Strategy Defines the Company Drag Coefficient
Companies can be thought of at any point as both living and non-living. Living due to the fact that it is run by individuals who have a direction and can change the direction as the executives deem it necessary. Also, the culture, values driven by the company provide the necessary soul/direction to the company. Having said that they are also non-living in the sense that, given a certain rigor and a certain set of established internal process and controls, the outcome can be controlled and can be made repeatable (say for example, Revenue/Margins etc). It’s this intrinsic nature of companies that make it sometimes difficult for executives to define the true direction. While growth, revenue and margins are important but so are the values the company stands for and the culture. One cannot come at the cost of the other and it’s a very delicate balance.
While our last post on Management By Metrics touched upon the KPI elements, this post is about the importance of types of metrics. A Company can be thought of as a large truck or car with multiple wheels. The person driving the car is the executive providing the direction and destination while the wheels are nothing but the KPIs that take the vehicle to the destination. Its important that each wheel works in tandem with the other. And it’s very critical to choose the right set of metrics that defines the company – it should be a mix of KPIs that provides the soul to the company and Financial/Operational ones. Each wheel’s speed and alignment should all be in the same direction. How do we know if all the metrics are aligned in the same direction and is there a way to measure the same?
We define that as the Company Drag Co-efficient. Company Drag Co-efficient determines if all the metrics are aligned to move the company aligned to the Strategy of the company. Lower the Drag Co-Efficient the better it is. This Drag Co-efficient is always assigned to the strategy. We at QuarkCube believe, a Company strategy is what defines the wheels of the car. Strategy with operational clarity on the KPIs is what makes the Strategy solid and measurable. A solid platform is needed to bring in all metrics - Financial, Operational, Culture related etc to ensure all metrics are measured, monitored and evaluated to a strategy. QuarkCube as a platform is rightly positioned to do the same.
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