I recently read a HBR article titled, Don’t Be Tyrannized by Old Metrics. The post talks about the importance of having the right kind of metrics for your business.

In my opinion, metrics are like the dashboard you have on the car. They do have some value but are of no use if you are going in the wrong direction. However, if you know exactly where you are going, then the metrics can help you reach your destination safe and sound.

This means that one needs to be fully cognizant of this fact when measuring metrics and taking decisions based on these metrics. There are a lot of businesses which have gone bankrupt trying to optimize the wrong metrics.

The best way to stay ahead and clear of this mistake is to question the metrics every year during the business planning and strategy discussions. It is the right time to re-look and check if the metrics that you are measuring are indeed the right metrics.

Based on my personal experience and what I have read, I think that there are certain characteristics that define good metrics. They are as below:

Good Metrics are not necessarily easy to measure

Building the right culture that enables the organisation to do the right thing that will lead to the right results is of paramount importance.

So is employee morale.

So is your customer behaviour and the metrics on which they evaluate you.

None of this is easy to measure. However, each one of them is critical for the success of your business and needs to be tracked and acted upon.

Just because they are not easy to measure doesn’t mean that you should not measure or track them. You need to be creative and find ways to track them.

Good Metrics are Lead Indicators

Good metrics are lead indicators for the goals that you are going after. They measure activities, that if done well, will lead to the results that we are aspiring to get.

Whether it is the kind of culture that you want to set or the revenue that you are going after or the operational efficiency that you want to achieve.

Find the most important and the most basic activity that could lead you to the results that you strive for and measure that as your lead indicator.

This will enable you to keep your focus on the most important stuff and at the same time will help your employees make the right choices.

Good Metrics Are Not Fixed

One of the biggest mistake the businesses do is to fixate on the metrics, once defined. One need to regularly question if the metric that you are tracking is still the right metric for the results that you are trying to achieve.

You evolve systems and processes to track, measure and report the key metrics in your business. Once these processes evolve, they tend to develop a life of their own and drive business behaviour over long term. It is not easy to change this and create new processes and systems due to inertia.

So, it is critical that as a business leader, you are intentional about questioning the metrics and if the metrics are serving you to reach your business goals.


What metrics are you measuring that needs questioning?