I wrote an article some time ago (published at www.flyingsolo.com.au) in which I looked at some of the issues around measuring business performance.  In that article – almost as a throwaway introduction – I wrote:

“In other areas of life this [measuring] is taken for granted: think of how sportspeople obsess over their times run, heights jumped, runs scored and so on.”

I was reminded of this a few days ago when I went to see the movie “Moneyball” (which by the way is very enjoyable).  The movie charts the story of the relatively poor (at least by the multi-million dollar standards of US sport) Oakland Athletics baseball team in 2002 as they adopted a new system for selecting players (Wikipedia has good artciles on both the movie and the “sabermetrics” system the Oakland A’s adopted). 

Rather than relying on the “expertise” of club scouts, they turned to an analytical approach of assessing a series of skills – measures such as (and whilst I sort of get these measures I am sure they mean far more to fans of baseball) “walks”, “getting on base” & “avoiding strike outs”.  From this analysis they picked up players who were undervalued (based on these statistics).  For the record they got to the playoffs in 2002, although this article in not about the outcome but the process.

I have long been fascinated by the post-match analysis by sports people from a whole range of sports.  Their emotional state (in crude terms happy / sad) is determined by the outcome (win / lose), but when they are asked to comment on the game they have just played they almost never mention the result.  They talk about the things they can control, the things they are coached to do in the game.  They talk about yards gained, sets completed or tackles made (rugby league), first serve percentages and unforced errors (tennis), fairways hit and putts taken (golf) and so on.  Their focus is on the things they can control that – if done right – will lead to success.  They focus on a similar range of measures to those used by the Oakland A's.

It seems to me that this is a lesson that the business world can usefully learn from sport.  All too often when sport is discussed in a business context it is in terms of the result (winning or capturing territory) or about commitment (“taking one for the team”, going "that extra yard" and so on).  But this misses the point that these are not what the sports people themselves discuss – whilst any (team) sportsperson will trot out the cliché of how the team result is more important than their performance, you know that come Monday morning when they debrief on the game with the coach they will be focusing on their personal contribution to the result.

In my own business I am developing a series of metrics to measure the indicators of performance that I can infulence.  Website visits and enquiries from those visits, conversion rates on leads, client retention rates, turnaround times on questions from existing clients, meeting client expectations and so on.  I don’t think all of these metrics are quite right – I’ll keep on working on this – but I do know that judging my staff based on the profit the business makes (the result) does not make sense.  Even judging my own performance on the basis of profit doesn’t give me any insight as to why the business has done well or less well in any given period.

Instead I need to judge the team (and myself) on performance against those things we can control.  If I can get that right I can continue to attract and convert new clients, to provide great service to (and hence retain) existing clients and to provide an interesting and rewarding environment for my staff to work in (hence enabling all of the above) – and if I manage to do all of that the results will follow.

What are the indicators of success in your business (other than the bottom line)?  What do you measure to know if your business is performing well?