To assess the health and productivity of their teams and organizations, leaders create, measure, and rely on key metrics.
The scorecards, dashboards, and financial reviews used at most organizations focus on many of the same indicators. Just about every company tracks financial metrics like revenue growth, gross profit margin, cash flow, and debt-to-equity ratio. The same is true of customer, operational, and team member metrics.
But the best organizations go further, examining everything they can, looking for a predictive metric that others overlook or haven’t thought of.
When they find a metric that adds tremendous value, they consider it proprietary to the organization. Leaders and team members talk about it, seek to influence it, and use it to measure their success. It becomes a trade secret.
For instance, through behavioral analysis, Airbnb developed a unique way of tracking the magic moments that drive repeat bookings. The specific measure remained closely guarded for years until competitors caught on to its predictive power.
Netflix tracks proprietary metrics for completion rate and retention by show. Bothreflect subscriber satisfaction and, ultimately, renewals.
Amazon has built its culture around customer obsession. It uses proprietary calculations to track not just customer satisfaction, but also customer lifetime value.
Toyota’s production system tracks the rate of Jidoka — the practice that empowers workers to stop the line when they detect defects and then fix the root cause. For Toyota, a higher Jidoka ratio is the best reflection of quality.
Costco adopted sales per square foot as its north star metric long before other retail stores recognized the predictive importance of such a measure.
Any organization would benefit from digging deeper and finding a root cause metric to help drive thinking and performance.
The best metrics are proprietary in nature as they remain largely unknown to other organizations. They predict future outcomes and are often counterintuitive or measure something others dismiss or overlook.
Once they find one, leaders feel the metric gives them a competitive advantage because of the insights it offers.
What is your organization’s proprietary metric? What do you measure that almost no one else does — something you believe strongly predicts future outcomes? Work hard to find one. Don’t settle on anything that doesn’t change how you view performance and success.
The best organizations win by measuring what others ignore or miss.
The best metric is the one that allows you to see around corners. Data is common. Knowing what metric changes everything is rare and worth finding
