Measurement and Metrics for Success in the Third Wave
As Alvin Toffler predicted, the rate of change has continually increased in the Third Wave. Well into this era, it is evident that the breadth and pace of change are still creating new possibilities and complexities for almost every sector, industry, and organization. The modern work environment is a perfect model for how the confluence of a few significant shifts can transform paradigms.
In such a dynamic environment, competition becomes especially challenging because standardized comparative benchmarks are less likely to exist. In fact, most modern organizations employ a variety of frameworks, standards, and certifications to pursue a competitive edge. The scenario raises an important question for future-focused organizations.
When the very nature of what an organization looks and feels like is continually changing, are the current metrics you are using to make organizational decisions relevant now? More importantly, will they be relevant in the future?
The Metrics we Collect
Traditionally, accepted organizational metrics have been static snapshots of past events and results. In a Third Wave organization, metrics can – and must be – taken in real-time to accurately assess and depict dynamic, multifaceted environments. Emerging technologies like Artificial Intelligence (AI) and Virtual Reality (VR) are contributing to the potential for organizations to see collect more useful data than ever before.
- Big data and continuous optimization technology enables organizations to collect and analyze every possible type of data the company needs on consumers real-time and adjust continuously to hyper-personalize the customer experience
- Miniaturization technologies are making way for new products like wearable (even ingestible) health devices, weapons, space exploration, and data storage that can collect more detailed measurable data than ever before in history
- Quantum computing is solving previously unsolvable complex problems
Organizations can’t compete without these technologies and the insights they provide. Ironically, that necessity raises the importance of partnerships – it’s almost impossible that any one company will have all of these technology capabilities in house. To be competitive and grow, organizations and their respective workforces must work in collaboration to access and leverage the necessary resources to deliver products and services customers expect.
The Metrics we Measure
Especially as organizations learn how to tap into one another’s capabilities, the amount of data we can access is less the challenge. Knowing what to measure and compare in the effort to position for competitive resilience is the conundrum.
The Malcolm Baldrige National Quality Award offers a useful framework for knowing what and how to assess an organization’s integration and maturity with its metrics/performance results. The only award to recognize both public and private U.S. organizations for performance excellence, it looks at whether they are tracking the most significant results, and how those results are informing decision-making in five key areas:
- Leadership and Governance
- Financial and Market
- Product and Processes
Customer-focused Performance Metrics
The future of hyper-personalization is being shaped by technologies like web and mobile analytics, conversion rate optimization (CRO), and predictive analytics, which are working together to create a future where companies will know customers on a deeper level. Successful organizations will be those that have equipped themselves for continuous optimization. This ability to generate big data via each interaction and employ the insights to improve customer experiences will enable companies to deliver the exact right products and services.
With that sophistication, traditional customer-centric metrics like Customer Satisfaction, Market Share, and Customer Retention Rates become inadequate. Instead, organizations need to benchmark how they are staying ahead of customer demand with metrics that address:
- Customer conversion rate/new customer acquisition rate
- Customer responsiveness (as defined by the customer)
- Customer engagement (how long they engage with your product)
Workforce-focused Performance Metrics
We already know that Third Wave companies need to think beyond traditional structures and hierarchies. Organizations must provide the resources necessary to develop the workforce and create new opportunities for career progression and compensation. To increase the quality and sense of value of the work, managers must have strategies for merging the skills of its workforce with the enablement capabilities of its technologies.
Performance measurement should go hand-in-hand with attracting, training, empowering (and thus keeping) ideal employees. These workers are “T-shaped” – they understand at least one field on a deep level and also can converse in the language of a broader range of disciplines and soft skills. They are conscientious workers who develop broadly and deeply as they collaborate and problem solve in environments not bound by geography, culture, or time zones.
Traditional workforce related metrics like employee satisfaction, employee engagement, and retention levels are insufficient to understanding and optimizing this rich workforce. Instead, managers should explore deeper workforce-related metrics related to:
- Workforce capability (availability of T-shaped employees to handle complex projects)
- Workforce capacity (the right mix and balance of full-time employees and freelancers)
- Ability to attract high performing SME talent for each project
- The quality of benefits (given that the workforce that may not be completely full-time, what benefits do they value the most and is the organization providing them)
Leadership and Governance Performance Metrics
Companies need to design an operational and governance structure capable of adopting and iterating products and services to meet changing market needs. Strategic planning should be done continuously (quarterly is not timely anymore) if leaders are to have the foresight and agility to adapt. Collaboration structures should help the organization and its partners to thrive as technologies and competitive powers evolve. In addition, leadership must be equipped for progress as archaic federal and state level policies are replaced by more innovative and future-focused regulations. With all those imperatives, organizations should be thinking about how to measure:
- Effectiveness of organizational partnerships and alliance collaborations
- Ability to successfully address strategic challenges and optimize strategic opportunities
- Investments in new markets through strategic planning
- Senior leadership engagement with the workforce and key customers
- Brand image of the organization in the market
- Investments in new technological platforms
- Number of ethics related issues
- Societal responsibility goodwill index
Financial and Marketplace Performance Metrics
Tantamount to a company’s survival is its capacity to generate revenue and strong return on investment (ROI). Strategic collaborations and partnerships are important pieces of the puzzle, particularly because many companies may lack the financial resources necessary to invest in the capabilities they need to compete. Measurement should focus on ROI, especially as operational structures and the workforce become ever-more fluid.
Beyond traditional financial metrics like Profit Margin, Market Share, Revenue Growth, and Operational Costs, organizations need the structures to measure the following metrics:
- ROI in new markets
- ROI on new technological platform purchase or development
- ROI on collaborations (new businesses or additional profit coming out of these collaborations)
- Investment in the workforce
- Social responsibility
Product and Process Effectiveness Metrics
Big data allows organizations to gather daily operations and organizational performance data from the cradle to the grave. Done right, organizations can use the intelligence to drive significant growth in customer lifetime value and retention. Done poorly, organizations will face expensive, static infrastructure with no provable ROI.
Organizations need to make changes and iterate based on insights from the data. Then they need to be able to test changes as they generate more data to make sure that predicted outcomes perform as anticipated (or pivot if they don’t). Agile processes are necessary for adjusting quickly to external and customer changes. The capacity to iterate quickly likely will depend on partnerships.
Measuring details like the time it has taken to market new products or services, order fulfillment speed, and the number of defects or complaints managed can not provide leadership with an accurate performance health review of the organization. Agile Third Wave organizations are more inclined to measure against benchmarks like:
- Time to adopt (re-engineer products/services based on market needs) and make a sale
- Cost/time savings and increased satisfaction based on new technologies
- Innovation related cost/time efficiencies and related increase in customer satisfaction
- Collaboration platform adoption rates
- Quality of relationship with supply chain partners
As available data grows, market boundaries become increasingly blurred, customers become disintermediated, and the stage is set for global reach, organizations absolutely must work to capture a multitude of metrics continually and in real time. Correlations between data points like time, market, customer, partner, and operations will tell a much more useful story than a single benchmark ever could. Therein lies both the challenge and the opportunity in the Third Wave. If your organization is unprepared to thrive in this environment, Toffler Associates is available to help you see the future in your current state.
It’s time to confirm that your organization is gathering and measuring the data that will equip you for agility and purposeful innovation.
- Workforce and Society