What Result Do You Measure?

by Jay Deragon on 11/04/2008

The historical measure of business success has been centric to financial results. Today markets are driven by feelings of the quarterly financial results accompanied by news and market spin.

The “system” on Wall Street has operated on a certain set of financial variables for years and these variables determine a company’s performance within the investment community.

Is The Old System About to Shift?

“Business” has historically been measured in a narrow economic sense rather than relational one. The variations caused by economic measures are built into the markets sentiment about a particular company’s performance.

The ecosystem of any business is what ultimately produces the end results. Yet little has been done to measure, monitor and report the elements of a company’s ecosystem as a primary influence on end results, financial performance. This idea emerged from James F. Moore’s The Death of Competition (1996) Moore examined the importance of the company’s context – its ecosystem. Moore defined the business ecosystem as follows:

An economic community supported by a foundation of interacting organizations and individuals – the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies” (p. 26)

One wonders when the sentiment of people, (suppliers, employees and customers), will play a significant role in the overall markets perception of a company’s performance.

Could Social Media be a Measure of Business Performance?

Social media is building momentum as an influence over markets. Comcast, Southwest Airlines and Marriott, to name a few, have just begun to recognize the influence of people expressing opinions on experiences with brands, products and services.

Soon these collective voices will be organized into a new measure of business performance. The measure will be correlated with a company’s financial performance and subsequently influence the old markets perception of value. The old market has been driven by Wall Street and now traders will begin to consider the “peoples” experience and opinions as a measure of performance, past, present and future.

The impact of this measure will be significant, disruptive and create massive shifts in capital, the ultimate market influence. If you think this is another prediction of the future think again. We just witnessed a company who has built the statistical database and the subsequent indexes for reporting these measures.

As Doc Searls says, “Markets are conversations”. Now the conversations will impact the markets like never before.

What say you?

{ 4 comments }

Michael Cayley November 4, 2008 at 9:36 am

What’s the company that you witnessed?

StarGazon November 4, 2008 at 4:38 am

What Result Do You Measure? /The Relationship Economy……/ – The impact of this measure will be … http://tinyurl.com/5tm97k

Dan September 25, 2008 at 6:55 pm

Try this triple analogy out:

“Information is to knowledge is to innovation what distance is to velocity is to acceleration”.

It’s a bit abstract but it does not violate common logic. It also provides a very interesting way of looking at this question.

For example; if I want to measure the distance that a car travels, I look at the speedometer and my stopwatch. The distance is simply the velocity (Miles per hour) multiplied by the time the car was traveling. If I want to measure acceleration, I measure how fast the speedometer went from say, zero to 60 – or miles per hour per second.

The business narrative is full of terms like “momentum”, “velocity to market”, “dynamic”, “production” – all of these are time dependent variables.

Now, let’s consider social networks where people exchange intellectual capital, social capital, and creative capital. If I want to measure knowledge in a social network all I need to do is observe the rate of change of information over some period of time. If I want to measure innovation, I can observe the rate of change of knowledge exchanged in the social network over a period of time.

I believe it to be that simple. Wherever one can observe a high rate of change of knowledge among people, there is innovation happening. If the innovation corresponds to your business plan – you are in luck. If it does not, then you need to change your business plan.

The best policy is that which accommodates what people are going to do naturally. Successful companies will align themselves to what people are doing. People will not necessarily align themselves to what companies are doing.

StarGazon June 26, 2008 at 6:36 am

Will Business Measures Change? /The Relationship Economy……/ – The impact of this measure will be … http://tinyurl.com/5tm97k

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