Measuring company success - It's not all about the money

This is the second of our background blogs.

It will focus on how we measure the effectiveness of Revenue Generating Services (RGS).

Spoiler - It's not all about the money

Whilst financial success is important we are witnessing the market pushing companies to improve their reporting of Corporate Social Responsibility and how they engage with suppliers, customers and employees (for example, equal pay has become a big issue in UK).

These areas form the the three fundamental forces at play:

* FINANCIAL

* ENGAGEMENT

* SOCIAL-ENVIRONMENTAL

These forces will consist of a number of sub elements for each organization. An example is provided below:

* FINANCIAL

- Gross Margin

- Revenue

* ENGAGEMENT

- Customer

- Supplier

- Employee

* SOCIAL-ENVIRONMENTAL

- Energy Use

- Equality Ratios

- Salary Differential Ratios

The feeds used to create the measurements for these forces must come from established, consistent and repeatable sources within your organization be that corporate accounts, net promoter score, Aon Hewitt, internal audit ....

Once we have an accepted measure for each force we can position the organization within a quadrant and display their enterprise vector.

The enterprise vector will define your quadrant

Whilst the enterprise vector alone provides a useful overview it hides how well or badly your portfolios and individual Revenue Generating Services are performing.

The three layers we can measure are:

- ENTERPRISE

- PORTFOLIO

- REVENUE GENERATING SERVICE

The method of creating corresponding vectors is summarized in table below

The power provided by this layered approach is best shown by giving a hypothetical example.

One(1) company with three(3) portfolios and six (6) Revenue Generating Services.

The positioning of these vectors establishes a baseline, at first, and provides a starting point for discussion but they lack context .

It's a photo when we need a video.

The value comes in seeing the change (trend) in your vectors over time; be that yearly, quarterly, monthly and perhaps even weekly or daily.

Once we have the trends

Imagine seeing very early signs of your 'cash cow' starting to lose market share.

Imagine seeing the return on your investment in a new revenue generating service show the green shoots of life

Imaging seeing a costly improvement show no change to the revenue generating service.

Imagine seeing cost cutting impact staff moral and the increase churn rate and increased costs of hiring and training.

Imagine seeing the impact of morale of suppliers and employees on the effectiveness of your services

Imagine how this information could impact your business decision making.

This is a consistent, repeatable and defined method for measuring the effectiveness of you Revenue generating Services, Portfolios and Enterprise.

We call this approach Enterprise Kinetics

A future blog will look at the detail of what Support Services (SS) are and how we control these costs to increase RGS margins.

For more information please contact:

followup@mackayser.com