The HeadScratcher Post - Two Critical Metrics - The CHANGE and The CHANGE IN THE CHANGE

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Two Critical Metrics

–

The change and the change in the change.

We track all kinds of metrics;

Project milestone completions, sales forecast to actual, spending budget to actual, miles per gallon in your car, how many inches of rain your location gets per year, your blood pressure, cholesterol and sugar levels, and many, many more.

Change Metric:

One of the key metrics we should, and often do track is the change in those measurements. If your blood pressure is normally 110/70, and it gets measured at 135/75, that

’

s a change. So your doctor asks you about your lifestyle to see what

’

s going on. If sales have been flat for some time, and then in one quarter it

’

s up by 20%, that

’

s a good news change and you

’

ll want to know if it

’

s a one quarter thing or you could expect increased sales going forward.

When something happens that

’

s different than what has happened in the past or the plan, you ask, What has changed? If it

’

s a negative change, you can look at how to fix or address it. If it

’

s a change for the better, you want to know why, so you can replicate it, leverage it, expect it or understand it

’

s an anomaly.

Change in the Change Metric:

This one is new to many. In the mathematics world we call this the second derivative. We often use terms like

“

it

’

s exponential

”

, or

“

it

’

s a chain reaction

”

.

Here are four examples of a "change in the change" metric.

Take your kitchen sink.

Normally it

’

s off. However, one day you notice a slight drip, maybe a drop every 30 seconds. That

’

s a change and you put on your to-do list,

“

fix faucet

”

. It

’

s not a high priority. In a few days however, you notice that it drips every 20 seconds, and in another few days you notice the drip is every 10 seconds. The time it takes to drip (the change) is increasing, i.e. there is a change in the change and it is increasing … it is accelerating. This is the red flag. If nothing is done, the acceleration might lead to a flow of water and/or complete failure. You call the plumber.

Take a Facebook or Linkedin post.

You start getting likes, maybe 20 a day. The change is you start getting likes. A few days later, you get 100 likes a day, then 1000 a day. The change (likes) is increasing. There

’

s a change in the change. Your likes are accelerating … it

’

s gone viral.

Your sales are steadily increasing

by about 5% per quarter. Everyone is happy. The change is 5%. Next quarter there

’

s a 4% increase. Happy again, sales is increasing. The next quarter it

’

s 2% increase. Sales is increasing, no worries. Hmm. While the change is positive, the change in the change is not. Your increase of sales (the change) is starting to slow down. The change in the change is negative. At this rate, maybe next quarter you

’

ll have no increase in sales, and the quarter after you

’

ll actually have a decrease in sales.

Covid

: At first, what was measured was the number of people sick. That

’

s the change. Very quickly however, the change was increasing and increasing faster. The number of people who were getting sick was exponentially increasing. The change in the change was positive .. things were accelerating. All hands on deck. Then over time, due to vaccination and saturation of people who got sick, the number of new cases started to slow. Still more and more were getting sick, but the incremental per month was slowing. The change in the change was negative. There was light at the end of the tunnel. As time went on, because the change in the change was negative, eventually the number of new cases started to decrease to almost a low flat line level. There are still people getting sick (the change), but the change in the change is nearly zero. It

’

s flatlined. Things not getting worse, nor getting better. It

’

s the new norm.

ACTIONS around measuring the change in the change:

Here are the four scenarios around actions to take regarding change and the change in the change.

Happy

: When Change is positive and the Change in the Change is positive, your good news will accelerate. Enjoy the ride.

Fire fighter

- All hands on Deck: When Change is negative and the Change in the Change is negative, know that the bad change is going to get worse, and you better triage and address it immediately.

Pro Active

: When Change is positive, but the Change in the Change is negative, know that while you might have good news (the change) for a while, the good news will be less and less and very possibly turn bad, so understanding this is very important. Be pro-active to understand why and what actions should be taken to avoid an upcoming downside.

Patience

: When Change is negative, but the Change in the Change is positive, even though things are bad, and getting worse, they are getting worse at a slower rate and eventually will turn around and get better. In these situations, it

’

s best to watch it, but don

’

t take immediate or drastic action. Things should get better.

The Takeaway:

Look at the metrics you track. These will give you numbers around change. Pick out the key metrics that guide your business or lifestyle and track the change in the change. When the change in the change is either positive or negative, be aware, and either be

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