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 helps ensure you’re measuring the right actions to achieve your program goals.
What Is the Tool? Predictive Metrics Tree
The Predictive Metrics Tree is a simple tree diagram, generated in Power Point, that provides a direct line of sight between the project goal and the 3-5 key metrics that, when defined and frequently measured, will best predict the likelihood of achieving the desired goal. Predictive metrics are fundamentally different that results metrics in that instead of measuring an outcome, the organization measures a process or behavior that drives the result.
Constructing a Predictive Metrics Tree is a cross functional group process, typically done by the project leadership. The critical aspect of constructing predictive metrics is ensure, with all the moving parts associated with delivering a product to market, that the team is sharply focused on the 3-5 elements that will have the biggest impact on whether or not the overall program goal is achieved. This process consists of crisply defining these four-elements, which are order-specific. The last step is frequently measuring and managing the resulting predictive metrics.
- Project Goal: The cross functional team will define goal of the project. Typical examples in product development include delivering a project against specific schedule, cost quality and revenue targets. The project goal is a shared objective that is time-bound and measurable. It is derived from a broader organizational and/or corporate goal. This is the result metric that typically is measured, as opposed to the predictive metrics discussed in this chapter.
- Key Drivers: Key Drivers are derived from the project goal. Once a goal is established, the project team will identify the 3-5 key actions that will have the greatest impact on successfully achieving that goal. It is important the team bound the number of drivers, to ensure that they can sharpen their focus in the high impact areas, and avoid the ineffective method of “measuring everything.”
- Initiatives The initiatives are the key actions within each driver that will ensure that the goal is achieved. By identifying the key initiative within each driver, the project team continues to narrow their focus to gain clarity on the most relevant actions or behaviors that will drive the successful outcome of the stated goal.
- Predictive Metrics: Predictive Metrics are the processes or behaviors that measures progress to the goal. For each Initiative, the project team will identify one element that has the biggest impact on determining is progress toward the Initiative. It is critical that each Predictive Metric is crisply defined. The failure to do so, will introduce an element of ambiguity, leading to inconsistent measurement.
Once a suite of 3-5 predictive metrics has been defined, they should be tracked on a daily or weekly basis. Typically, this is done in the weekly project team review, or in a weekly management review. Typically, a predictive metrics dashboard is constructed as a single Power Point slide, and is included in the review. These metrics give the team the best chance of identifying if progress is not being made toward the stated goal, and allows the team to take quick action to rectify any identified issues.
What Are the Benefits?
- Disaster prevention: Increased confidence that this early warning system will provide the best opportunity to prevent disasters 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 allows the project leadership to focus on the most critical areas and not get consumed in meaningless number crunching or metrics tracking.
Which 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 meaningful 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. Most organizations focus on what they can easily measure, as opposed to what they should be measuring to optimize the probability of achieving the project goal.
Product Development Expert
John Carter is a widely respected expert on product development. He is an inventor of Bose’s Noise Cancelling Headphones and designer of Apple’s New Product Process. As Founder of TCGen Inc., he has consulted for Abbott, Amazon, Apple, Cisco, HP, IBM, Mozilla, Roche, and 3M.
The Clean Tech startup has secured funding to deliver the 1.0 release of their product. The funding was allocated based on four key drivers – (1) release the software, (2) scale the technical staff, (3) scale sales operations, and (4) raise 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. See below 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 tracked on Excel and updated in a matter of minutes.
To further illustrate in the visualization below, examine the predictive metric “Resumes Screened.” Many managers would be tempted to measure the initiative “10 New Hires” with the metric “number of new hires this week (month)”, which is not predictive or 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). As that predictive metric is 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 number of resumes that you’ll need to screen to hit the goal of the initiative.