Over the last five weeks, I introduced my Ebook 12 Steps to Business Transformation and I defined the first 5 of the 12 transformational steps. This week we are going to talk about Measure, Monitor and Analyze.
Measure, Monitor and Analyze is step 6 in my new Ebook “12 Steps to Business Transformation.”
Measure, Monitor and Analyze requires you to document and understand the key business metrics of your business. These metrics are health indicators for your business.
For example, revenue generated per square foot may be an important indicator for your business if you are in retail or in the restaurant business. If the revenue number per square foot slips too low, your business may be in jeopardy. Similarly, your overhead multiplier (multiplier applied to an employee’s base salary to determine actual cost) may be important to an engineering company. If this number gets too high, you will price your services out of the marketplace!
By measuring the key business metrics, monitoring them constantly and analyzing the results, the business owner is better able to understand how the business is operating and what changes may be necessary in the business to better achieve the mission and vision.
It is kind of like being a pilot of a plane – you need the most important metrics of your plane visible to you at all times while you are flying (speed, altitude, location, etc.). Without these metrics you are “flying blind” and the plane will be very difficult, if not impossible, to fly. Similarly, without proper identification of the key business metrics and the monitoring of these metrics, your business will be next to impossible to run effectively.
12 Steps to Business Transformation
12 Steps to Business Transformation is founded on a simple business model and describes the 12 steps required to implement and execute on the model. The whole model is summarized in the Thinking Business Blueprint shown below. And, as mentioned above, the sixth step in the Blueprint is Measure, Monitor and Analyze.
I have written about Measuring, Monitoring and Analyzing in the following articles:
- How Do You Measure Success
- You Will Get Crushed Without Accurate Business Analytics
- How to Set, Monitor, and Reach Your Business Goals
- How Do You Track Your Strategic Priorities
Go ahead and spend some time and review these articles so that you clearly understand all aspects of Measure, Monitor and Analyze.
Why is it Necessary to Measure, Monitor and Analyze your business? Measuring, Monitoring and Analyzing provides:
- A critical glimpse into your overall business’ health
- A mechanism to understand and predict market changes before they negatively impact your business
- An indicator or indicators for when your business needs to change its processes
- An indicator or indicators for when your business needs to change its strategy
- Insight into where your business has bottlenecks and inefficiencies
- Insight into where and when you need to optimize your business
- In depth business knowledge so you know what to adjust when the market changes and you know how the organization will respond to these adjustments
Don’t destroy your business by continuing to fly blind! Set up mechanisms, processes and reporting in your business this week to ensure that your business Measures, Monitors and Analyzes its performance continuously. This will allow you to dynamically adjust to the ever changing marketplace and always be positioned for success!
“Core values and core purpose in enduring great organizations remain fixed, while their operating practices, cultural norms, strategies, tactics, processes, structures, and methods continually change in response to changing realities” Jim Collins
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