3 steps to build an operational indicator system

How do operators use core capabilities to build an operational indicator system? The article explains this.

What are the core capabilities of operations? Let me tell you in one sentence: change is the norm, and only those who have the mindset to increase the sales of core resources can be invincible!

What are core competencies?

Let’s first think about what operations are? Operation is a way of thinking that targets different user groups, conducts marketing through content and channels, and optimizes operational methods, product functions and user experience through data indicators.

Note that what is emphasized here is that operations is a way of thinking rather than a profession, and thinking is the core ability of operations.

How do you understand this sentence? Each company has different business, different definitions of operations, different methods and results required, and different definitions and requirements for operations at each stage.

Definition and requirements of operations at different stages

In 2013, operations were a process based on products, using the lowest budget, best path, most efficient execution, and most effective means to attract a large number of loyal users, establish competitive barriers for products in the market, and ultimately achieve product market success.

By 2016, operations meant making the product run at the lowest cost through various means and ultimately achieving profitability.

In 2019, operations are to spread product value, create user gameplay, and build a platform ecosystem. Specifically, operations are no longer about group and layer management, but about reaching every user through technical means. Users are becoming increasingly tired of marketing methods, and the means of reaching out are beginning to shift toward the B-side. To give a few examples, the writing robot Xiaomingbot can output 100 articles in 0.01 seconds, Luban can generate 160 million banner images every day, and Picasso can generate 100 million copywritings every day, realizing the display of copywriting for thousands of people.

Operation is a kind of thinking

Under the ever-changing external conditions, we emphasize that change is the norm! Therefore, what we need to have in our operations is a mindset that no matter how the market or users change, we can increase the sales growth of core resources by designing strategies and mechanisms.

Operation indicator system

In one sentence, I can tell you the importance of building an operation indicator system. Establishing an operational indicator system is an important task that every mid-level operator must face in "actual combat experience" and is the external manifestation of operational thinking.

There are three steps to build an operational indicator system:

Step 1: Clarify the business model;

Step 2: Clarify business stages and goals;

Step 3: Structuring and systematizing indicators.

Let’s break it down:

Step 1: General methodology for business model analysis

①Business direction: What is the business direction?

②Subject: What roles are involved in this business? Subject

③ Link: Links are formed between entities through the system, and the links in each link determine the overall model.

④Related businesses: What other related businesses are associated with this business? How to have a relationship?

For example, take Didi Chuxing.

Business direction: Travel upgrade to solve the problem of mismatch between passenger and driver information.

What roles are involved in this business? Passengers and drivers.

Links are formed between entities through the system. There are carpooling, designated drivers, airport pick-up and drop-off services, and different levels of car models;

What are the related businesses? For example, the points mall is related to travel mileage, homestay booking, cash loans, etc.

Step 2: Clarify business stages and goals

Business stage judgment method: focus on key points, determine the overall indicator system based on the business chain, and gain insights into key indicators based on the business stage.

1. The product is in the new business stage and is still in the survival stage. The focus is on whether the business is feasible, whether it can stand the test of the market, and whether users buy into it.
2. When a product is in the development stage and the business is confirmed to be viable, we should focus on healthy growth. The business growth rate should keep up with the plan. The goals should be broken down into process indicators and the volume should grow rapidly.
3. As the product enters the mature stage, the focus is on the layout of the ecosystem, the support of overall efficiency, and the market share.

Step 3: Structuring indicators and targeting them

There are three dimensions here. In step 2, we talked about different product stages and different focuses, but generally there are three directions: product growth rate, health status, and contribution to the overall market. The growth rate and health status of a product can be used to determine how well it measures up to a single product; the contribution to the broader market can be used to determine how well a single product measures up to the overall market.

① Growth rate: measure the product's own development speed through performance improvement ability and user attraction ability;

② Health status: measure the health of the product's own development through user activity and user retention;

③ Market contribution: measure of a single product’s contribution to the overall market.

Finally, I would like to emphasize the principle of indicator selection.

• Scientific principle: The indicator system objectively and truly reflects the state of development and evolution of the system under study;
• Systematic principle: It should have a global awareness, be structured and hierarchical, and fully reflect the interpretation of the business;
• Practicality: readability and practicality (the indicator system should be moderately simple and complex, the indicator design should not be too complicated and should be easy to understand; simplify some indicators that have little impact on the evaluation results or are repeated)
• Dynamic principle: During the monitoring process, things change dynamically, and any changes can be reflected immediately.

Author: Gao Gao

WeChat public account: Gaogao's Operation Notes