Measure What Matters to Customers: Using Key Predictive Indicators (Kpis)

This is a very well written book with analytical take on things. Baker insists on the need for theory, that can be tested and improved on, over fads that do not stand on data. It is refreshing to see a author who evangelizes the importance of profitability over market share and the need for businesses to leave the the cost-plus mentality in pricing. I recommend this book for all marketers and decision makers.

Ron, I have just completed reading Measuring What Matters to Customers. I couldn't put it down and finished it off in three days. As I was finishing it I had the mixed emotion of being pleased to finish your message, but sad the story was coming to an end. You know I have kidded you about how academic Professional's Guide to Value Pricing was. Well, Measuring ranks right up there as an academic masterpiece, which is important in this day and age when it seems that everybody is just writing what they think. You should have been a college professor and your book would be worthy of text at Harvard Business School. I have been using business coaches for my family law practice for 20 years and I have read at least a hundred success and management books and I have lectured all over the U.S. and Canada and there are many previously unearthed gems in your book. First, traditional numbers usually don't help. I have been telling my advisors and support staff for years, "These numbers don't seem to help. I can be enjoying an unbelievable trend and then...boom, no business" Or, "No, there are no seasonal trends, sure some people put off divorce during the holidays but sometimes the holidays prompt other problems." Being told by you in no uncertain terms that there is no certainty is a blessing. Thank you. Other points of import: Each customer is different. (That's what the last one insisted in his recent exit interview...that he was different). So, focus your efforts on each one, not solely on a system for pleasing all. We need to pick three leading indicators, and the team needs to do it. Team workers are "knowledge workers" and "volunteers" and it is important to call them that and treat them like that. With good team members management needs to get out of the way and not demoralize them with negative feedback or scoring; and we further need to eliminate systems and procedures which interfere with what they are doing. We need to release our grip on our systems and ask the team members what systems help and what gets in their way. Measuring the wrong thing accurately can throw you completely off. Take time to carefully analyze situations outside of the facts. Your example about the World War II Bombers was unbelievable. The first thought was that the returning planes needed more armor where the bullet holes were. But Abraham Wald came to the opposite conclusion: that the armor needed to be placed where the bullet holes were not because the planes that made it back had survived even though being hit where they were. Being efficient at something irrelevant is a sign of impending disaster. The real things of value in life cannot be measured, something my more introspective teammates have been trying to tell me for years. It takes courage to go against the grain and that is what you have done. Keep up the good work.

This book is compelling reading for two groups of people. Those that have been schooled in traditional accounting and business and the second group for those that believe that innovation and change is important for business success. This book shifts the focus from your view of the business to your customers view, and then challenges you to follow the indicators that measure value in their eyes. Ron provides credible argument that most of what we measure today has little impact on our future success. He then delves into the areas that are more appropriate indicators of future success. The book is exceptionally well researched and draws on thought leaders from most era's. It gives weight to trusting you instincts in business and provides a case for looking at those items that are harder to measure, but more valuable to follow. This is a must read and I highly recommend it.

Ron Baker's latest book is a winner. The "Value Pricing" guru is back - this time with a great book on measuring what matters. Ron makes the case that we are measuring from the wrong perspective as we look backward (lagging indicators) and from the inside (busines operations point of view) when we should be looking forward (leading indicators) and outside-in (from the customer's perspective). Ron challenges the status quo and backs it up with great stories of great companies and a good historical background of peformance measures. I love his theory for the new formula of business : Profitability = IC (Intellectual Capital) x Effectiveness x Price. He then goes on to explain the three components of Intellectual Capital as Human Capital, Structual Capital & Social Capital. This new framework explains the new value creation companies and how to transform your business into a value creating machine. I recommend this book highly!