Measuring Organizations - Part I

In the organizational world today, measurement is en mode and rightly so. Measurement is very important because it proves or disproves whether a particular strategy or program is working. If you don't measure what you're doing, then how can the organization smartly make changes and get better?

I don't think I've wrote this out before, but the way I see it, there's a few kinds of measurements:

• Operational Performance: These are measurements which try to assess whether the things that happen "behind the scenes" from the customer are being done well. These don't necessarily happen solely inside the four walls of the organization because the organization may be partnering behind the scenes with a partner or ecosystem to deliver value to the customer. These measurements determine whether you've got the right stuff going on under the hood

• Customer Value: These are measurements which represent what the customer feels (explicitly or implicitly) about the organization's product or service. There are two ways I can see to do this. One, you ask customers what they think and really listen to what they say. Two, you see how they vote with their feet, so to speak, when making trade-offs; you look at what they do. How much do they pay or otherwise sacrifice for your product or service? This could be in dollars, time, resources, behavior, it doesn't JUST have to be dollars

• Customer Impact: These are measurements which show whether your product or service is actually making your customer's life better. If you are trying to make your customer's life better by helping them be x, y, and, z...you ought to measure it

• Investor Value: These are measurements defining and determining whether investors are getting the return they desire. In some cases investors are actually customers or participating members of the organization (i.e., also subject to operational metrics). I'd rather call these folks the investors (rather than shareholders) because in lots of organization there are people who give more than just large amounts of capital who are otherwise "invested" in the returns the organization is trying to achieve (e.g., employees, volunteers, advocates). This category is an amalgamation of all the stakeholders in the organization who are putting something into it. They should also be getting something out of it

I'd be curious, do you think this covers the gamut of all categories of organizational measurement? Obviously lots of things fold in underneath these (I acknowledge that these categories aren't specific), but big-picture wise I'm curious about what you think or how you would revise this framework.

I'd like to add one nuance that I hadn't thought about until yesterday. There's a difference between a metric and an indicator:

Metrics are backward-looking. They assess whether ideas, strategies, and programs the organization put into place previously are working and are yielding results. The benefit is, you know whether what you did actually made a difference for your customers and investors. The downside is, metrics don't give insight into whether what you are trying to do will yield results. These sorts of measurements don't help you figure out if what you're doing along the way will get the results you want. In the game of basketball, this might be points or a win and loss record. Metrics are the proof in the pudding.

Indicators are forward-looking. They assess whether ideas, strategies, and programs the organization put into place will work. The benefit is, if your indicators are looking good you can have a reasonable expectation that you're on the right track. The downside is, indicators aren't proof of results. Having good indicators doesn't matter in the real world and you can never really know whether indicators are accurate until you validate them with testing and measuring metrics. Take basketball for example, having lots of assists is a good indicator that you'll win a game, but, it doesn't guarantee that you'll score more points than another team. Indicators are the tea leaves that tell you what the future might look like.

One final point, I really think this framework (well, this is more like the beginnings of a framework) can transcend the public, private, and social sector...the designer of the metrics just has to flex the concepts a bit. Moreover, some of these metrics and indicators should be short term and some should be long term. 

So, putting these all together, metrics are a matrix along three dimensions: Category (e.g., Customer Value vs. Investor Value), Metric vs. Indicator, and short-term vs. long term. Having a robust build out of such a "metrics cube", with measurements at every three-axis intersection would be amazing.

I bring this up to broaden the conversation about measurement. There are lots of buzzwords thrown around when this topic is discussed, and I hope this provides a bit more rigor. Well, I hope it does. I don't really enjoy buzzwordy conversations about a topic that's super important to push the organizational world forward.