In days gone by, two distinct camps occupied the business realm: the salespeople and the financiers. Sales focused on revenue and the quantity of units sold, while finance honed in on profit margins and the equilibrium between income and expenses. Yet, the tale concludes with a sobering reality: companies that viewed the business through different "lenses" in their management approach suffered market losses.
Sales failed to deem customer retention and brand experience vital, while finance made biased decisions by exclusively considering metrics within their purview. In hindsight, these talented individuals lacked the tools to detect seemingly insignificant changes that would later prove consequential.
During this era, quite distinct from the present:
Some companies began applying alternative management strategies and philosophies, seizing opportunities that continue to resonate today. Toyota stands out as a prime example, competing fiercely with American cars of the time. Others, such as Disney, pioneered the concept of user experience that we are familiar with today.
This I dub as "Business Myopia." It's the time when apparent abundance blinds us to our business's decline, leaving us perplexed about the reasons behind it.
The adage "you get what you measure" rings true. Countless companies adopted a concept devised by Robert Kaplan and David Norton: the "Balanced Scorecard," an approach still employed that has revolutionized corporate management.
The concept was simple: a performance dashboard that balanced financial metrics with all other factors crucial to a company's success.
OKRs, KPIs, North Star Metrics – do these sound familiar?
These concepts are rooted in the Balanced Scorecard, and they are particularly associated with the realm of Digital Businesses. Google is often attributed with popularizing these strategic management approaches.
Fast forward to today:
In reality, progress only emerges when actions are taken. No one learns to ride a bike without getting on and pedaling.
Initially, begin – whether in Excel, Google Sheets, or a robust system. Put your metrics somewhere, educate your workforce on your business model, and engage in meaningful dialogues with your team about them. Embrace risk responsibly, make decisions with incomplete information, and as you refine metrics, nurture an organization responsive to them.
Lastly,
Remember that within your company – regardless of size or nature – everyone should comprehend the logic of your business model. This substantially contributes to internal culture, providing insight into the "why" and "what for." This cultivates strategic thinking across every role in the organization.
And you, dear reader, what are your thoughts on this matter? Let's embark on a dialogue of strategic enlightenment.