best targets focus on the current needs of the business (e.g., existing product revenue), as well as its future needs (e.g., new product pilots). While progress against KPIs is generally communicated with a red, yellow and green stoplight, the best leaders are binary. That is, a KPI is either red or green. Organizations and people must work to consistently deliver a “green” scorecard with relentless execution.

Instrumenting the business empowers people to understand what success looks like (how success is defined), what is expected of them (how good performance is demonstrated) and the why behind it (context and reasoning). In the absence of instrumentation, people lack understanding about what to do and not do. Work must be aligned with the scorecard. Once scorecard targets are set, whether right or wrong, they are set. Because targets are a person’s or team’s promise back to the company, instrumentation helps drive both performance and accountability.

All contents copyright © 2014, Josh Lowry. All rights reserved.

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