Measuring What Matters

By: Exclusivia Team

“We tend to measure what is easily measurable instead of what is truly important to measure.”

We recently heard Charles Koch the CEO of Koch Industries in an interview talk about his company, their philsophies, and how they want to seek mutually beneficial relationships with their shareholders, customers, employees, suppliers, and partners. This mutual good and interdependecy throughout the ecosystem creates a “rising tide, lifts all ships” that creates loyalty, strength, and lasting power for everyone.

Mr Koch revealed how he the team spend an enormous amount of time designing the compensation packages of their people. They look at all kind of measurement metrics to incentivize the type of behavior and actions that promote the overall goodwill and strength of the company. When he spoke about this, he acknowledged how hard it was to design these metrics because so many of the behaviors they are incentivizing are not strictly about maximizing profits, revenues, costs or other qualitative measures but instead qualatative attributes that lead to good will across the entire ecosystem. “The Problem is, We tend to measure what is easily measurable instead of what is truly important to measure.”

The significance of those words stuck in our minds. How often do we seek simple and easy measurements when we are looking at Key Performance Indicators (KPI’s)? Short term revenue, sales and profitability at all costs, cost of production, user acquisition, might all be examples. While we shouldn’t discount measuring these items, perhaps we should dive deeper into the measurements and analysis.
For example: Is it beneficial to increase profitability by squeezing our suppliers making them unhappy to do business with us, decreasing their loyalty for the future? Or would we be better served taking less profits in the short term, but ensuring that when we hit a difficult with supplies that they take care of us in turn? Is it beneficial to acquire customers at all costs, even those customers do not align with your values and will most likely cause problems for your organization, or would you be better served seeking out customers appreciate your services and worth the future investment of your company? There are countless more examples that we could identify, but the main point is it’s difficult and requires hard work to look deeper at the intagibles that should be measured.

Innovation, fortitude, trust, commitment, creativity, consistency, and looking after the long term value of the company and all it’s members are just a few examples of other items that are difficult to measure but might be invaluable. To dive deeper and identify what matters most then try to measure that, requires a leader or organization to have courage and to think long term about what adds value and strength to the organization and it’s entire ecosystem.

While business is the easy example to point to, this idea could most likely be extrapolated and applied to many areas as we pursue our best lives.