By John A. Warden III, CEO, Venturist, Inc.
A strategic measure is one that tells you that you are either on a path to realization of your Future Picture or that you have arrived. My recent Essence of Strategy post clarifies the concept of Future Pictures. As I have said before, measurement is hard, but necessary work that is filled with pitfalls. Among the most dangerous and most beguiling of these is substituting or confusing tactical for strategic measures. In other words, whenever you are deciding your measures of success, make sure that you are measuring the right things–the strategic things related to your objectives–and haven’t confused them with the wrong, tactical measures so often relied upon.
Measuring success in the world of Fast Food
To illustrate the problem, I frequently ask my students and clients to imagine they were running a fast food restaurant with a drive-through window. I ask them to think about that drive-through window and identify the most strategic objective associated with it. The overwhelming majority answer that speed is the strategic element-how long it takes a car to get through the line. I then ask if all the cars got through in a few seconds, would they be happy. At this point, brows begin to wrinkle but the majority still answers affirmatively. I then ask if they would be happy if the speed through the drive-through led to customers only having time to buy a soft drink. As the discussion continues, people come quickly to realize that maybe speed is not strategic. Speed might be the wrong measurement.
Then the issue arises of what is the right, strategic measurement. Some will say quality, customer service, and repeat business. Now although these are all important, you could conceivably have great success with all three while going bankrupt. Finally, the group realizes that restaurant profit properly measured is a real strategic necessity and that something like speed through the drive-through is merely a means to an end. You could even conceive of cases where you would like to slow the traffic down in order to provide customers with more time to buy higher margin products or to provide employees with enough time to deliver quality, accuracy, and good customer service. At this point, everyone sees the necessity of identifying what is truly strategic (an end in itself) as opposed to the means to get there (the tactics).
The moral of the story: carefully identify your real strategic objectives and then create measures that will tell you whether you are progressing or have arrived. Don’t start with the tactics! In the case we just discussed, we know that measuring profit is complex but at least we know we are directly measuring something of strategic value.
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