Measure the leading, but not obvious, indicators

I was talking to a manager of a new Tractor Supply store recently.  Out of curiosity I asked her, “How many farms are there within driving distance?  I assume your company determined that before they decided to open this store.”  She replied, “I don’t know about that, but I do know that they looked at the number of pick-up trucks and dogs that were registered in the area.”

Of course, it was no surprise that professional demographic market researchers look at all kinds of non-obvious things that they’ve found correlate with their clients’ goals.  But the same lesson applies to any manager trying to achieve long-term profit.

Sure, you probably look at the obvious things like revenue, expenses and profit margin.  But to deeply understand your business, you need to measure things that relate to the processes that cause your business to succeed.  That’s a major reason that you need a complete model of your business processes.  You should probably be looking at, and measuring, among other things: competitive positioning 5 years out, the new product development pipeline, the state of your product/market strategy process, and so on.

This is, in fact, the focus of our work at CMG, because we believe that this kind of process view and measurement of the enterprise is the linchpin of successful companies.  Our book outlines this approach, and explains why you might want to look at the pick-up trucks and registered dogs within your company.


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