Running a business doesn’t follow a single prescribed path; otherwise, every business would operate identically. Nevertheless, the primary objective for most companies remains consistent – generating profitability for shareholders. While numerous strategies can be employed to establish a competitive edge and stand out in the market, the challenge lies in determining their profitability post-execution. In practice, data serves as a guiding light and a benchmarking tool. Assessing operational and financial performance and comparing it to competitors is relatively straightforward when using data. Many competent managers have developed their unique approaches and priorities when it comes to data utilization.
In my role as a brand consultant, I’ve had the opportunity to engage with various managers in the Icelandic business landscape. What often struck me in brandr Index presentation meetings, was when proficient managers swiftly identified opportunities for improvement within the data. (For those unfamiliar, the brandr Index measures brand positioning.) It has always been intriguing to witness managers leave these meetings with action plans and a plethora of ideas. The essence of data is to facilitate managerial work rather than complicate it. I frequently encountered discussions about various “systems,” “measurements,” and “connections with this and that,” that intended to restrain or limit managers. There are tons of data and systems that measure and display different things, but they are as varied as they are many.
In the end, the critical aspect is to harness data correctly. There’s little point in investing in data collection or storage that merely ends up gathering dust. This led me to reach out to distinguished managers in the country, posing a simple question:
What data and measuring tools do you rely on most in your work?
I’d like to take this opportunity to express my gratitude to the interviewees for granting me insight into their roles.
“In my business, I utilize cubes and Power BI daily to monitor income and profit margins. We also create monthly statements for each company individually, which I consider essential for proactive monitoring of business performance. Human resources and employee satisfaction are of utmost importance, so we gauge our employees’ sentiments and identify areas for improvement every two months, using HR monitoring tools. All of these efforts hinge on ensuring our customers are satisfied, and we continually measure their feedback through monthly surveys to maintain performance feedback. Additionally, we conduct annual analyses of our competitors’ financial reports to assess our standing in comparison.”
“The data and measurement tools I employ in my business operations are quite diverse, categorized into lagging metrics (reflecting past performance) and leading metrics (predicting future impact). While lagging metrics are readily available, leading metrics are often shaped by emotions, experiences, and strategic considerations. My focus encompasses financial aspects, customer-related metrics, staff evaluations, and other vital areas or processes. It’s a dynamic mix of data from systems and individuals. Some metrics are reviewed daily, while others are assessed weekly, monthly, or on a case-by-case basis. The key lies in aligning the team to work collectively toward shared objectives.”
As evident from the interview responses, data plays a pivotal role, with a wide-ranging focus across various facets of business. Data and metrics serve as guiding lights for managers to steer their strategies effectively. If discrepancies arise in the measurements, it provides an opportunity to step in and make necessary adjustments accordingly.
Upon closer examination, certain patterns emerge in their responses. All interviewees underscore the significance of customer satisfaction metrics and financial indicators. Particularly noteworthy is Jón Björnsson’s emphasis on lagging and leading metrics. Leading metrics, in particular, are formulated based on emotions, experiences, and strategic insights. To elaborate further:
Leading metrics are challenging to estimate and are tied directly to a company’s operations. They serve as proactive indicators to prevent potential issues and achieve established goals. Examples encompass metrics like machine processing time, achieving specific sales growth percentages, work completion within defined timelines, and bolstering customer satisfaction levels.
Lagging metrics, as the name suggests, rely on historical data to provide an overview of a company’s past performance and the success of its strategies. These encompass key indicators such as income, profitability, production figures, and customer growth over time.
These metrics complement one another, with strategic plans rooted in leading metrics that, while partially grounded in historical data, are primarily based on emotional intelligence, experiences, and strategic foresight. After the designated period, and even during it, these metrics serve as yardsticks to compare planned objectives against actual outcomes.
Ari’s insights into human resources measurements are particularly noteworthy. A PwC survey earlier this year revealed that one in five individuals is highly likely to seek new employment opportunities. Recruiting and training new staff can be prohibitively expensive. Thus, it’s imperative for employers to maintain a vigilant stance, ensuring that employees are content in their roles. As Jón noted, effective teamwork and a shared sense of purpose are critical for success. Managers play a pivotal role in extracting the best from their teams, motivating them, and facilitating their professional growth.
In this context, employer branding gains increasing prominence. Broadly defined, it involves positioning a company as an attractive and sought-after workplace for both existing and potential employees. This entails crafting a positive and distinctive employer brand identity, showcasing the company’s values, culture, work environment, and growth opportunities. The ultimate aim of employer branding is not solely to attract talented individuals but also to retain and engage existing staff.
Lastly, Guðný underscores the importance of daily monitoring of business inflows and outflows. In the competitive insurance market, customers are the lifeblood, necessitating the cultivation of long-term relationships and the establishment of new ones.
These examples emphasize that operational success isn’t solely about the volume of data but the quality and usability of that data. It should offer insights without burdening management. Data should encourage action, provide information on areas for improvement, and contribute to the company’s profitability. Future leaders will be those who recognize data’s significance and devise cost-effective methods for harnessing its potential.
In conclusion, it brings us back to where we began. The primary objective of companies is to generate profitability for shareholders, and as such, it is crucial to leverage all the available tools and measurement tools that align with that goal.
