New best practice for a company in Stage I or II would be to measure everything. The reason for this best practice is simple, harkening back to Frederick Taylor -- you can't manage what you can't measure. Small, growing firms tend to focus on marketing and on selling new products, not professionalizing their management. But measurement is a key best practice that firms should employ as early as possible in their business, because it drives so many things.
Getting tracking systems into place allows for defects to be tracked and detected, it allows for better performance management of human resources, it can allow the company to identify and dismiss underperforming employees, and improve service quality. Management benefits from knowing more about the company, and can begin to orient behaviors and even the organization's culture towards specific objectives (Lovin & Yaptangco, 2006).
Measurement also allows for performance benchmarking. The company can improve by benchmarking against itself, and its competitors. It can only do this if it knows what it is doing, and it can only benchmark against itself if it knows what it did in the best. This is one of the best ways to improve because when management has hard numbers, it knows whether it improved or not, and by how much. Measurement takes a lot of the guesswork out of management, allowing managers to accurately assess situations (PERI, 1999).
Seeking out measurement also re-orients the company and its culture to more professional practices. For a company in Stage I or Stage II, this outlook is not usually common, and people in the company feel more entrepreneurial. Measurement does not need to stifle creative impulse in the company, but it does help to formalize routine tasks and procedures. This gives the company an opportunity to understand how to do things well -- in other words measurement is the baseline best practice that facilitates the development of other best practices. Companies have the opportunity to evaluate the outcomes of managerial action and that helps them to make better determinations of how to perform key tasks in their business, and it also helps them to make better decisions with respect to resource allocation.
Often, companies avoid this best practice because they feel that it is too expensive, too time-consuming or that their business changes too quickly for them to worry about things like benchmarking, but these are all myths. The reality is that measurement pays for itself, even when it requires pricey information systems. The improvements in efficiency, reduction in waste and other savings can be tremendous, especially for a young company that has never really thought about waste and efficiency before because it was growing so quickly it didn't have to. The time spent gathering information, once the system is in place and management knows how to use it, is not all that great in the information age -- most of the data is collected electronically and delivered to management's dashboards. A changing business that gathers data is going to have a competitive advantage; where there is innovation, the firm that can understand the new markets better and faster is going to be able to make better decisions.
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