Using Predictive Metrics to Make Better Decisions Faster
Companies are measuring the wrong things, and ending up with the wrong results. Many times we get stuck on measuring what’s easy instead of what’s useful. Or we focus on validating whether we succeeded or failed instead of measuring the elements that would tell us that a project is getting ready to go off the rails. Predictive metrics are the solution to that problem. And the Predictive Metrics Tree is the tool that allows you to ensure you’re measuring the right action to achieve your program goals.
What is the Tool? Predictive Metrics Tree
The Predictive Metrics Tree is a simple tree diagram that provides a direct line of site between the project objective and the 3-5 key metrics that, when defined and frequently measured, will best predict the likelihood of achieving the desired goal.
The elements of the tree are:
- Project Goal: the shared objective to reach a desired outcome.
- Key Drivers: the elements within the project that has the greatest impact on successfully achieving the goal.
- Initiatives: the actions within each key driver that leads to the goal.
- Predictive metrics: the process or behavior that measures progress to the goal.
What are the Benefits?
- Prevents Disasters: Increased confidence that this early warning system will provide the best opportunity to prevent disaster, or get a project back on track.
- Better Decisions Faster: With an early indication that a program is heading for trouble, the leadership team can make data-based decisions, and avoid “fire drill” thinking and behavior.
- Increased Focus: Measuring things that matter – not just what is easy to measure
- Less is more: Measuring 3-5 elements instead of dozens, allow the project leadership to focus on the most critical areas, and not get consumed in meaningless number crunching or metrics tracking.
What Business Problems Do We Solve?
- Identifies where projects are about to come off the rails, and allows early decision making and action to keep it on track.
- Ensures that you’re measuring the most meaning elements to drive a project to success.
- Creates a greater competency within the project team to focus on predicting outcomes, instead of just measuring results.
What are some considerations?
This is a new way of thinking for most organizations. It requires a fresh approach, and the fortitude to abandon the old way of managing metrics. Its critical that the correct predictive metrics are identified and that there is a direct line of sight from the predictive metric to the project goal.
A start up secures funding to deliver the 1.0 release of their product. Funding was allocated based on four key drivers – 1) release the software, 2) scale the technical staff, 3) scale sales operations and 4) cash management to the next round of funding. The Predictive Metrics Tree provides a direct line of sight between the corporate goal (shipping the 1.0 release), and the predictive metrics that will allow the management team to visualize any early warning signs that would prevent the team from achieving their goal. Below is the model, and how each predictive metric ties to the corporate goal.
In each case, the predictive metric is clearly defined, and should be measured and reviewed on a frequent basis (in this case weekly). All four of these metrics can be track on Excel, and updated in a matter of minutes.
To further illustrate, examine the predictive metric, Resumes Screened. Many managers would be tempted to measure the Initiative (Did we hired 10 new people?). A metric with just a yes or no answer is not very useful. Alternatively, if you measure the number of resumes screened then you have an early indication of whether or not you’re going to hit the goal of your initiative (10 new hires). Measured on a weekly – or more frequent- basis, managers can quickly reinforce with hiring managers to budget time to screen resumes. Over time you can set targets for the # of resumes, that you’ll need to screen to hit the goal of the initiative.