How to measure the impact of your business improvement initiatives?
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The four critical business indicators “Efforts and courage are not enough without purpose and direction.” John F. Kennedy
There is lots of synergy between this quote from JFK and this week’s topic. It is pointless investing massive amounts of time and money in business improvement initiatives without there being a true purpose to their existence. Having no clear direction from the top will mean the initiative will be seen as a distraction, unimportant and will lead to failure or it having limited value.
Business improvement initiatives should always align to the overall strategy and objectives of the organisation. These strategies and objectives should ultimately guide you to monitoring and measuring the following four indicators when running your improvement initiatives
Indicator One: Revenue
Without income you do not have a business, if your improvement initiatives do not impact the, maximising, stabilising or generation of revenue, then I would question whether they are worthwhile. Of course every initiative may not lead to a direct increase in revenue, but there should be a link in some way. E.g. an increase in your profit may enable you to become more competitive, happier more engaged people may enable you to sell more or to offer fantastic customer service. Offering your customers what they want, at a price they can afford will undoubtedly increase your top line. These things are all interrelated, please read on
Indicator Two: Profit
The profitability of your business is the indicator that is going to provide you with a long term sustainable organisation. Profit is what will keep your organisation alive. Strengthening the profit of your business should always be in the forefront of your mind. Once the revenue comes in, it needs to be handled carefully and protected. Protecting and growing your profit through business improvement initiatives will safeguard its future. I would recommend that you quantify the impact your initiative will have on profitability at the outset, and then track and report progress. Don’t be afraid to adjust your initiative if profitability is not being positively impacted. Remember profit is the life blood of your business
Indicator Three: People
The people within your business are fundamental to its success. Creating a great place to work for your people and providing your teams with the right tools, support and training to deliver their work, is paramount. Hopefully you will have read my articles on staff motivation and engagement. When delivering business improvement initiatives don’t forget your people whatever kind of initiative it is. Where possible track and measure the impact your initiative has through productivity, effectiveness, or staff engagement / satisfaction results
Indicator Four: Customers
Finally your customers; closely linked with the people indicator. Internal and external customers exist across your business. Customers inevitably supply your revenue; any improvement initiative you engage in should positively impact your customer experience. Business improvement initiatives should help you to stay ahead of your competition and exceeding your customers’ expectations. Measure this through revenue, profitability and customers satisfaction surveys
It’s really important when embarking on business improvement initiatives that you measure the impact they have on your organisation. Initiatives are hard work and costly, try to ensure you get the maximum benefit from you efforts by monitoring your four critical indicators today. Good Luck!!