Imagine for a moment that you (as I) have purchased one of those cheap, three-legged, round accent tables for your home. It is unstable and will barely support more than the weight of our gaze. Mine has been toppled more than once by our cats.
Another three-legged product I have is a tripod for my camera. It is incredibly stable. The effectiveness of the tripod comes from the focus of the legs on a single and common point under the camera. But each leg of the accent table has a separate focus.
So what do three-legged devices have to do with building a better business? Their differences illustrate that the three essential supports for any company — measures, milestones and management — must have a common focal point to produce a really strong business. Simply using these three “legs” by themselves is not enough. We must get the tripod effect for our businesses.
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Measures are used to quantify the results of the enterprise. Measuring is essential for managing. One old saw is, “If we don't measure it, we can't manage it.” That is true for health care, sports, aviation, environment, politics and most of the other endeavors of mankind. Imagine managing the care of a respiratory patient without measures.
There are five perspectives from which you should be measuring the results: financial, customer, learning and growth, strategic and business process. This approach will give you views from the top down, bottom up, inside out and outside in.
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Milestones are the goals we set for the things we measure. Milestones may be based on known standards, contractual arrangements, best practices, personal bests or our best judgments. When selecting milestones, be careful of using industry norms. They are not applicable to all companies. Industry norms are based on an average for the companies studied. So, to set a milestone based on an industry norm is to aspire to mediocrity.
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Management is the process of guiding and adjusting the endeavor so that the measures achieve the milestones. Without measures and milestones there can be no management, and without management there is no need for measures and milestones.
Managing effectively requires that the measures are accurate, timely and relative to the mission and vision of the company. The vision may be thought of as what you aspire to be, and the mission is how you will accomplish the vision. Managing effectively also requires accountability, which is the mechanism that facilitates achievement of milestones.
The tripod effect can be achieved when these three essentials have a single and common point of focus: one overarching measure that defines the company vision. If any of the three legs are short of reaching the common point, the effectiveness of the business is compromised.
Rigging your company to have the right focal point starts with a series of questions. First, what is the company vision? Then:
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How can you know if you have achieved the vision? If you can't quantify it, you can't know you achieved it. With some thought, this complex question can be answered with a quantifiable statement. One company, for example, has determined that its overarching measure will be the profit per customer visit. Another has used market share.
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For each of the five perspectives, what actions are essential to achieving the vision?
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How do you measure each of the essential actions? Note that in the business process perspective, there should be two measures. One will measure throughput, which is the output related to time, and the other will measure quality, which is the useful output.
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What milestones must you achieve with each measure? This may need to be stated in phases if a measure is far from the ultimate target.
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How do you ensure accountability at all levels of management? This answer may include compensation, bonuses, organizational structure, management information and contingencies for the failure of managers.
Getting this level of focus from the three legs of business will ensure a strong business.
Wallace Weeks is founder and president of Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. He can be reached at 321/752-4514 or by e-mail at wweeks@weeksgroup.com.
