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External metrics, status metrics and results: Choose Your Own Intelligence

Every day your company produces lots and lots of information, and yet most managers feel like they don’t have the insights they need. Advanced business intelligence, with either custom reporting and/or dashboard solutions, is often looked to as a solution to sorting intelligently through organizations’ massive influx of data.  Before you head down the path to business intelligence, it’s important to first stop and consider this: the dashboard isn’t what’s giving you the answer, the metrics behind it are. If you don’t know where you’re going, even the fanciest car available won’t get you there.

External, status and results metrics

While metrics are proven to drive better performance, not all metrics are created equal. Metrics get their value by being used to make a decision, communicating current status or measuring the outcome of a goal. Let’s start with three common pieces of information, and the difference in how we interact with them. First is an external metric used to make a decision; traffic. You can’t actually change traffic conditions, but it’s good to know when you’re choosing which way to go. Second is a status communication; driving speed. You absolutely can change your driving speed, but remember that you usually do so based on other factors that you may or may not be able to control. Third is a measurement of results; time to destination. Time to destination is the most interesting of the three metrics, because it’s a lagging metric (meaning we don’t know until after the fact) impacted by many other metrics, some of which you can hope to use to help optimize the outcome; in this case time to destination.

Types of Metrics in Oil and Gas

Now let’s try finding similar examples in an oil and gas context. Let’s start with external factors used to make decisions: the price of Natural Gas. The price of Natural Gas is not something a single oil and gas company would really aim to change, but it’s commonly needed when making other decisions related to the profitability of certain operations. Second, the status communication; number of SPUD dates per quarter. Many companies use this or a similar metric as part of operations status reporting. Third measuring results; number of days to completion per well. Again, this is a lagging, results-based metric, with many correlated metrics potentially affecting its outcome. By knowing all of those factors, this metric is a goal metric, ripe for optimization.

Affecting Change with Metrics

So what does all this mean to someone still either over or underwhelmed with information? We don’t actually want to know everything. Before putting together a business intelligence solution, it’s important to know what metrics you can affect and what metrics should guide you along your way and what metrics are your true goal.  When thinking about what you want to know and see, it can help to sort your go-to information into external factors, status measurements and results. Once these have been disentangled, you can go through and map relationships between all of these pieces of information and start to map out where you should spend your time if you want to have an impact. Much of this blog is based on a great conversation I had with Trevor of Lean Decisions – check out his blog here!

Want to examine your companies specific metrics in more detail? Download our Key Performance Indictors worksheet right now and get started!




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