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The qualification of quantification

Quantification of any business element is always nested inside that element's qualification. Numbers alone don't mean anything. Only numbers in application tell a story. So, in trying to quantify elements of your business, it is critical to ask the question “why?" Why do you want to get a particular set of numbers to quantify a specific element of your business? It may be that you have never properly developed a P&L statement. In this case, the why is staring you in the face every day you wonder how your company is performing. To continue developing quantification models without a purpose that is tied back to your Strategic Objective is a dead end. What are the five or six key metrics that determine the health of your business? Are you wasting a lot of time and effort by reporting on metrics that aren't your business’s actual leverage points? Asking why is the critical qualification process required before you embark on any quantifying project.

Your Strategic Objective is the guiding light of your company – all quantification efforts are downstream of it. Your business's leverage points are the metrics that translate what your business performance is relative to your Strategic Objective. As Yogi Berra so eloquently stated: “You've got to be very careful if you don't know where you're going because you might not get there.” If you don't ask why, you won't have a link between where you are, where you want to be, and the leverage points in your business that will help you get there.

EMyth Team

Written by EMyth Team

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