ACTIVITY Metrics are THE Key to Strategy Implementation

Consistency and Reality are the core deliverables of Competitive Advantage. If you tell a customer (client) that they should buy from your organization (or use your organization, if nonprofit) because you do X, Y, and Z that make your offering a TRUE COMPETITIVE ADVANTAGE, then you must deliver on the promise! Every time an employee does not deliver on the promises made, the customer discounts the message being delivered and considers alternatives

Virtually everyone in every organization is very familiar with the many outcome measures used to evaluate success:

• sales
• expense ratio
• net income
• profit margin
• productivity
• net promoter score (simply one of the most poorly designed and statistically flawed outcome measures ever created)
• same-store sales
• inventory turnover
• returns

These types of metrics are quite valuable, but they provide information only on the outcomes of the organization. How did these outcomes change from one period to the next? What if they did not change the way that leadership was hoping for? What levers should the leadership team push to move them forward? What is preventing the organization from achieving its goals?

Leadership is about crafting an informed hypothesis about success and ensuring that the activities of employees are directed to move that hypothesis forward

All organizations operate under management hypotheses! That is, a leadership team believes that if employees do X, Y, and Z, then the organization will see increased sales, profits, etc. It is not a “known” (if it were, then every leadership team would know exactly what would yield them the results they are looking for); it is a hypothesis that considers all of the elements of the business, the competition, and the environment in which it operates. Once this is established, the next step is to determine whether employees are actually doing what we believe will lead to our success. Are they focusing their efforts on the organization’s competitive advantages? Therefore, in strategy implementation, these quantifiable metrics must be about the activities that we want employees to do.

Strategy is a journey over a period of time. For strategy to mean anything beyond the words on a page, it has to be measured, and adjustments must be made in those measures to direct employees to do what needs to be done. As stated earlier, the metrics used must examine the activities, not the results, that we believe will move us closer to knowing that our strategy is actually being implemented.

I have spoken with many CEOs who are frustrated that their well-designed strategy has not led to the organization growth they had envisioned. With a bit of investigation, we find that we can’t evaluate the success or failure of the strategy because it was never really implemented. Management teams below senior management paid lip service to the new direction but didn’t change any of their actions.

Companies need a completely new set of metrics to know that the strategy is actually being implemented. Those activity metrics need to be tied directly to the unique strategy (competitive advantages) of the business.

COMPETITIVE ADVANTAGE "MOST CONVENIENT"

Number of minutes it takes to move a vehicle from curbside drop- off to offsite parking (thus freeing up curbside parking and making it more appealing to customers): number of minutes from vehicle arrival at curbside to return of attendant to curbside (evaluated daily or hourly)

Time to initial greeting of customer (makes the customer feel that they are being taken care of): number of seconds from customer arrival to initial greeting (evaluated daily)

Number of dedicated sales staff (ability to reach a salesperson easily): number of dedicated salespeople divided by total number of customers

How up-to-date employees are on the latest customer service initiatives (improves the consistency of delivery to customers):  number of in-store employees attending refresher trainings divided by total number of employees

COMPETITIVE ADVANTAGE "BEST AVAILABLE SELECTION"

Number of items available for purchase when ordered (makes it the go-to place for customers—would like to see the number of specialty items ordered go down at least “to a point”): number of specialty orders divided by total number of orders

Number of times employees are able to resolve an issue about a customer not finding what they are looking for (gives customers confidence): number of daily resolved customer complaints on being unable to find products divided by total daily complaints on being unable to find products

Having everything that the customer needs to complete a particular project: number of items on-hand to complete a project divided by number of projects that items can be used for by customers

Number of products available during certain hours (customers operating outside standard hours might look for full selection):  number of items available to customers after midnight divided by number of items available to customers before midnight

 COMPETITIVE ADVANTAGE "HIGHEST EXPERTISE"

Number of times an employee must refer to outside sources to answer a customer question (provide customers with confidence):  number of times an employee refers to an outside source divided by number of questions received by customers

Number of employees who have completed industry certifications (outside certifications provide validation): number of employees who have completed industry certifications divided by total number of employees

Number of articles/presentations made by employees to outside groups (shows off current expertise and provides visibility as an organization known as an expert): number of published articles or industry presentations per year divided by total number of employees

 COMPETITIVE ADVANTAGE "PERSONAL CONNECTION"

Number of customers about whom employees can recall at least five important personal elements (knowing personal information and ability to recall it provides a connection with customers): number of customers about whom employees can recall at least five important personal elements divided by number of employees

Number of customers contacted after an order to determine satisfaction with no additional sales pitch (customers generally appreciate not just being an order): number of customers contacted after ordering solely to determine if anything else can be done divided by total number of customers (per day/month/quarter)

Note that not only are these activity metrics, but they are also all aimed toward the actions of employees that will impact the perceptions or responses of paying customers. If designed effectively, the change that the strategy envisions will result in a change in employee actions. All of the metrics can be used at an organization level as well as the individual employee level.

We worked with a nonprofit organization that (among other competitive advantages) had a competitive advantage of going out to the client instead of having the client come to them for services. It passed as a true competitive advantage relative to the other nonprofit organizations in their community. We crafted a metric: number of visits outside office divided by total visits with clients.

When we measured this against performance, we found that the mean was roughly 91 percent. This made sense since some clients simply preferred to come to the office. However, when we dug deeper into this number, we found three counselors in the organization with percentages below 50 percent. Each was approached and questioned about how low this number was for them. Each expressed a reluctance to meet clients outside the office (uncomfortable, inconvenient, ego, etc.). The reality was that they were not delivering on the strategy promise.

In order for strategy implementation to be effective, it must be consistently delivered

Dr. Chuck Bamford is a Strategy Consultant (www.bamfordassociates.com) who has worked with over 140 organizations. He is the author of 7 books including The Strategy Mindset 2.0 as well as two of the leading textbooks in Strategy – 15th edition (Pearson) & Entrepreneurship – 3rd edition (McGraw-Hill – 4th edition release date is 2/1/2021). This article is a slightly modified excerpt from The Strategy Mindset 2.0.

He is an Adjunct Professor of Strategy at Duke University (Fuqua School of Business) where he teaches Strategy Implementation in the MBA and EMBA programs. Over the past 25 years he has been honored with 22 Professor of the Year awards including 12 Executive MBA Professor of the Year Awards. He was named a Noble Foundation Fellow in Teaching Excellence and a Poets & Quants Favorite Professor.

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