How to Measure the Effectiveness of Your Company's Vision…

The following excerpt is from Riaz Khadem and Linda Khadem’s book Total Alignment. Buy it now from Amazon | Barnes & Noble | IndieBound

To measure your company’s vision requires a deeper understanding of what the words that you use to define it really mean. You’ll need to dig a little deeper to make sure that everyone has the same understanding of each key phrase, so try to consult with key staff and reach a consensus about those meanings.

Related: Vision Statements: Why You Need One and How to Create One

Next comes defining the right indicators that measure progress towards vision. Let’s look at one common vision statements as an example: “outstanding value to customers.” How can this statement be measured? How do you know when it’s achieved? It must be based on solid evidence and not opinion. What information is needed to prove that this phrase from the vision is being realized? First, “outstanding” implies something that performs better than expected. How do we measure this? Two possible indicators would be one for quality and one for service.

Where do you find these indicators? You can either design a survey and ask your customers to rate the quality or the service of your offerings, or find the data within your internal processes from sales to delivery. The first alternative will give you the information you want but might inconvenience your customers. The second doesn’t take the customer’s time but only approximates the intent of your vision of providing outstanding value.

An approximate measure of value delivered to your customers might be something like “percent of repeat sales,” implying that repeat sales come as a result of value perceived by customers. Or you can look at the “percent of returns” assuming that a high percentage implies the customer didn’t perceive value.

Let’s try another example. Suppose the vision of a pizza company is “on-time delivery.” First, this has to be made clear before assigning an indicator to measure it. What is “on-time delivery?” It can be clarified by stating, “We deliver pizza within 15 minutes of the order.” Now, you can define an indicator to measure this intent.

Related: How to Engage Employees Through Your Company Vision Statement

How do you measure whether this actually happens? You can look at the delivery logs and count how many times the delivery was made within the 15 minutes promised. A good measurement of this statement would be “percent delivered within 15 minutes.” The measurement gives the owners of the company a clear indication of how their delivery service is operating. If their main selling point is “delivery within 15 minutes,” they would give attention to this indicator as their highest priority.

Here’s another example to illustrate how to clarify a part of a vision statement and convert it into a measurable indicator. If you state in your vision, “We’ll be the market leader,” what exactly does this mean? Do you mean the leader in technology, the leader in ethics, the leader in customer service? If the intent of your statement is to capture your market presence, then your vision statement could be clarified by defining it as, ‘We will have a higher market share in our lead product than any of our competitors.” You can then define an indicator to measure this statement as “percentage of market share in lead product.”

Acceptance criteria for indicators

To effectively measure your progress toward your vision, it’s imperative that the indicators you design be of the highest possible quality. What does this mean? It means that they be measurable, supported by data, fact based, reliable and accurately convey the intent of the vision. The descriptions below provide the characteristics the indicators should have:

Measurable. The indicators should be measurable. An indi­cator is measurable if it begins with the words “number of,” “percent,” “ratio,” “average,” “sum” or “delta” (difference between A and B). Examples are: number of customer orders, percent of customer orders through online channels, average number of customer orders per day, total customer orders, difference between customer orders received versus projected.

Supported by data. The indicator must be able to be supported by data that already exists in the company’s data systems, or can be captured by examining the documents generated during the operation of the company processes. If data doesn’t cur­rently exist, you can assess whether data capture is possible or cost effective.

Fact-based. Indicators are more meaningful if they’re based on facts, not opinions. Although opinions may give valuable infor­mation, indicators based on facts are preferable. For example, an opinion-based indicator might be the percentage of customers who rated the product with five stars on an ecommerce site. This is based on customer opinion. It’s valuable information but isn’t fact-based, whereas the percentage of customers who ordered the product a second time is fact-based. The more you make your indicator fact-based, the higher the quality of your measurement will be.

Reliable. The data source you’re considering for your indi­cator determines reliability. How reliable is the data accuracy from the source? How dependable is the source that provides the data on a regular basis?

Related: Getting Clarity on Your Big-Picture Vision

Accurately conveys the intent of the vision. If you have a choice of several indicators to measure the vision, the one that most accurately conveys the intent is the one you should choose. However, if data for this indicator doesn’t exist or is difficult to obtain, then you can choose an indicator that closely approximates that intent.

Your company may currently be using metrics to track performance. How do these differ from the indicators of vision? They don’t. They’re both indicators that measure progress. Your existing indicators are candidates to be linked to your vision. However, companies often have too many existing indicators, some of which might not be relevant but continue to be tracked from year to year. We suggest you make a list of these indicators and analyze them one by one to see if they adequately describe the intent of any of the phrases in your vision statement. If they do, then they become vision indicators. If they don’t, you might not need them.

Engage your team in clarifying your vision, then measuring the intent of your vision with the highest-quality indicators that might include some of your existing indicators. Once you’ve developed your strategy, pick the indicators you need to focus on in the next twelve months.