Measuring performance is essential, but even that can be misleading. For example, when we look at an isolated metric, it may tell one story, yet the results may differ when we compare it to other measures.
For example, a growth in revenue by 50% may seem to be favorable. However, if we see that the cost of goods sold increased by 70%, the measure is now less favorable. If we filled 90% of our open positions, we might say that was positive, yet when we compare it to the time it took or retention, the result may tell a different story,
Unless we set a target, a stand-alone measure will rarely suffice to tell a story. Even most output targets should align with a timeline – annual, quarter, etc.
Measures typically reflect outputs, volume, or time. Yet we should seek to show a correlation or interdependency with some other activity, event, or production to provide meaning. What we choose to compare them against ultimately will tell a more rounded and appropriate story than the one measure that stands alone. When devising our ratios, we should ask ourselves: what story we seek to tell will ultimately make this objective a success? Using a simple revenue growth example where an increase in revenue by 50% is favorable, yet that growth is over ten years or is below the market growth tells very different stories. One may be a success, while the other a failure.
Measures are essential, and the ratios you choose to showcase them against will dictate a story. Always consider baseline, time, or comparisons. Ultimately we want the story to be meaningful, inspiring, and accurate.
