Figure Out Why Customers Stay?and Why Some Don’t

Beyond Outcomes Measurement

How can a simple concept such as “measurement” get so convoluted? Easy. Just start with a few bromides like “You can’t manage what you can’t measure.” Toss in business fixation on “outcomes” measurements. Add an adult dose of management impatience with anything not quick and easy and big picture. And top it all off with a dollop of “I know what I know, so don’t confuse me with the facts.” That’s how.

You’d think the truth about measuring business performance is still a deep, dark secret. Actually, you could argue it does remain a secret because so many executives spend so much time rejecting truths that don’t fit their management style.

What’s the truth? For my money, no one’s expressed it more clearly and succinctly than Robert Kaplan and David Norton in the many books and articles describing their construction, the Bbalanced Scorecard. The authors mock (gently) the very notion that business can manage against outcomes measurements. “Hey, go get me 10% more sales.” Or, “Let’s increase profitability by 5%.” Better yet, “You’d better manage against your budget.”

Let’s consider the results of managing against these outcomes. 10% more sales? Do the same stuff you’re doing now, but faster and harder. Never mind that it’s the wrong stuff. 5% more margin? Easy. Raise prices 5%. So what if customers take a hike. Manage against your budget? Simple. Just cut staff to make your numbers. Too bad quality falls off the table; cutting into your sales; and eating up your margins. But we’ll worry about next quarter next quarter.

But hey, you can’t just leave this stuff to fate, can you?

No you can’t. But you can drive performance by measuring what drives performance. Novel concept. Go figure out what makes customers stay. Or why they leave. Then focus on doing more of the former and less of the latter. Go figure out why some customers give you more of their business. And some give you less. Same drill. Do more of the former and less of the latter. Or figure out why some customers are willing to pay more for whatever you provide. Now we’re talking. These are the “little pictures” that big picture managers ignore. Not that senior executives have to get deep in the weeds with every detail. But they absolutely should be focusing on how the company is managing these small details that drive so much of business success.

We can measure what work we do-and how well we do it. And we can motivate and train managers and staff to do more of the right stuff and less of the wrong-and do it right the first time. All it takes, gulp, is designing, implementing and measuring new, customer-centric business process—out in the office, where sales are made and margin created. You betcha, out in that veritable process no-man’s-land. Or should I say “variable process no-man’s-land” to call out the difference between flexible office and fixed manufacturing process.

“Gulp” is the operative word here. All too many executives believe they’re too important to pay attention to anything but big picture outcomes measurements. Hey, they should all spend a day with Jack Welch. Welch may have six sigmatized GE to within an inch of its life improving all the little pictures, but in GE’s production environments it sure worked. He knew his job went far beyond the big picture-and that he was directly responsible for what GE did and how it did it, the two major components of business process.

Business needs a whole bunch more like-minded executives and managers who grasp the reality that the big picture is but a composite of thousands of little pictures-and you can only change the big picture’s appearance at the little picture level.