Metrics With Impact: Why Building More Won’t Be Key To Tomorrow’s Success

We live in a day and age of obscene amounts of data. Instead of the challenge being a lack of access to data, the challenge has become determining what data is important.

At the World Business Forum in New York in October last year, Simon Sinek, renowned author and leadership guru, spoke to me about the housing crisis. He suggested that housing leaders think about how to put metrics in place that measure progress, not that measure money.

That may mean creating new metrics, metrics that take into account community, green space, or crime. It may also necessitate actually listening to stakeholders. New metrics based on stakeholders’ needs and desires will lead a path to resiliency, creating a culture and building a structure that can help an organization survive hard times.

As a strong example of that, Sinek pointed out that the World Economic Forum is discussing how to measure happiness so that it can be the new measure of a country’s wealth, instead of the age-old gross domestic product, GDP.

Some leaders in the housing industry are identifying their new metrics and building a business around them, despite what might be seen as negative cosmetic consequences.

For instance, in 2019, LB Building Products announced that it was rebranding as LP Building Solutions. The company’s CEO, Brad Southern, led the change to be more solutions-oriented by, as Sinek advised, listening to customers.

Since then, the change has evolved into new metrics for the organization. Craig Miles, business marketing manager at LP Building Solutions, said before the change, the six brands the company owns were siloed, operating only to fulfill their six unique business propositions.

“What we learned from each group has caused us to reimagine what we have,” Miles said. “Now, we rethink how we go to market. We aren’t going to market as a product, but as a solution.”

The change has come with some consequences. The company went from being ranked as the world’s number one commodity provider to two or three. But, that metric is no longer the important one. Now, they measure profitability. Southern’s approach had a win-win angle. The customer wins and so does the company’s bottom line.

“We stepped back from being the world’s largest commodity provider to two or three,” Miles said. “Now, we want to be a big solutions provider. Our bottom line is driven by external pricing forces. The structural solutions portfolio is higher margin, because now we have more control on pricing.”

The company isn’t adding capacity, but shifting it away from the quarterly priced commodity market and selling it at a higher margin.  

The solutions-oriented approach also has a very positive impact on the organization as a whole.

“My folks have never felt more empowered to make meaningful decisions and own and drive meaningful decisions,” Miles said. “Our product managers feel more empowered than ever before. There also is an important emotional component around building better structures to impact people’s lives in meaningful ways. They can make a pay check and have ownership, and actually impact someone’s lives today.”

Meritage Homes is another great example of how the shift in metrics is not only a smart business strategy, but it’s becoming an opportunity to elevate the entire industry.

The Meritage tag line is “Setting the standard for energy efficient homes.” This infinite thinking doesn’t stop at beating out its competitors with more home sales. The vice president of innovation at Meritage Homes CR Herro says that the process has been an evolution.

“Building a better home is a smart business strategy,” said Herro. “We recognize that the potential of the industry was significantly ahead of the actual of the industry and we needed to inspire everyone to make better choices.”

Herro works internally and externally to enable Meritage’s supply chain participate in a better way and inspire buyers to make good choices. The messaging works across the builder and the manufacturers to  educate buyers on the life improving benefits of making a good choice, from safety to durability, health and comfort.

Now, Meritage is recognized as the first net zero national builder and celebrated with a very comprehensive educational website for buyers.  

The benefits don’t stop there. Herro says that Meritage’s work with suppliers, municipalities and buyers can all win from better business practices.

“The level of change that we promote will not be perfect the first time,” Herro said. “We want to make sure that we start with a pilot process to learn and capture best practices before we have a mass market adoption. We have blue-sky ideation followed by pragmatic program, followed by national adoption program.”

All of these changing metrics have to be resilient to leadership and part of legacy, advises Sinek.

“A leader’s responsibility is to leave the organization in better shape than they found it,” said Sinek. “We want children to have a better life than we had. The same is true for any for any organization – are we creating a culture and building a structure that can help the organization survive hard times? People come together during hard times.”

Part of our measure of a leader should be what happens to their organization after they leave, and the ones focused on the right metrics will certainly be able to see their company succeed far into the future.

This post first appeared on Forbes.com. To see the original, click here.