In June 2015, the number-one Billboard album in the United States was not Beyoncé, nor Jay Z, nor Taylor Swift, nor any of the other artists that the radio, MTV, and streaming systems around the world are inundated with: it was from James Taylor, the folksinger, who while very talented, just isn’t normally top of mind as the number-one Billboard artist as measured by sales.
What’s going on?
David Graham,in his excellent article in the Atlantic on June 25, 2015, notes that technology has changed how people consume music and how consumption is measured, and that demographics of customers have shifted the formerly platinum-standard Billboard Hot 100 into a strange time warp where Tom Petty and the Heartbreakers, Tony Bennett, and Weird Al Yankovic are now topping global mega crowd-pleasers such as Taylor Swift and Beyoncé.
The music business raises many passions and has even more opinions about what is good, what is hot, and what is not, but one lesson we can take to the boardroom and to strategic management leadership is this:
If the music industry continued to use only the Billboard album charts as a bellwether, they would be considering artists whose careers peaked in 1968 as where to most suitably invest their money for strategic success tomorrow.
What worked well in the past as your strategic performance indicator may not necessarily work well tomorrow
While setting strategic performance indicators may seem like a routine task, its importance can be demonstrated simply by looking at what is going on in many industries and learning from examples such as the music industry and the formerly rock-solid Billboard charts. I have had the privilege of working with a number of leading global organizations on resetting their SPIs (strategic performance indicators), and here are three takeaways that have made my clients more successful:
- Make sure your SPIs are measuring both forward-looking (leading) indicators as well as reverse-looking (lagging) indicators. Organizations often tend to focus on the lagging while not putting the attention and emphasis on the leading indicators.
- Make sure your SPIs reflect your assumptions about where the business and industry are heading and not only where they have been. Linking indicators back to your future strategic purpose and path will help you make sure you are measuring the right things at the right time.
- Regularly review the indicators and ask your board and management team, “What are we learning from these indicators? What are they telling us about the future of our business and the decisions we must make to remain relevant and profitable?”
While not all industries are facing the turmoil today that the music industry is confronting, what is occurring is a fundamental shift in how we all measure the strategic success of our businesses and the continual requirement for asking, “Is this indicator telling my board and management team what we need to know to make the best timely decisions about our future successes?”