Metrics are very important to success. I won’t say the most important though, because a number without a narrative that gives it meaning, relevance, and value might as well not exist. It won’t produce any change in direction or focus.
If you don’t have a purpose, by definition they aren’t complete
They are likely a complete waste of time in today’s fast-moving marketplace.
I recall a meeting over 15 years ago when a colleague of mine invited me to talk to his quality team. He was new to his role leading the team and I was excited for the opportunity to help my friend and to learn how the quality department of a highly successful Fortune 100 Aerospace & Defense firm operated.
We started the meeting by introducing ourselves. Their introduction included a list of metrics they used for “audit purposes”. I asked about two metrics to understand what they were used for. “Don’t know.” Who uses them? “Somebody must.” When did you start measuring them? “We’ve always done our metrics like this.”
These types of answers are the result of the previous industrial revolution. People acting as a “cog” in the larger organizational wheel. They really didn’t need to understand much outside of the standard work required to do their job. Anything more was a distraction and reduced efficiency. They produced reports. Someone else did something with them…or at least at some point, they did.
Metrics are Enablers for Outcomes
They help us know if we are on track or if we need to adjust our actions. They tell us if our team is on track or if they need help. They can help to measure cultural behaviors and, made visible and combined with targeted narratives, enable us to change ineffective behaviors.
We use three categories of metrics. I’ve included some examples of our metrics in each of these categories.
- Operational Metrics: measuring the trustworthiness of processes and their outcomes
- On-time, milestone performance
- Process Accountability
- Proactive versus Reactive Behaviors
- Equipment Utilization
- Current Capacity
- Technology Metrics: measuring the trustworthiness of technology
- Financial Metrics: measuring income statement and balance sheet impacts
- Equipment / Facilities Savings (OPEX & Cashflow)
- Services Savings
- Equipment Disposition
Baseline and Then Act to Produce Outcomes
When we start any engagement we begin by helping our customers baseline their current performance. Often they don’t have practices in place to drive the outcomes we ultimately help them to produce, so we are mostly focused on the outcomes that are already known, like spending, as well as those we can audit to determine, like utilization. It turns out utilization is often an indicator of whether spending is higher than it needs to be and if we can anticipate bottlenecks caused by equipment availability that results in process delays.
With a very small set of metrics, we can define the size of the improvement opportunity. Capitalizing on the opportunity requires the full set of metrics customized to the specific situation your company or department is in.
Stay Grounded in the Value of What you are Measuring
Be clear that the metrics you use, and the narratives you use them with, are producing the intended results. Make sure they measure important leading indicators of success so you know where you need to focus to get back on track if the program drifts.
To understand what differentiates Sente, you must first look at our approach from a philosophical perspective because that philosophy leads to knowledge requirements in our organization which then leads to the capabilities of our solutions and the award-winning results we’ve produced. We don’t organize around managing assets. Assets are easy to manage. They never have…
Hoarding Kills Utilization. Measuring equipment utilization is the best way I know to determine if your assets are being hoarded and, as a result, your business is incurring all of the costs of lost time and unnecessary money spent that comes with hoarding. The genesis for founding Sente was in a conversation I had years…
Like many aerospace companies, this one had many sites and different legacy cultures on each. See how they installed common resource management tools, increased utilization 3X and funded new programs.
The hoarding culture was slowing this company down while impacting cost and quality. See how a journey to common processes and collaboration lead to a 50% reduction in assets as their business doubled.
“We wanted to understand Sente’s Total Cost of Ownership model – which was very detailed – and make sure the cost savings were real. Our own analysis confirmed that TRM would save us money. But at the end of the day, we moved forward because of the increased capacity the solution would provide to our engineering organization.”
Director of Finance