5 types of portfolio metrics to track

 

Last year we purchased an Awair device which tells us about the air quality in our apartment. It tracks five different metrics: temperature, humidity, CO2, chemicals, and dust. A bar chart of our scores illuminates on a device that looks more like a radio than an air monitor.

The device also shows a combined score, which tells us how close we are to optimal air quality with a convenient color coding system. We reference a connected app to check daily trends and read advice on how to improve individual scores.

Numbers are in. From the time we wake up to the time we go to sleep, many of us are surrounded by metrics in our daily life. Tracking how many steps we take, retweets we got, and items we checked off our to-do list. The feedback triggers our competitive nature to keep improving the score or avoid breaking the chain.

Good metrics can make us healthier and encourage good habits. But bad metrics can require excessive overhead or reward the wrong behaviors. How do we pick the right ones?

The key to metrics that matter vs. ones that just fill up databases is that actionable metrics drive the behavior needed to achieve your desired outcomes.

Back to the Awair example, our desired outcome is healthier air. We monitor the air quality at a glance, and a dip into the fair or poor zone triggers us to prioritize making a change. The tool also advises us on the type of investments to make, such as opening a window, buying a plant or switching to organic cleaning products. However, the tool only measures a small sub-set of the info that we need in order to decide how to best spend all of our time and money in our life “portfolio.”

What set of metrics do you consult to make decisions about where to invest your resources? Here are five categories of metrics to think about when building out measurement capabilities and dashboards to manage your organization’s portfolio. With this list in mind, you’ll be able to focus your data efforts on the metrics needed to identify and validate investment opportunities.

 

Mission-based metrics

Mission metrics are anything related to your core vision or mission, which can be as unique as the organization. Are you aiming to be seen as a leader in your industry? To have one of your products in every home? To solve a specific problem for every customer who purchases your product? It’s important to track metrics related to the major goals that your company exists to achieve.

Your mission is the reason the company or portfolio exists in the first place. So tracking the progress you’re making helps to energize the team and focus efforts on work that will contribute towards the goal.

These will be the longest living metrics. They can map to your yearly goals, or last for the lifetime of your organization.

Examples

  • % of your target market that owns your product
  • # of your past clients that still use your product or service one year later
  • # of users who were hired/obtained healthcare/found the love of their life/[insert your mission here] thanks to using your product or service

 

 

Operations metrics

Operations metrics are the diagnostic panel of your business. They’re like the pilot’s dashboard that provides an overview of what’s going on and alerts you to any problems. Unlike the mission metrics which focus on your vision or strategic goals, your operations metrics follow the major steps of the key processes your business needs to succeed. For many companies that means tracking their value streams, the processes involved to create and deliver value to customers. Other companies prefer to track “funnel metrics” at a glance.

Tracking operations metrics helps you look at the end-to-end process and identify any issues or bottlenecks. Some companies are ok at tracking what’s going on at a local level but don’t combine the information into an overarching view. The holistic view can help you more easily see how effectively items move through your process. For example, speeding up the process at one step might make the experience even worse downstream if the later step can’t handle the influx of demand.

Examples

  • Cycle time from request to delivery
  • Time required to complete each step
  • Quality of the outputs at each step
  • Conversion rates between steps
  • Customer satisfaction throughout the process

 

 

Resource allocation metrics

Portfolio techniques come in handy when you’re trying to figure out how to allocate limited resources to achieve your target outcomes.

Resource allocation metrics include understanding how much you’re investing over time, as well as the anticipated value created. You can see at a glance if you have some extra resources to take on a new project. Or if you’re overallocated and need to make some tough choices. Tracking the percentage of resources going to each item can also help you ensure that your portfolio is balanced.

If you’re not hitting your goals, it could be that you’re not investing enough in items that would contribute towards those goals. Or it could be that the items you’re investing in are providing a lower payout than something else you could focus on.

This can happen often in organizations. They have a stated goal but many investments of time and energy end up going to smaller improvements or “fighting fires.” By tracking and visualizing how your resources are actually spent you can easily compare it to your original goals.

Examples

  • % of resources for maintenance of existing processes vs. exploration of new opportunities
  • % of resources allocated per theme
  • % of allocated vs. free resources
  • Costs per month
  • The relative value, complexity, and risk of portfolio investments
  • Return of portfolio investments per month (whether that means more money, users, leads, etc. given your goals)
  • Projected future return of portfolio investments (inherently uncertain but some factors are clearer and you can use Monte Carlo simulation to account for uncertainty of highly risky or expensive investments)

 

 

Project metrics

We launch projects, products, and programs to help achieve bigger goals. Resource allocation metrics can tell us how much funding is going towards each project, but tracking project-specific metrics like delivery time and quality can help us continuously improve how we deliver the change. By tracking a baseline you can search for ways to improve your projects in the future to deliver better results faster.

Project metrics are helpful, but I’ve seen many organizations focus too heavily on these metrics at the expense of others, probably because they’re easier to track and already built into many project management tools.

Examples

  • Work in progress
  • Project delivery lead times
  • Burndown of work (% of completed work out of total)
  • Shelved or scrapped work
  • # of defects or support calls after the project goes live

 

 

Experimental metrics

Like science class, experimental measurements help you track what happened after introducing a change so you can compare it to the baseline. The metrics should link to your hypotheses. When you made the change, what indicators did you expect to increase or decrease? Track the quantity, source, and decide when you’ll start and stop measuring.

Define ahead of time how you’ll use this information to make decisions. What kind of change would you need to see to move forward with further investment? To change direction? To prioritize one initiative over another? The new information can help you decide whether to continue building out a feature, create a new revenue stream, move into a new market, or pick which version of the roadmap to move down next.

They can be similar to the other types of metrics in this article (ex. sales of a product). Or provide other general information about your customers. The level of granularity should be related to the scale of the change. For example, changing the color of a button might not measurably impact global sales but you can track if the number of clicks on that new buy button changed.

Your experimental metrics will change the most often. Each time you plan an experiment, you’ll likely need to make some adjustments to the data you capture.

Examples

  • # of sign-ups during a six-month pilot period of a new product
  • % of customers returning on a weekly basis to a membership site
  • # of referrals per month after introducing an affiliate program
  • Change in Net Promoter Score after an experience re-design
  • Interests/problems of your target customers (ex. what articles they read or features they used)

 

 

Portfolio metrics help to make decisions about where to allocate resources. What to prioritize in the short term to reach the desired end state. Start with what you have and continue to build out your measurement and reporting capabilities as you go. You’ll probably find a lot of measurement overlaps which will help you answer multiple questions with the same set of data.

Does your organization track all of these types of metrics? Which are more challenging? Why do you think that is?

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