The decisions you make about your business either keep you firmly motoring down the road to success or spinning your tires in mud. What keeps you from making decisions blindly? Data. Why? Because data-driven decisions help keep your business viable and profitable.
Peter Drucker, the man whose name is synonymous with modern business management, is credited with the quote “If you can’t measure it, you can’t improve it.” But what does that statement mean? Simply put, you need a starting point. If you don’t take a measure to tell you where you are, you won’t know where you need to go.
Think of it like trying to improve your golf game with no score. If you don’t know you are over 115 strokes, you can’t set a definable goal that will get you to 90 strokes. The same is true with business: you need to measure to know what the score is that you need to improve upon.
GROW Executive Summit presenter Ken Lane, President of Hathaway & Direct, suggested three ways to start getting a measure on how your business is doing.
Start with a SWOT analysis. SWOT stands for strengths, weaknesses/limitations, opportunities, and threats. Once the analysis is done, your goal is to translate that analysis into actionable items. Be specific with the benchmark of where you are. Lane suggested defining your timeframe and expectations and setting up regular reporting frequency and timeframes for reporting. And don’t forget to build in time to assess how you are doing. Where are there variances from the plan, and if you find them, why are they there? Lane also recommends doing a SWOT analysis every two years to keep up with today’s rapidly changing business environment.
Understand the 80/20 of your business. The 80/20 rule is the principle that 80% of outcomes (outputs) come from 20% of causes (inputs). In short, you give priority to the 20% that will produce the best results and create maximum value. You need to know what metrics are most important to your company. The improvements you make strategically in your business should focus strategies and tactics in those specific areas to move things in the right direction. “The data matters,” Lane said. “It helps you decide where to shift your dollars and efforts.”
Know the difference between objectives, strategy, and tactics. Strategy is your plan of attack or the approach you take to achieve a goal. Objectives are the measurable steps you plan to take to turn strategy into action. They are what you want to achieve. A tactic is the “how.” Like a hammer, a tactic is the tool you use to get the job done or complete an objective tied to a strategy.
Data helps you decide where to shift your dollars and efforts.”
