The Basics of Good Metric Generation

By: Romains Bos

Agenda

• Introduction• Eight Characteristics of Good Metrics

• Examples• Bad, Poor, Good Metrics

• Hypothetic Metric Areas• Cause and Effect Diagram• Evaluation• Metric Maps• Foundations of Project Success

Eight Characteristics of Good Metrics

1. Actionality – Inputs that affect the metric are under the direct hands-on control of the people who are responsible for the performance of the metric

2. Proximality – Nearness in time and distance between the people that are responsible for the metric and those that take action to change the metric

3. Immediacy – The time between a change in a micro-process input to a metric input and a change in the metric itself

4. Causality – The degree to which a micro-process metric is a cause of change in a “higher” metric rather than an effect

5. Proportionality – A high correlation between the size of a change in the performance of the individual, work group or site metric and the size of a resultant change in a “higher” metric

6. Atechnology – The ease with which a metric can be updated and understood by the people responsible for improving it

7. Teamness – The degree to which a metric engages intact work groups (or change teams) in meaningful, focused improvement efforts more than it engages individuals

8. Customer Focus – The degree to which a metric reflects performance relative to internal and / or external customer requirements rather than “business” concerns

Really, Really Bad Metric

A Poor Metric

A Good Metric

Another Good Metric

First Four Areas

Second Four Areas

Another Six Areas

MFG .CAP.

EMPL.TRAIN.

PLANNINGMORALE

CUSTOMERSERVICE

COMM. SERVICE

All the Areas

CUSTOMERSATISFACTION

Panel D.

BusinessSuccessMORALE

MAN.CAP.

COMM. SERVICE

PLANNING

CUSTOMERRETENTION

ASSETS

CASHROI

WORKINGCAPITAL

CUSTOMERRETENTIONMORALE

QUALITYCASH

ROI

QUALITYEMPL.TRAIN.

TECHNOLOGY

CUSTOMERSERVICE

Final Set: Hypothetic CEO Metric Areas

BusinessSuccessPLANNING

CUSTOMERRETENTION

CASHROI

CUSTOMERRETENTION

ROI

QUALITYEMPL.TRAIN.

CUSTOMERSERVICE

CASH

QUALITY

MORALE

SALES

Starts With a Simple Cause & Effects Diagram

Man Machine

MaterialsMeasurement

Method SuccessfulBusiness

EffectEmployeeTraining

Cash

CommunityService

Sales

Quality

Custom

er

Reten

tion

ROI

Technology

Capital Equipment

Planning

Capital ($)Assets

ManufacturingCapacity

Morale

Custom

er

Servi

ce

Evaluate at Each Level

Final CEO Set of Metric Areas

Metric Maps Are MadeFrom Cause & Effects Diagram

Man Machine

MaterialsMeasurement

Method ROA

Inventory

Assets

CustomerRetention

CashSales

Cycle Time

CommunityService

CapitalEquipment

Morale

Yields

Profits

Effect

Metric Maps Are MadeFrom Cause & Effects Diagram – Cont’d

Man Machine

MaterialsMethod

CustomerRetentionLate Supplier

Shipments

Poor ResponseOn Calls

Poor Quality

No Order HistoryOn Computer

Morale

12 WeekLead Time

Poor VolumeSales Deals

Dept: Sales

Measurement

Can’t TrackIn-Process

Orders

The Procedure is Repeated at Each Level,In Each Dept., For each of the Metrics

CEOLEVEL: SALESV.P.

DEPT.HEAD

METRIC: CUSTOMERRETENTION

ROA

SALESTEAM

% OF CUSTOMERINQUIRIES

HANDLED INTWO DAYS

% OF KEYCUSTOMERS

CALLEDEACH WEEK

Level Beneath CEO(VP Sales for “Sales Metric Area”)

Man Machine

MaterialsMethod

SalesPoor Quality

CustomerService

Too LittlePrint Media

No Auto TicklerFile On Customers

Well trainedSales reps

Better TrackingOf Orders

Small TravelBudget

Measurement

CustomerRelations

No ComputerizedPricing

Need HardHitting Brochures

Slow Orde

r

Input

No Cooperation

Between Territories Poor

Adve

rtising

Poor Follow-upOn Complaints

Effect

Panel A:V.P. Of Sales

Level Beneath CEO(VP Manufacturing for “Sales Metric Area”)

Man Machine

MaterialsMeasurement

SalesTimely Delivery

On Custom Orders

Ship FromStock Agreements

Returns HittingLater Month’s Sales

Quality

MethodBreakdowns

Warning OnSpecials

Throu

ghpu

t

Spee

d

Effect

Panel B:V.P. Of Mfg.

All The Way “Down” For One Metric

Customer RelationsCatalog MaterialsEffective AdvertisingProduct PositioningPhone Follow UpCustomer Service

Throughput SpeedQuality

Communications BetweenCustomers And The Plant

Warning On SpecialsShip From Stock Agreements

Major Accounts Called Each Week

Survey ResultsOrder Accuracy

Assignment Of PeopleTo Specific Accounts

Order Input AccuracyCustomers Know

Order Status Data

Unplanned MaintenanceChangeover TimeLot SizesScheduling AccuracyLast Minute Emergencies

Preventative Maintenance Skills

Unplanned Downtown

CEO METRICSCustomer retention

SalesQuality

Employee trainingCustomer Service

ROICash

PlanningMorale

MFG. V.P. METRICSSALES V.P. METRICS

SALES MGR. METRICS MFG. MGR. METRICS

SALES TEAM CELL TEAM

Creating a Metric Map

Metric Map in Progress

Metric Map Complete

A Generic Metric Map Format

President

Vice Presidents

Directors

Managers

Supervisors

Percent On-time

Cycle Time

Work In Process (WIP)

Costs Per UnitOutput

Defects / Yields

These metrics can be applied with minimal customization by any work group at any level

Every work group, every employee, every manager focused on a similar set of metrics for their own processes

Micro-processworkers

Foundations of Project Success

Scope and Requirements

Sche

dul

eProject Success

Qual

ity

Cost

Integrity and Safety

The End

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