The Smith Report - Operational Playbooks

Measurement – A Reminder from Bill Gates

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Measurement – A Reminder from Bill Gates

Last week in the WSJ an adapted extract from the Bill & Melinda Gates Foundation’s annual letter was published, outlining Bill’s plan to fix the world’s biggest problems. His thesis revolves around good measurement and a commitment to follow the data. And oh how true that approach is to building a successful business. Reading the article reminded me of the power that knowledge brings. The knowledge gained through really smart measurement.

Executing a successful strategy is not possible without measurement. But are you measuring the right stuff? Are you measuring it often enough? Are you changing your behavior based on what the data is telling you? So often in business we fail to measure. We fail to define the right stuff to measure. So we don’t have the data points that we need. So we don’t change behavior and we flat-line and then decline.

Understanding what to measure is a local game, a domain specific game, a set of key performance indicators that ties back to who you want to be. It requires the defining of success.

Action

Take a look at your strategy and then look at your key execution teams. Are you measuring the right stuff? Will the feedback from precise measurement drive your progress? Define all the questions you need answers to and measure the performance. A few examples:

Product/Services – Are you measuring changing shifts in consumption patterns, changing demographics, changing technology? Is this driving your product road maps?

Marketing Teams – Are you measuring the success of all your lead generation campaigns precisely? Do you know what content really works, really grabs attention and trust?

Sales Teams – Do you understand why customers invest in your technology or service? Do you know what your sales teams sound like in front of prospects? Is your story compelling and translated from your strategy? Do you understand the attrition rates of all accounts? Are there patterns of behavior with weak renewal rates? Are you testing monthly the product knowledge, market knowledge, sales process knowledge of your team?

Production, Finance, Customer Support – all need to be clear on relevant measurements. Today we have a problem. I don’t believe we are structuring our businesses to really optimize how we measure and who measures it and what we do with the results. Intensive measurement is now possible more than any time in the modern era. We need to believe 2 things:

 What get’s measured gets done!

Who you are is what you measure!

Only then will leaders drive the design of the most appropriate, accountable and actionable measurements.

 

 

 

 

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About the Author

Ian founded The Portfolio Partnership (TPP) in 2010. TPP is an operational consultancy focused on scaling private businesses safely. He believes his resume of building 4 previous businesses from publishing, investment banking to software in Europe and the States gives him a unique set of skills and a sense of humor. He remains a competitive masters track & field athlete and in 2012 was ranked #2 indoors in the world for his age at 400m.

Discussion

  1. Heather Stone  January 28, 2013

    Hi Ian,
    Agreed. Without measurement, metrics, there is no repeatability, sustainability, or opportunity for forecasting and making course corrections. The thing is, small business people…on the smallest level, have a hard time thinking in terms of KPI’s. What they need is a software solution of some kind to walk them through determining what their metrics should be and that will help them keep record. And, though these solutions exist, I think a lot of very small business owners just don’t have or think they don’t have the money to invest in these kind of metrics. But without some tracking software, CRM, whatever, any kind of old school metrics is time consuming to gather. So what’s the solution for the very small business owner, especially a brick and mortar or non tech savvy small business owner…or someone bootstrapping? I know there’s open source stuff around, but there’s a learning curve. Hmm…
    Anyway, great post!

    (reply)
    • Ian Smith  January 28, 2013

      Heather

      Many thanks for your comment. Reply posted on the Biz Sugar web site as well.
      I think small biz owners are often put off by the jargon, the overhead, the time needed to create their own little dashboard. But it really can be kept simple. For example simple measurement of traffic to web sites, or sales or renewals of contracts say compared with the same period last year. This may answer something as simple as – am I growing and where? The key seems to me to curate. To choose say 5 key metrics you can measure weekly that are easy to measure and that actually trap progress. But it must be progress towards a goal.

      One quick tip on graphs is the Trailing 12 graph. Every month plot on a graph the previous 12 months sales. If the graph is rising you are growing. If not….. This takes seasonality out.

      (reply)

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