Disruption is highly uncomfortable! Purposefully causing disruption inside your business seems like a stupid thing to do! For what reason would you want to disrupt something that is running smoothly?
Well, for starters, building a business that never changes is a flawed business strategy. A business that is too rigid to change will be obliterated by the fast-changing marketplace! As Clayton Christensen pointed out in the Innovator’s Dilemma, the fact that you are successful makes it hard to keep the edge you need to win in the future!
We do not have to look too hard before we find prime examples of businesses that were once at the top of their game and now have failed or are basically on their death bed! It is clear that they were not relentlessly committed to self disruption.
The easy examples that always get the spotlight are businesses like Blockbuster, Sears, and Toys R Us. But, there are countless others including Radio Shack, Vitamin World, Gymboree, Swissair, Woolworth’s, Sharper Image, Polaroid, and the list goes on!
So, what can a business leader do to productively disrupt their business?
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.