The Importance of Using the Right Metrics
- May 14th, 2009 by Steven Leung
In creating integrated marketing campaigns, or any company initiative, it’s essential to choose the right metrics so that how you’re measuring your success coincides with reality. Here’s an example of how a company chose a metric that was both a cause and a symptom of a very large problem to come.
Over a decade ago, I had the opportunity to talk with the world’s largest technology company at the time about their hard drive business. One of the managers there talked about how they were a metrics-driven organization and how they measured productivity. He went on to talk about how every one of their programmers was rated based on the amount of code they produced.
That code controls how and how well the hard drive works, and it’s stored in memory that’s purchased and built into the drive. The more memory you need to buy, the more expensive your COGS.
Code is like writing. You can write either “six words to convey an idea” or “a long missive that meanders around the point you’re trying to make until you’ve finally communicated the gist of what you’re trying to say”.
The second phrase is four times more expensive than the first, but gets you a higher rating. Basically, their way of measuring how successful their programmers were caused their manufacturing costs to rise in the same way.
What happened to them? In 2002, the company sold the division, suffering 1,500 layoffs and a $2 billion charge in the process, including those “related to productivity initiatives”.
So what are the right metrics to use for measuring the success of your integrated marketing campaigns? That’s the subject of our next blog post.
Tags: Goal Setting, Product Management
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