Operations

Quality Metrics

Quality Metrics Jonathan Poland

Quality metrics are measurements that are used to evaluate the value and performance of products, services, and processes. These metrics can be used to identify areas for improvement and to ensure that products and services meet the needs and expectations of customers and stakeholders. Quality metrics may include measurements of functionality, reliability, usability, efficiency, and customer satisfaction, among others. By tracking and analyzing quality metrics, organizations can improve the quality of their products and services and better meet the needs of their customers. The following are common examples.

Customer Satisfaction
In many cases, it is appropriate to measure the quality of a product or service by the quantifying customer opinions. The most common way to do this is simply to ask customers to rate their satisfaction. For example, there is no better way to measure the quality of a meal beyond asking the customer if it was good.

Ratings
Ratings of products and services such as those offered by reputation systems.

Failure Rate
The reliability of products as measured by the probability of a failure over a period of time. For example, a robot might have an annual failure rate of 0.1% indicating that 1 out of 1000 units fail in a year.

Mean Time Between Failures
The reliability of IT services is often measured as the mean time between failures. For example, a software service with a mean time between failures of 6 months is down twice a year on average.

Quality of Service
Quality of service is a telecom industry term for the quality of network services such as internet connectivity measured using technical metrics such as error rates, bit rate, throughput, transmission delay and availability.

Quality Control
Quality control is the sampling or testing of manufactured units or delivered services. For example, a hotel might randomly sample rooms that have been cleaned to make sure that the room is in the expected condition. This can then be tracked as a quality metric such as the percentage of rooms that met the hotel’s standards.

Defect Rate
The quality of processes or project work can be measured with a defect rate. For example, the number of defects per 1000 lines of code can be considered a quality metric.

Time to Volume

Time to Volume Jonathan Poland

 

Time to volume is a marketing metric that measures the time it takes for a new product to go from concept to launch and reach a significant level of sales or usage. Also possibly used as time to scale. It is similar to the time to market metric, which measures the average time it takes for products, services, and innovations to go from concept to launch. However, time to volume is intended to exclude limited launches that only reach a small number of customers, as well as products that never achieve a significant level of commercial success. The definition of commercial relevance may vary depending on the size of the organization, but it typically refers to revenue, units sold, transactions, or number of service subscribers. By tracking time to volume, organizations can measure the efficiency and effectiveness of their product development and launch processes.

Impact Evaluation

Impact Evaluation Jonathan Poland

An impact evaluation is a study that measures the actual outcomes and consequences of a change. It takes into account both intended and unintended effects of the change, and aims to determine its overall impact. This means that a program or project may achieve its goals, but have negative unintended consequences. On the other hand, a program that is perceived as a failure due to budget and schedule issues may actually have a more positive impact than originally anticipated by its planners. Impact evaluations help organizations understand the full range of impacts of a change and can inform decision-making about future changes or interventions. The following are illustrative examples of an impact evaluation.

Cities

A city expands its highway system to more lanes only to discover that within a few short years traffic jams have once again become a common occurrence. An impact study indicates that the new lanes encouraged development of land further from the downtown core making the city less dense and increasing average commuting distance.

Transportation

A program to develop a system of high speed trains is initially viewed as a failure as it exceeds planned budget. However, within a decade ridership is far greater than business plans had anticipated. The overall impact on the economy, quality of life and the environment can be demonstrated to be exceedingly positive.

Education

An education system abandons standardized testing in high schools in favor of tests crafted by individual teachers. A later impact study looked at data before and after to determine that grade inflation occurred with the abandonment of the standard tests. This led universities and colleges to begin to rank schools and apply more complex admission processes than were far less transparent to students.

Marketing

A newspaper begins aggressively optimizing the titles of its articles with A/B testing. This immediately increases overall revenue. A later impact study indicates that the quality of titles dropped dramatically such that titles often didn’t reflect the content of articles. The optimization effort was associated with a steady decline in reputation, customer satisfaction and subscription rates.

Business Constraints

Business Constraints Jonathan Poland

Business constraints are limitations or factors that can impact an organization’s ability to achieve its goals and objectives. These constraints can be internal or external and may include:

  1. Financial constraints: These are limitations on an organization’s financial resources, such as budget, funding, and credit availability. Financial constraints can impact an organization’s ability to invest in new projects, hire staff, and expand operations.
  2. Time constraints: Business is essentially a way to put assets to work over time. Physical assets typically depreciate with time and cash tends to go down in value due to inflation. In contrast, investments in competitive businesses have a remarkable history of going up in value over time.
  3. Resource constraints: These are limitations on an organization’s physical, human, or technological resources. Resource constraints can impact an organization’s ability to complete projects on time or to meet customer demand.
  4. Legal constraints: These are limitations imposed by laws, regulations, and compliance requirements. Legal constraints can impact an organization’s ability to operate in certain markets, use certain products or services, or engage in certain activities.
  5. Market constraints: These are limitations imposed by the competitive environment in which an organization operates. Market constraints can include competition, customer demand, and the availability of substitutes for the organization’s products or services.

Business constraints can have a significant impact on an organization’s ability to achieve its goals and objectives. By understanding and managing these constraints, organizations can develop strategies to mitigate their impact and maximize their chances of success.

What is a Business Case?

What is a Business Case? Jonathan Poland

A business case is a document that presents a proposal for a project, strategy, or course of action. It is designed to provide stakeholders with the necessary information to decide whether to invest in a project. Essentially, a business case is a pitch that outlines the potential benefits and costs of a proposed course of action. The following is content that commonly included in a business case.

Problem Statement
The background of the project framed as a problem statement. Explains why the project is proposed.

Financial Analysis
A budget proposal and an analysis of return on investment, payback period and other financial projections.

Success Criteria
How the project will be deemed a success or failure.

Alternatives
Alternatives to the project including detail around what happens if you do nothing. Consider the opportunity costs of the proposal.

Approach
High level requirements that define what is to be done.

Assumptions & Constraints
State all assumptions and constraints upon which your analysis is based no matter how obvious they may seem. Anticipate the wants and needs of stakeholders and explicitly state what is out of scope of your analysis.

Risks
Identify potential negative outcomes that will impact your proposal or the project.

Recommendations
Suggest a way forward including milestone dates.

Due Diligence

Due Diligence Jonathan Poland

Due diligence refers to the level of investigation, care, and judgement that is appropriate and expected in a given situation. It is often used to describe the obligations of a business to investigate material facts before making a major decision, such as signing a contract, acquiring an asset, making an investment, merging with another business, hiring an employee, or establishing a partnership. Due diligence is a key aspect of corporate governance, which refers to the responsibilities of a business’s directors and management to stakeholders. In many cases, due diligence is legally required.

Financial Controls

Financial Controls Jonathan Poland

Financial controls are the policies, procedures, and processes that an organization puts in place to manage and protect its financial resources. These controls help to ensure that financial transactions are accurate and authorized, and that financial reporting is reliable and consistent.

There are several types of financial controls that organizations can implement. These may include:

  1. Internal controls: These are controls that are implemented within an organization to ensure the accuracy and reliability of financial transactions and reporting. Internal controls can include segregation of duties, periodic reconciliation of accounts, and the use of checklists and procedures to ensure that all financial transactions are properly documented and authorized.
  2. External controls: These are controls that are implemented by external parties, such as auditors or regulatory agencies, to ensure the accuracy and reliability of an organization’s financial statements and reporting. External controls can include audits, reviews, and inspections.
  3. Risk management controls: These are controls that are designed to identify and mitigate financial risks that an organization may face. This may include the use of insurance, diversification of investments, and the implementation of contingency plans.

Effective financial controls are essential for ensuring the integrity and reliability of an organization’s financial information and for protecting its financial resources. By implementing appropriate controls, organizations can improve financial management, reduce the risk of fraud and errors, and enhance the confidence of stakeholders in the organization’s financial reporting. The following are some examples of financial controls.

Accounting Standards
Adopting an accounting standard with knowledgeable staff who are accountable and responsible for its implementation.

Financial Statements
Executive leadership such as the CEO and CFO are accountable to deliver timely and accurate financial statements such as income statements, cash flow statements, balance sheets and statement of changes in equity.

Operating Metrics
Executive leadership such as the CEO, CFO and COO are accountable for delivering timely and accurate operating metrics such as profit margins.

Policies
Policies are in place in areas such as general ledger, chart of accounts, recognition of revenue, reconciliations, invoicing, payment processing, inventory and asset management. Knowledgeable accounting staff managed by the executive team are responsible for implementing policy.

Segregation of Duties
A clear segregation of duties exists between areas such as sales and revenue recognition.

Reconciliation
Reconciliations such as bank statements to general ledger.

Responsibilities
Clear responsibilities such as a person who is responsible for sending account statements to customers each month.

Approvals
Approvals processes such as CFO approval of major sales deals looking at factors such as gross margins.

Disbursement Policies
Validation of disbursements such as checking that each payroll payment is to a bona fide employee.

Audit Trail
Audit trails are created and retained for events such as approvals, financial transactions and updates to financial documents.

Information Security
Access to financial software and documentation is restricted to authorized personnel.

Feasibility Analysis

Feasibility Analysis Jonathan Poland

Feasibility analysis is the process of evaluating the potential of a proposed project or system to determine whether it is viable and worth pursuing. It is an important step in the planning process that helps organizations determine whether a project is likely to be successful and whether the resources required to complete it will be justified by the expected benefits.

There are several factors that can be considered when conducting a feasibility analysis. These may include:

  1. Technical feasibility: This refers to the ability of the organization to develop and implement the proposed project or system using existing technology and resources.
  2. Economic feasibility: This refers to the financial viability of the project, including the costs of development and implementation, as well as the potential return on investment.
  3. Operational feasibility: This refers to the ability of the organization to effectively operate and maintain the proposed project or system.
  4. Legal feasibility: This refers to the compliance of the proposed project or system with relevant laws and regulations.
  5. Schedule feasibility: This refers to the ability of the organization to complete the project within the allocated time frame.

Conducting a feasibility analysis allows organizations to identify potential risks and challenges associated with a proposed project and to make informed decisions about whether to proceed. It is an important tool for ensuring that resources are used effectively and that projects are likely to be successful.

Program Controls

Program Controls Jonathan Poland

Program controls are the mechanisms that enable a computer program to execute a set of instructions in a specific order and to make decisions based on the input or state of the program. These controls allow the program to perform a wide range of tasks and to adapt to changing conditions or inputs.

There are several types of program controls that are commonly used in computer programming. These include:

  1. Sequential control: This refers to the execution of instructions in a predetermined order. In a program with sequential control, each instruction is executed one after the other, in the order in which it appears in the code.
  2. Conditional control: This refers to the ability of a program to make decisions based on the input or state of the program. Conditional control is often implemented using if-then statements or switch statements.
  3. Iterative control: This refers to the ability of a program to repeat a set of instructions multiple times. Iterative control is often implemented using loops such as for loops or while loops.
  4. Subroutine control: This refers to the ability of a program to call and execute a set of instructions from another location in the code. Subroutines are often used to modularize code and make it easier to reuse and maintain.

Program controls are essential for creating programs that can perform a wide range of tasks and adapt to changing conditions. By using these controls, it is possible to create programs that are flexible, efficient, and easy to maintain. The following are common types of program control.

Estimates
Validating project estimates with techniques such as reference class forecasting.

Financial Controls
Financial controls such as a segregation of duties between project accounting and reconciliation processes.

Earned Value Management
Measuring project performance and progress.

Schedule Analysis
Measuring project performance and progress in terms of time.

Risk Management
Identifying and treating risks.

Health & Safety
Health & safety controls such as human error prevention programs.

Procurement
Procurement processes and segregation of duties in handling requisition, purchase orders and invoices.

Vendor Management
Vendor management such as a regular evaluation of vendor performance.

Document Control
Processes and systems for document control.

Performance Management
Performance management processes for project teams including project managers.

Project Governance
Oversight of project management processes and assurance that methodologies and standards are applied appropriately.

Improvement
Processes for learning from issues and developing capabilities and knowledge to improve.

Integration
Identifying and managing cross-project dependencies.

Metrics
Measuring and reporting program and project metrics to give program stakeholders visibility.

Risk Contingency Jonathan Poland

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Economic Moat Jonathan Poland

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Cost Innovation Jonathan Poland

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Product Markets Jonathan Poland

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Relationship marketing Jonathan Poland

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Pricing Power Jonathan Poland

Pricing Power

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Performance Goals Jonathan Poland

Performance Goals

Performance goals are targets or objectives that are set for an employee’s work, typically in collaboration with their manager. These…

Change Driver Jonathan Poland

Change Driver

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Risk Management Process Jonathan Poland

Risk Management Process

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