September 26, 2007 - You'll only get it if you measure

Every techie has the uncontrollable urge to measure things -- myself included. I've found
that nothing cures the blues like going into the lab and firing up a bunch of superexpensive
test equipment - even when I don't have anything to measure!

In recent years (since being banned from the lab), I've turned to measuring other things.
For example, as part of my personal diet plan, I weigh all my food. I've found that
nothing helps me stick to my diet more than knowing how many grams of paprika I've
added to my alfalfa sprouts. Apparently, a number of my employees find this weird.

In recent months (since being banned from the company kitchen), I've turned to
measuring business parameters to improve the way we work. It's surprising how many
critical business decisions we make with only a few concrete numbers to guide us.

Sure, we measure the obvious things. We track our sales each month and compensate
salespeople based on how much they sell. That's easy to measure. The problem is that
when measurements become complicated, we sometimes give up too quickly.

Profitability is one of those complicated things to measure. It seems easy at first: total
revenue minus total expenses. But measuring profitability accurately is tough. You
attempt to predict the profitability of a specific project in advance, and before you know
it, you get bogged down with details. For example, how do you distribute overhead costs
between departments, or in my case, between branches in different countries?

My management team has developed an internal tool for predicting profitability on a
project-by-project basis. It has been a real challenge, but it's starting to provide us with
valuable insights for improving our business. The next challenge: making that data
known.

Can you imagine using a volt-meter without a display? You could poke away at the
circuit all day and never be wiser. You need to get data back from all that measuring! In
the same way, business measurements must be made available to the people who can
make a difference.

In keeping with the food theme, we like to couple our company results with pizza. Few of
our employees practice my weird diet methods, so we attract them to the company
kitchen monthly with the prospect of a free and heavy carb intake. I enter the kitchen
(now using a day pass) and our managers provide data to our employees (sales, revenue,
expenses) - the obvious measurements. But we've increasingly begun reporting more
elusive data: most and least profitable projects, load factor, top customers for the month
and more.

Feeling quite good about our altruistic pizzas, I told a friend in San Jose about them. As
always in Silicon Valley, my friend - founder of an e-commerce company - had to outdo
me. "At our company," he replied, "we report results to our staff every second." He
escorted me into their company kitchen (much larger than ours of course) and led me into
a scene from Twenty Thousand Leagues Under the Sea. I gaped at a huge wooden panel
covered with several ancient looking analog gages; each meter's reading changed
slightly every second. At first I thought it was a joke, but then I read the labels over each
meter. One read "revenue per minute," another "profit per minute" and so on. My friend
had actually tapped into their e-commerce software to provide their employees with
instant financial results to chase down their soy lattes.

I had to come up with a way to outdo my friend. If we couldn't be as rich as them, we
could at least be more physically fit. If you can't beat them, at least outlive them. Hence
my quest to make dozens of little Arnold Schwarzeneggers within my company doors. I
hired an Ottawa U student, a certified personal trainer, to come in twice a week and work
with our employees who want to improve their physical fitness. Following this column's
theme, the trainer measures everyone's key performance stats and challenges them to
improve on their previous results.

Needless to say, there are lots of things you can measure in the workplace. For example,
if energy conservation is important to you, consider putting up an enormous power meter
in a prominent place. Reveal to everyone how much energy your company is currently
using and how it compares with yesterday or the month's average. How can we expect
our employees to be more energy-conscious if they are blind to the data? A meter giving
live readings underscores a sense of urgency.

Your company has its own unique parameters to measure. Consider what it is you're
trying to improve in your business and then begin measuring and reporting it to the
people who can make a difference. Even if that means installing meters in visible places
to share the data. If you have trouble finding gadgets like this after surfing the internet,
send me an e-mail. Maybe we can create one together. Michael.Wakim@fidus.com

Mike Wakim is president of Fidus Systems, an Ottawa-based electronic design services
company. Fidus specializes in electronic product design for the communications,
aerospace, defense, transportation, automotive, storage and memory, consumer products,
biomedical instrumentation and industrial control markets.