How to Measure the
Effectiveness of Your Company's Vision
Once you have a vision
statement in place, find out how to choose the right indicators that will
determine if you're meeting those goals on a daily basis.
Image credit: Pinkypills | Getty Ima
RIAZ KHADEM
MAY 3, 2017
READER RESOURCE
To measure your company’s vision requires a deeper understanding of what
the words that you use to define it really mean. You’ll need to dig a little
deeper to make sure that everyone has the same understanding of each key
phrase, so try to consult with key staff and reach a consensus about those
meanings.
Next comes defining the right indicators that measure progress towards vision.
Let’s look at one common vision statements as an example: “outstanding value to
customers.” How can this statement be measured? How do you know when it’s
achieved? It must be based on solid evidence and not opinion. What information
is needed to prove that this phrase from the vision is being realized? First,
“outstanding” implies something that performs better than expected. How do we
measure this? Two possible indicators would be one for quality and one for
service.
Where do you find these indicators? You can either design a survey and ask
your customers to rate the quality or the service of your offerings, or find
the data within your internal processes from sales to delivery. The first
alternative will give you the information you want but might inconvenience your
customers. The second doesn’t take the customer’s time but only approximates
the intent of your vision of providing outstanding value.
An approximate measure of value delivered to your customers might be
something like “percent of repeat sales,” implying that repeat sales come as a
result of value perceived by customers. Or you can look at the “percent of
returns” assuming that a high percentage implies the customer didn’t perceive
value.
Let’s try another example. Suppose the vision of a pizza company is
“on-time delivery.” First, this has to be made clear before assigning an
indicator to measure it. What is “on-time delivery?” It can be clarified by
stating, “We deliver pizza within 15 minutes of the order.” Now, you can define
an indicator to measure this intent.
How do you measure whether this actually happens? You can look at the
delivery logs and count how many times the delivery was made within the 15
minutes promised. A good measurement of this statement would be “percent
delivered within 15 minutes.” The measurement gives the owners of the company a
clear indication of how their delivery service is operating. If their main selling point is “delivery
within 15 minutes,” they would give attention to this indicator as their
highest priority.
Here’s another example to illustrate how to clarify a part of a vision
statement and convert it into a measurable indicator. If you state in your vision, “We’ll be the market leader,” what
exactly does this mean? Do you mean the leader in technology, the leader in
ethics, the leader in customer service? If the intent of your statement is to
capture your market presence, then your vision statement could be clarified by
defining it as, ‘We will have a higher market share in our lead product than
any of our competitors.” You can then define an indicator to measure this
statement as “percentage of market share in lead product.”
Acceptance criteria for indicators
To effectively measure your progress toward your vision, it’s imperative
that the indicators you design be of the highest possible quality. What does
this mean? It means that they be measurable, supported by data, fact based,
reliable and accurately convey the intent of the vision. The descriptions
below provide the characteristics the indicators should have:
Measurable. The indicators should be measurable. An
indicator is measurable if it begins with the words “number of,” “percent,”
“ratio,” “average,” “sum” or “delta” (difference between A and B). Examples
are: number of customer orders, percent of customer orders through online
channels, average number of customer orders per day, total customer orders,
difference between customer orders received versus projected.
Supported by data. The indicator must be able to be supported by data that already exists in
the company’s data systems, or can be captured by examining the documents
generated during the operation of the company processes. If data doesn’t currently exist, you can assess whether data capture
is possible or cost effective.
Fact-based. Indicators are more meaningful if they’re based on facts, not opinions.
Although opinions may give valuable information, indicators based on facts are
preferable. For example, an opinion-based indicator might be the percentage of
customers who rated the product with five stars on an ecommerce site. This is
based on customer opinion. It’s valuable information but isn’t fact-based, whereas
the percentage of customers who ordered the product a second time is
fact-based. The more you make your indicator fact-based, the higher the quality
of your measurement will be.
Reliable. The data source you’re considering for your indicator determines
reliability. How reliable is the data accuracy from the source? How dependable
is the source that provides the data on a regular basis?
Accurately conveys the intent of the vision. If you have a choice of several indicators to measure the vision, the one
that most accurately conveys the intent is the one you should choose. However, if data for this indicator doesn’t exist or is difficult to obtain,
then you can choose an indicator that closely approximates that intent.
Your company may currently be using metrics to track performance. How do
these differ from the indicators of vision? They don’t. They’re both indicators
that measure progress. Your existing indicators are candidates to be linked to
your vision. However, companies often have too many existing indicators, some
of which might not be relevant but continue to be tracked from year to year. We
suggest you make a list of these indicators and analyze them one by one to see
if they adequately describe the intent of any of the phrases in your vision
statement. If they do, then they become
vision indicators. If they don’t, you might not need them.
Engage your team in clarifying your vision, then measuring the intent of
your vision with the highest-quality indicators that might include some of your
existing indicators. Once you’ve developed your strategy, pick the indicators
you need to focus on in the next twelve months.
