The HeadScratcher Post Archive
December  2010
Preeminent Metrics
       December 2010 The Headscratcher Post Headscratchers LLC    Edition 67

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Thinking about Preeminent Metrics

We define Preeminent Metrics as metrics that give you the time to prevent or take advantage of an outcome they predict.

Here are a few examples:

  • Imagine if you were tracking a set of Preeminent measurements that accurately predicted the stock market crash of 2007/2008 when the Dow dropped from over 14,000 to below 7,000.   If you had high confidence in the metric, you would have sold all your investments, and perhaps repurchased again a year later, doubling your investments instead of losing value.

  • One of the most precious resources on projects are the people who work on them.  If critical contributors leave, project schedules often are adversely affected.   One Preeminent metric your HR department probably tracks is the employee attrition rate.   If you observe that this rate increases, this may give you enough time to either work on morale issues, and/or start the recruiting process to quickly replace a soon to be empty seat.

  • Brake lights of the cars ahead of you are a simple Preeminent Metric.   Watching for this metric, i.e.brake lights, gives you the time to slow down, or stop, and avoid an accident. 

Corporate and Project Dashboards and Report Cards give you a good read on historical data and near term future predictions but generally don't give you enough time to change the outcome.  These measures just help you prepare and are useful as a communication tool.

Preeminent Metrics however provide you with an early warning system, early enough so you can actually change the outcome they predict. 

Here are the components of a Preeminent Metric:

  • Measure what really matters; what is necessary and sufficient for a desired outcome.  Too many metrics and they will be ignored

  • Measure changes, not absolutes.  Measure acceleration, not just change.  (e.g. are things getting better or worse (change), and are they getting better or worse faster or slower (acceleration). (For the Math oriented reader, this is the second derivative of a measure)

  • Create pre-determined triggers for specific action if a measurement hits a certain value, increases or decreases at a certain rate, or falls within a certain range for a period of time?  (Don't wait for things to hit the fan before deciding what to do)

  • Business conditions and project plans change, and new information is discovered.  Therefore, what you measure, how you measure it, and what actions you might take, must be current and dynamic. Don't just create a set of metrics and assume they will be the right and only ones to use throughout the life cycle of the initiative.

  • Understand the relationships, the cause and effect between business processes, to create candidates for Preeminent Metrics, e.g. if "this" affects "that", then when "this changes" so will "that".

The Takeaway:  Report cards are a great communication tool, but if you want to control or prevent an outcome, make sure you have a set of metrics that give you enough time to change what they predict.

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