by John Gross
Several of my columns have been about metrics and measurement and how they help you better manage your business. This month’s column takes the use of metrics one step further by introducing you to the concept of Primary and Secondary metrics. Primary and secondary metrics confirm that we are achieving our goal and not negatively impacting other parts of our business.
The formal definition of primary and secondary metrics are:
- Primary metric --The metric that measures the direct impact of a change. It shows if a project or improvement is working as expected.
- Secondary metric – This metric is a ‘confirmation metric’. It confirms that the improvements measured by the primary metrics are truly improvements.
Two examples of how a secondary metric acts to confirm improvement are:
1. You want to increase sales so sales increase becomes your primary and margin becomes the secondary metric. This combination confirms that if you are increasing sales, it is not by ‘giving your product away’ to make the sales.
2. You want to decrease manufacturing lead-time so you measure lead-time in days as your primary metric and labor productivity as your secondary metric. This combination confirms that if you are decreasing lead-time that it is not by adding labor.
Primary and secondary metrics offer a holistic understanding of what is happening and also provides early warning if metric improvements will impact the business.
As we move into end of year planning, select a primary and secondary metric for each of your annual projects and see how much more control, insight and operating profit you gain.
John Gross is an EOS Implementer who helps businesses achieve Vision, Traction, and Healthy. You can contact John at John@ DrivingChangeInc.com or call 636.667.0579.