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5 Mistakes Companies Make When Measuring Success

Martin Klubeck June 26, 2018

Success metrics are, without a doubt, the most important metric for any — and every — organization. If you don’t track your overall success, why bother tracking anything else?

At its core, success is measured by how well you fulfill your purpose. Does this organization live up to its mission? Has this individual answered his or her calling? When we lose sight of our purpose, we end up building complex measurement systems that are as likely to lead us astray as to give us useful insights. Avoid these common (and dangerous) missteps to develop a metrics program that measures what matters.

Mistake 1: Using key performance indicators as success metrics

Key performance indicators (KPIs) are ideal indicators of performance. Performing means doing — KPIs tell you how well you do whatever it is you do. It could be selling cars, raising funds, or constructing buildings. Every company does things, and KPIs tell you how well you do those things.

Success is not measured this way. You can be the best at what you do and still fail miserably at why you do it. Success is based on how well you fulfill your why, your purpose, your mission. When we forget our mission, we compile KPIs as if they were pillars to success, but they aren’t. KPIs are a type of fool’s gold that lead us down the wrong path if they are the only measures we use.

Every time an organization’s leader pridefully shows me their extensive dashboards filled with colorful charts, graphs, and tables, I wince. These KPI-driven companies risk everything because their indicators of success are misplaced, most commonly in performance measures.

Mistake 2: Believing continuous improvement will lead to success

Continuous improvement is a great concept that every organization should leverage. It’s how we avoid becoming obsolete. It’s a tool for getting higher returns on investment. It helps us to be more productive. What’s not to like?

The problem comes about when we assume a culture of continuous improvement will inevitably lead to success.  Continuous improvement is usually focused on improving how we do what we do. KPIs are one step removed from the why behind our organization’s existence. Continuous improvement is two steps removed.  We can improve how we do things, but if we improve the wrong things, we will never be successful.

Mistake 3: Trying to make your organization “data-driven”

This is by far the scariest misstep. Nothing should be “data-driven.” Everything should be “data-informed.” Data, measures, information, and metrics are tools designed to provide insights. These insights should inform our plans, actions, and strategies. They should not drive anything.

Organizations must be mission-driven.

Your mission is your purpose. It’s why your organization exists. It’s not a slogan, catchphrase, or tagline — although these are great tools for communicating your mission. Your mission should drive everything you do. Everyone in your organization — from the entry-level worker to the front-line supervisor to the CEO — should understand it. The mission is the first measure. It’s the basis of any success metric.

Mistake 4: Keeping your success metrics for leadership’s eyes only

This mistake is actually a higher-level manifestation of ignorance that happens at every level of metrics. Aside from the habit of bad team players hoarding information, I’ve also seen leaders who think metrics are a tool they can use to manage their workforce. They think it’s a report card — attendance, on-time arrival and departures, time to resolve, time to repair, and the beat goes on. Using metrics to manage people is such an atrocious misuse of measures that I’m cringing as I write this.

Even when I convince management that performance measures should be owned by the workers performing the work, they still balk at sharing the higher-level success metrics. Perhaps it’s because they see success metrics as indicators of how well they — the leaders— are performing. This is close to the truth, but still off. The military taught me that the leader takes the blame for failures and spreads the credit for success, but the truth is that success metrics aren’t a leader’s report card. Success (or failure) is a result of the entire organization’s progress toward fulfilling the mission.

As a leader, feel free to take the blame for mistakes. That’s an outstanding leadership trait. But if you’re willing to take the blame (and give credit), you have to be transparent. Since success is a result of everything everyone does, you have to share the measures of success with all those who support your mission.

Your board of directors should see your success metrics at every meeting. Your senior leadership should review them daily. Your middle management, front-line supervisors, and workers should see them at every all-hands meeting, review them at staff meetings, and celebrate them annually. Your customers and clients should see them. Your suppliers and vendors should see them. Share them with your competitors, too! It’s liberating and invigorating to share your progress toward fulfilling your purpose.

Mistake 5: Not using success metrics to improve

This misstep is rooted in the misconception that success is based solely on the bottom line. Success is not measured by how wealthy, famous, or powerful you are as an individual. Boiling success down to dollars and cents also doesn’t work for an organization. A company can bring in millions in profit yet not fulfill its purpose, ultimately failing miserably.

Unless the sole purpose of your organization is to make money, how much money you make is not an indicator of success — no more than your personal success can be measured by your bank account. Survival is also not a viable reason for existence. Being in the black is not success. The reason your organization exists can’t be to exist.

This is a problem within individuals also. We can easily find ourselves, day in and day out, simply doing what it takes to survive. These are stories of failure, not success. Yes, we have to work to live, but making more money doesn’t make you more successful.

Success metrics are the best way to seek improvement, because they tell you if what you are doing is moving the needle. How will you know if the new process you put in place is worth the effort? How will you know if you should expand and grow, or if you should cut a service or product? The key is to measure success by determining how well you are fulfilling your purpose. Are you meeting your mission? Are you answering your calling?

Stakeholder Capitalism
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