by Scott Levine (email@example.com)
Business leaders often leave no stone unturned in searching for theoretical principles to guide them in structuring their processes and running their organizations. But sometimes even the most logical and sound business theories don’t pan out as expected. Sales may stagnate, valued employees may leave, and your competition may continue to have the advantage, even when you’ve adhered to the principles faithfully. To make matters worse, revisiting the theory will not necessarily point you toward the source of the problem–and you’ll be stuck wondering what went wrong.
This uncertainty is why many business leaders have shifted from focusing on theories to tracking key results to inform their business strategy. When monitored and appropriately measured, results can offer specific information about the aspects of your business that are functioning optimally and those that are not. Results can pinpoint what’s working in your marketing to bring in business. They can show what’s making your employees happy versus driving them away. They can reveal flaws in resource allocation and where small but well-performing products might be poised to make a more significant impact in the market.
In short, when you have a good grasp on your results, you can have a better grip on the overall health and inner workings of your business.
Effectively measuring results
The tricky part of assessing results is considering which results to examine and how to measure them. Many companies instinctively view financial statements as the benchmark for results, but your bottom line alone won’t give you a full picture of the workings of your company. Rather, you need to examine a range of results that explain how or why the company performed as it did, and that offer insight on specific actions to maintain or alter in the future.
A more thorough way of evaluating results is by setting strategic objectives across different categories and using appropriate metrics–usually Key Performance Indicators (KPIs)– to track the progress of those objectives. KPIs can number in the hundreds, tracking different aspects of the company’s business, including finances and revenue (e.g., profit, costs, sales, cash flow, etc.) employment statistics (employee turnover, satisfaction, skills acquisition), customer service (customer satisfaction, acquisition cost, retention cost), business processes (cycle time, quality control, efficiency) and marketing efforts (qualified leads, website traffic, email open rates).
When it comes to measuring results of innovation, however, it’s worth examining business management expert, Jim Collins’s “bullets, then cannonballs” approach. As Collins describes in his book, Great by Choice, companies that have the greatest success in innovation conduct low-risk, low-cost, low-distraction experiments (“bullets”) before launching a large and costly innovation (“cannonballs”).
Firing “bullets” allows companies to take small, calibrated shots at their target and gather empirical evidence of the results. Companies should launch a cannonball only after it has fired enough bullets to assess the strongest path to success and have objective data that the cannonball can likely follow the same trajectory.
As an example of this concept, Collins points out that in 2001 Apple initially opened only two retail stores and used them to test and redesign the concept and study results until they were reasonably confident of success. Today, Apple has 506 retail stores in 24 countries and is expected to reach the 600 mark by 2023.
That’s the power of results.
Your lawyer can help bring results
Never forget that your lawyers can play an instrumental role in helping you to achieve your goals, from helping you create efficient legal structures or processes to preventing or reducing costs due to inadvertent legal mistakes. Contact AEGIS today to learn more about how we can help you get the results you seek.
Scott Levine can be reached at firstname.lastname@example.org or (314) 454-9100 x 101.