Metrics are not the real things that we are doing in our businesses, they exist to help us do the real things better. Metrics must not be confused with goals. Once metrics become goals then we start to game the system of our own devising.

Metrics should be simple, so that they reveal reality easily. They should be sensitive, so that they easily and quickly reveal the effects of effort in one way or another. Finally, following these two ideas, Form should follow Function -the Metrics must be as close to the reality of the work as possible.

There are essentially four types of metrics: quality, scale, engagement, and revenue. If you are working on your metrics instead of the things the metrics reveal, you are tricking yourself. Metrics help us work on real things.

Aristotle says that we know a thing when we know it according to the Four Causes. Those causes are the Telos (the purpose or goal), the Material (what makes up the thing), the Form (the shape of a thing) and the Agent Cause (what gives Form to the Material).

In business the achievement of Telos is mostly revealed by Revenue, but the Form must match the Function (a non-profit has a different form that a for-profit because the goals are different).  And the Material (Human Capital, Equipment, Product) must have the potential energy to achieve the goal. Likewise, we must have processes, training, and feedback (Efficient Causes) drive the potential Energy into the Form that will achieve the Goal.

Quality measures the material cause of our business, the thing we are doing

Scale measures the formal cause of our business, the structure of us in the market

Engagement measures the effectiveness of our Agency in the market, does out Product lead us to our Goal?

Revenue measures our overall goal achievement

If we know these things, we know our business!