How To Develop Metrics to Track Digital Success
If you’re looking for a challenge, try teaching map reading to a driver who only knows what a GPS tells him or her.
That’s an apt metaphor about the importance of developing metrics to measure an undertaking as complicated as digital transformation.
A GPS is certainly handy, but it’s not always foolproof (just ask the real life tourists who, following a GPS’ direction, promptly drove a rental car into a Hawaii harbor.) Moreover, it can take some time to decipher how you’re going to get where you’re going, let alone review how you got to where you are now.
Not so with a skilled map reader. At a glance, he or she can see the route they’ve taken to date as well as what they need to do to reach their destination. Not exactly digital technology, but with time tested reliability.
That’s the case with metrics. Metrics are effectively maps that leaders can use to know when to turn the steering wheel and when not to. Moreover, the stakes at hand are a good deal more perilous than having to explain the puddles of water in your rental—by one estimate, by 2024, 55 percent of all information and communication investments will involve digital transformation.[1] Yet, 50 percent of businesses undergoing digital transformation don’t employ metrics to gauge progress.[2]
Don’t be one of them. Here are several steps to consider when developing powerful digital transformation metrics:
- Know your objectives, then build metrics that fit. The first step in developing the means to accurately gauge the outcome of business transformation is to know—or, better still, revisit—your overall business objectives. In a nutshell, what were your primary goals and objectives in undertaking what could best be described as a sweeping reinvention of your organization?
- Can the metrics be easily understood and measured? One technique that makes metrics particularly effective is use of dashboards–a graphical user interface which provides at-a-glance views of metrics, key performance indicators (KPIs) and other means of tracking progress. Whether your employ a whiteboard or printed material, dashboards are an effective means of conveying core information quickly and clearly to everyone who needs to see it.
- Choose specific key performance indicators. Metrics can be grouped into three broad categories: productivity, profitability and consumer value. Broken down further, here are a few KPIs to consider:
- Use. Usage metrics provide information on how users are meshing their work with technology, including daily use, conversion (activities begun and completed) and abandon rates (if this is high, that can suggest a problem that needs attention.)
- Cost Benefit. This KPI tracks the amount of money you’ve spent on technology and helps you determine which components are worth the investment and which to prioritize. This can fold over into overall return on investment (ROI).
- Productivity. Here, define what productivity means to you, then quantify it. For instance, you may want to see if employees are completing more tasks at the same time. Alternatively, your focus may be more on trimming the amount of time devoted to particular projects.
- Digital adoption. These metrics give you an idea of how well your team is adjusting to the new platform or particular features. If need be, they can pinpoint functional issues or need for additional training.
But don’t focus exclusively on money spent and earned. It’s every bit as valuable to examine your transformation for what it has achieved beyond the realm of dollars and cents. Effective metrics can also measure what are often seen as intangibles—agility, connection to changes in the marketplace and other desirable capabilities. For example, with regard to security, it’s relatively simple to identify just how much money is being funneled toward upgrades and bolstered safety. But the money effectively “earned” from such measures is a good deal more elusive.
Moreover, don’t overlook the emotional value of powerful metrics. Positive numbers can contribute a great deal to overall morale and enthusiasm for digital transformation. That can prove particularly valuable with people who may have been a bit skeptical about all the money and energy devoted to digital reinvention.
Lastly, bear in mind business transformation that incorporates digital technology has no fixed end point. Rather, it is very much a journey, one characterized by constant reinvention, evolution, and opportunity. Accordingly, not only is it prudent to continually study your metrics and apply their findings, it’s also a solid idea to keep them up to date—applicable to the changes that digital transformation will continue to have on your organization.
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[1] Carosella, Giulia, Jimenez, Daniel-Zoe, Little, Gard, O’Brien, Adelaide, Parker, Robert, Pucciarelli, Joseph, Yorifuji, Yukihara, “IDC FutureScape: Worldwide Digital Transformation 2022 Predictions,” IDC, October, 2021.
[2] “Gartner Survey Shows 42 Percent of CEOs Have Begun Digital Business Transformation,” Gartner,2017.
Adapted from REINVENT: Navigating Business Transformation in a Hyperdigital Era by Faisal Hoque (Fast Company Press, 2023), in association with IMD. All rights reserved.
REINVENT debuted as the #1 The Wall Street Journal bestseller and is The 21st Annual American Business Awards®, 2023 Best Business Book of The Year, The The Stevie® Awards Silver Winner.
Copyright (c) 2023 by Faisal Hoque. All rights reserved.
