Are we measuring the right things?
20 December, 2019
As leaders and company owners we spend quite a lot of time measuring things like gross revenues, margins and operating costs, or costs of sales. But are we measuring the right things? We try to encourage clients to think wider than this, and frankly at KISS I think we need to try harder ourselves sometimes.
As a country, economic growth seems to be the holy grail usually meaning growth in Gross Domestic Product – but even Simon Kuznets, the distinguished economist who defined the modern GDP for the US government in the 1930s warned ‘the welfare of a nation can scarcely be inferred from a measurement of national income’. Indeed, fellow Nobel prizewinner Joseph Stiglitz suggested we should focus more on wellbeing and sustainability as more accurate measures of a nation’s progress.
Bhutan led the way in this in 2008 with a ‘National happiness index’, the UK has attempted some measurements but countries like New Zealand have gone further, defining ‘improving mental health’ as one of the five top priorities for spending. It seems to me that the goalposts for society, and any business, need to be more clearly defined in this way and the result should be not just greater happiness but also profit growth.
As I see it, gross revenue growth in any business is a simplistic measure that may mask a whole range of potential issues and equally leave us blind to some opportunities.
This got me thinking about both happiness, and our processes. As part of working with you we wouldn’t just ask about your growth target figures, we’d look at the ‘pain’ your service helps customers with and the ‘jobs’ your product does for them (result: happiness! Or at least satisfaction…). We also often look to understand what could be called ‘happiness indicators’: what are your most effective customer retention strategies? Which customers are happy to recommend you, how do they currently do that, and who might be used as influencers, advocates or case studies?
If we’re working on reputation or internal communications we’d certainly want to understand your recruitment targets, your churn and retention rates and who would recommend you as an employer – I’m sure this is as critical for you as it is for us.
So, while numbers are vital, I think I’m learning that happiness may be at least as important to growing a sustainable business.