Post on 15-Feb-2017
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
Questions?
Comments?