Do each of your team members have tangible metrics that they can use to manage their own ... [+] performance?

We love data. Weve been talking about artificial intelligence and machine learning for years. We love the big five tech firms (Google, Amazon, Facebook, Apple, and Microsoft), masters of data, even if they come with potential costs when it comes to security and privacy. As we look to the future, theres one prediction we all can make: There will be lots more data and well struggle with the same problem. What are we using it for?

There are two reasons we collect and use data: to monitor performance (reactive) and to innovate (proactive). Most companies monitor a number of metrics if they didnt their businesses would be put at risk way too often. But not enough companies use data proactively. Proactive use of metrics, in contrast to reactive use, is strategic. Its about using the data that you have to find new opportunities and to think about a business differently. Innovative companies do this daily. Stodgy companies may do it as part of strategic planning on an annual or even a five- or 10-year basis. But its hard to be adaptive and stay ahead of the market without proactivity.

Proactive management isnt about boiling the ocean. Instead, its about looking at an issue first and finding data to prove or disprove a theory. Once its proven, that metric becomes the mantra. And when a goal is reached, its time to find a new opportunity.

This is the approach some strategy consulting firms use. After conducting an initial assessment of a company, looking both internally and externally at competitors and the market, they help to set an agenda for CEOs a short list of metrics (generally no more than five) that become the focus of the organization. This approach upends business as usual and delivers a successful corporate transformation in 12-18 months. Its effective because it gives companies focus: measure what you need to manage. The rest becomes a distraction.

Most companies, however, dont do this. They collect and store reams of data, but might not organize or catalogue it in ways that make it easy to access or use. They have metrics to monitor, but not necessarily to manage or lead. They likely report (at least internally) on metrics that are accessible or traditional, but may not be reporting dynamically on what could be the most impactful. Their reports may be informational, but not actionable. Similarly, individuals at these companies have jobs they do, but dont have the ability to measure the impact of their efforts. Most importantly, the leaders at their companies dont understand that they are missing opportunities. How could they? No one is looking at the data. Even though they think they are.

At many firms, metrics are standardized across departments. This helps executives and senior officers look across business units and competitors to see how the company is performing in terms that they understand. For that reason, they are often the types of metrics you learn in business school, like market share or throughput. But limiting the types of data we look at and who has access to information prevents companies from maximizing their value, for a number of reasons.

None of these challenges, however, is insurmountable and you likely dont need artificial intelligence or machine learning to get there. You do, however, need greater transparency, empowerment, and a questioning culture.

When it comes to data, many businesses struggle with transparency what should they make available to whom. But the real issue isnt transparency; its trust. When employees are trusted, they feel more connected to the business and are often more engaged.

When information isnt accessible, we make it harder for people to question, challenge, or innovate. But, if we make the information accessible, we give employees the space to take more interest in the business and to get creative. That is where new insights and innovation come from. They are much harder to find when everyone keeps their heads down.

Of course there may be bad actors, so trade secrets and personal information should still be kept under strict controls. But in all of the data we collect, how much really do we have to protect?

When executives spend their time monitoring metrics, they cant spend their time looking for more strategic opportunities. Focusing on strategy requires different data and a different approach. To create more space for strategy and innovation, leaders have to empower the managers that work for them. That can be hard for some: Empowerment is delegation without control. But leadership isnt about control; its about influencing others to do more and to be better. So leave the running of the business to the managers. Everyone will be better off.

One way to empower managers is to give them goals, by being clear about your expectations for the outputs from their teams. Let them work with their teams to determine what they would need to measure to manage the work themselves. That gives each individual on the team clarity on how their efforts impact the organization and accountability for delivering on their metric. When they are empowered and challenged, you may be surprised by how they approach the problem and what they come up with.

Leaders look to change the conversation, so metrics for executives should be used to point out what we can do to be better, not to flex the muscles we already have. That makes them strategic. Whether its an internal strategy team or a data-driven insights team, having a group that is tasked with challenging the status quo and using metrics to look at the business differently daily can create the same types of opportunities that the CEOs agenda provides. Just make sure to keep that focus. If a new metric is introduced, something else should fall off. Its no longer the priority. When goals are achieved, new metrics or ideas are needed and that analytical team will be the group trained to help.

Metrics do matter, but metrics alone dont do much. Individuals be they managers or leaders have to have the right mindset when looking at the data. If the mindset is one of stability lets just keep the ship afloat then monitoring is what matters, but change cant happen.

Instead, we can create cultures where inquisition is expected. Encourage critical thinking and challenging the status quo. Have your employees ask questions of management about why the company does things in certain ways and then help them find the data to test if another approach would be better. Or carve out time for them to develop questions about the business and then help them work to answer them. Who knows what they might uncover? After all, doing the work day in and day out does give them a very different perspective and a more nuanced understanding that can be more valuable than leadership sometimes remembers.

While I dont want to underplay the importance of monitoring performance, its active management and strategic leadership that benefit most from metrics. As leaders, we want to ask the hard questions and challenge the business. Metrics at best give us new insights when they are constantly being re-evaluated. At worst, they at least give us direction, and the wind is always changing.

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Businesses Have More Data Than Ever Before, But Do They Measure What They Manage? - Forbes