Entrepreneurs and business folks today use all kinds of metrics to measure the health of their company. Many times, however, these metrics might not give a true sense of what’s actually happening in the business. The inability to arrive at what is working and what is not can be very frustrating.

A successful business almost always has a set of processes to get things done. These might be well documented or just be known by a few key people. A process is made up of a set of actions with or without constraints. An action further has a set of influencers (like people, product, assets etc.) which either influence or are influenced by the action.

Businesses, processes, actions and influencers

Now that these terms have been established, I’m going to outline a 3 step process which can be used to arrive at a set of metrics for a business. Let’s consider the business of a grocery vendor who delivers groceries every morning as an example...

Step 1: Understand and deconstruct the processes involved.

A grocery vendor might have several processes like Procure, Deliver etc. You can map the various processes involved by looking at the business through the lens of some aspects like…

Effectiveness: Doing the right job

Doing the right job Quality/Efficiency: Doing the job right

Doing the job right Capability: Ability to do the right job and the job right

Ability to do the right job and the job right Progress: Extent to which the job is done

Extent to which the job is done Availability: Bandwidth to do the job

Bandwidth to do the job Output: Result of doing the job

One of the key processes, Delivery, can be deconstructed as shown below…

Actions and influencers associated with Delivery

Step 2: Ask the right questions.

This is easier said than done. Let us take the understanding of various aspects shown above to deconstruct the process and start asking the right questions. The goal here should be of evaluating the business through these questions. Let me illustrate…

Questions that could be asked for analyzing the Delivery Process

These questions are not exhaustive. Additional questions may (and should) be asked with respect to situational context, geography, business environment etc.

Step 3: Define the measures and metrics.

Now that the hard part of asking the right questions is over, it is time to define metrics that answers these questions.

How many of the scheduled orders are delivered?

Number of Orders Delivered / Number of Orders Scheduled How many orders are delivered as scheduled?

Number of Orders delivered in time / Number of Orders delivered How many orders are delivered rightly to designated customer?

Number of Orders delivered to designated customer / Number of Orders delivered How many orders can be delivered to designated customer in time as scheduled?

Total Man hours / Time taken for each delivery How many people available are used to deliver the orders?

Man hours taken to deliver the orders / Total Man hours How many orders are delivered ?

Total Number of deliveries How much revenue is generated out of those deliveries ?

Gross Revenue

There you go. This is a simple yet effective way to map your metrics without missing out on any critical pieces.

Lastly, If you are wondering how many metrics is too many, please note that there is no right answer to that question. I personally know friends who measure >150 metrics on a weekly basis. Just like how eating right and exercising will keep your body healthy, tracking the right metrics will keep your business healthy. That is why Vinay and I built a product to help business owners track the right metrics and make sense of their business data in a hassle free manner. Check it out at 16Metrics.com.