I want to be smarter.
We all want to be smarter.
We have all heard, “You get what you measure.” And, we all believe it to be true. We all aspire to it.
Brene Brown mentions in her talk, “If you can’t measure it, it doesn’t exist.”
Every management book you read speaks to the power of measurement. Every leadership book speaks to the power of metrics. How many times have you heard, “Every great Executive Team has a dashboard of metrics.”
We all speak to it.
We all aspire to it.
But, how often have you truly LIVED it? How often have you truly lived in an organization where metrics where everything?
I talked to a leader from another company who always spoke about the power of metrics and how they use them in his company…
“How are you guys doing as a company?” I asked… You seem to run your leadership team extremely well with very clear metrics… “How are you guys doing as a company?”
“Sales and profit are down” he said. “It’s a very competitive market out there!”
PLEASE DON’T MISUNDERSTAND ME… I think Metrics and measuring things is VERY important… but likely for VERY different reasons than you might believe.
I don’t believe in management by goals.
I don’t believe in management by objective.
I don’t believe in management by metrics.
I believe in management by CONVERSATION… I know it sounds silly – but please read on.
If you want to lose weight, weighing yourself is extremely important. I’d say its paramount to success. And, just because you are weighing yourself doesn’t mean that losing weight is easy… but if you are weighing yourself its at least possible.
But losing weight is a largely a single variable objective…
Leadership and management is extremely complex… it requires considering lots of people in your organization, lots of different types of clients, external competition, internal competition, pricing, costs, distractions, market conditions, market cycles and seasons…
Human nature is to want to make things “easier”. We all believe that somewhere, somehow there are magical metrics that allow us to make the right decisions in some simple way.
I have been part of many organizations from start-ups to Fortune 50 companies… and I’ve gotta tell you… I’ve never seen metrics drive an organization successfully. I have been a part of very successful ventures… and always we were trying to figure out our key metrics… but driving by our metrics was never the driving part of our success.
Metrics are PART of the equation, not THE equation.
An executive dashboard, is a DASHBOARD… what would happen in a car if you drove by looking at a dashboard? How far would you go before you crashed?
Here is the normal evolution that I see…
Phase I – Do what is right for the company – no metrics.
In start ups no one measures anything. People are too busy working. There aren’t enough people to actually measure stuff. But, everyone wants to get to a point where we can KNOW the metrics and measure stuff. We all dream of growing up to be that company that can speak so eloquently to what drives it… But in a start up you are working on value, distribution, production and maybe cashflow. If you ask this exec team for a list of metrics, they say they don’t have time but hope to start measuring things soon.
Phase II – Keep the business growing – talk about metrics.
Ok – so now you are bigger than a start up – you have some success. You start talking about metrics. You start measuring lots of things. You spend most of your time measuring things once. You don’t do it systemically, and you really don’t have much time to analyze the metrics because you are spending all of your time producing them. You are spending a fair amount of time on metrics – but whether you succeed or not depends on whether you are focusing on scale and expansion into value added new products…. Not what you are measuring. If you ask this executive team for a list of metrics for their dashboard, they give you the 300 metrics that they are measuring (though none of them are systemic) and the team can’t really decide on the 10 most important.
Phase III – “Sophistication” – Actually using metrics.
Ok – now you are a real company, stable and with some history. You actually talk about some metrics regularly – though you are not necessarily sure what they really make you do different. You have very structured meetings where metrics are discussed. Everyone knows they have to come to the meeting with metrics. You run your leadership team with metrics… but whether or not you are succeeding is secondary. You are proud – you wear the “We have a dashboard” T-Shirt with pride. If you ask the executive team about metrics – they can explain their dashboard clearly and with pride. If you ask the exec team about their business however, it could be a really different answer.
Phase IV - Distress
Something happened. We are losing sales. We are still measuring some metrics but the business has turned down. Profit is down. The competition is eating our lunch. It gets to the point where you start consolidating people. You stop measuring metrics and it doesn’t seem to change the trend. You wonder – did we really need to be measuring all of those things? If you ask the exec team about metrics, they say, “We are working to turn the business around.” We have had to suspend our metrics for the time being…
This may or may not be your experience… but I would argue that its some version of this.
We all aspire to metrics…
And, yet, metrics seem to be somewhat independent of success…
WHY?
Business is COMPLEX…
I am a HUGE fan of metrics… but part of me COULD CARE LESS what you are measuring…
That is right… You heard me… I could CARE LESS what you are measuring…
But, here is the KEY to success…
MEASURE SOMETHING REGULARLY and TALK ABOUT IT
NO…
NO… I have not lost my mind.
I am less interested in the discussion “What is the trend?” Though that is important… if you are already measuring it… chances are the organization is ALREADY working on it… so if there is a trend the team already knows about it and is likely working on it…
The questions that we should ask as a leadership team or as an executive team are…
Are we measuring the most important thing(s)? The right thing(s)?
Why or why not?
What else could we or should we be measuring?
Why?
What is impacting our current numbers? What makes them accurate? What makes them inaccurate?
THAT IS THE POWER OF METRICS…
Metrics makes for OBJECTIVE conversations… you talk about something very SPECIFIC.
If you start to measure something – you know very quickly if it matters or not…
If you start to measure something – you can start to discuss very clearly if there is something else more worthy of measurement and discussion…
HERE IS A KEY QUESTION FOR METRICS…
“How are we using this metric regularly or occasionally to make strategic decisions?”
“When was the last time we made a specific decision based on this metric?”
THESE ARE MASSIVELY IMPORTANT QUESTIONS… If you are not MAKING DECISIONS and SETTING PRIORITY and DECIDING ACTION with your metrics …
YOU ARE NOT MEASURING THE RIGHT STUFF…
Or
YOU ARE NOT HAVING ENOUGH INTELLIGENT CONVERSATION ABOUT YOUR METRICS…
The issue and the danger with metrics is that they make leadership teams “short sighted” or create “tunnel vision”. We start to believe that our leadership is within the METRICS…
Our leadership role in companies needs to be AROUND the METRICS… much more so than within them.
Again, think about driving a car… As the leader of a company how much time do you spend focused on the speedometer or the gas gauge? How much of your time do you want to be spent looking down versus looking UP and OUT the winshield.
Some say, “Lagging indicators are bad”. “It’s like driving looking out your rear view mirror”. Good point. BUT… I have hit from behind three times in my 20 years driving. And, seeing what is coming up from behind me helps me make better decisions about how to drive going forward. (If you don’t know what I am talking about – try driving in Europe or Latin America).
Some say, “Only leading indicators are worthwhile.” I agree leading indicators are valuable… but in reality can you drive a car only looking at leading indicators? It would be like navigating with a GPS or maybe a radar… its not bad… but its not necessarily as good as looking up.
ALL OF THESE THINGS ARE TRUE… BUT, WHY, WHY, WHY do we have to keep making these conversations about ALL or NONE.
You don’t just look at lagging indicators. You don’t just drive looking out the rear view mirror.
You don’t just look at leading indicators. You don’t just drive looking at your GPS or radar.
You don’t just look at your dashboard. You don’t drive looking down all the time.
You need to leverage ALL of your tools… and you need to spend MOST of your time… LOOKING at what is out your WINSHIELD!!!
In companies – every leader has a different windshield. Every leader gets to see a different part of the landscape of the business and company.
So, our success is not about finding the right table of metrics to talk about and show on the board… the success to our leadership MUST be in TALKING about the things that we are seeing out the windshields, comparing notes, and ALSO talking about what our dashboards and metrics are saying…
“Based on everything that we are seeing – are we still measuring the right stuff?”
How often do you ask that question?
Are you even allowed to ask that question?
In some companies – the exec team has made a commitment to metrics with such vigor that they can no loger be questions… I think that is capitalistic suicide!
“Are we able to use the things (metrics) that we are measuring to make timely and meaningful decisions?”
You have GOT to ask that!!!
I know of handfuls of companies that are using various forms of client surveys and measuring all kinds of “client satisfaction” and are fundamentally missing the mark. I am receiving surveys and questions while I am on the phone with one of their competitors figuring out if I am going to switch providers.
In some cases, when we do talk about the real issues, the conversation actually turns to, “I am surprised to hear this. Are you sure its true? Because we haven’t seen any indication of this in our metrics. The metrics look good.”
I am not kidding.
We become enslaved to our metrics. We stop questioning them – and we stop questioning our business.
We want business to be easy.
We want to evolve and show the world that we are using science to run our companies.
But, think about this…
HOW MANY GREAT COMPANIES WERE BUILT PRIMARILY USING METRICS?
Think about it?
Metrics or the concept of metrics is DEADLY when you start applying it to client research.
OK – we are going to get “Scientific”… So we go out and we ask our clients if they like our product… “Would you buy Product A?” we ask them. “Of course,” they say. They don’t want to hurt anyone’s feelings. And, they don’t know any better.
Then we launch the product and nobody buys it.
I could write an entire book on the inefficiency and ineffectiveness of client and customer research. Here is the thing… our clients themselves don’t know exactly why they buy or what they want. Did you know you would love kale 5 years ago? Did you know you would be ordering quinoa on your salad? Did you grow up excited because you’d be able to drink protein powder? Did you know you wanted a smart phone before they came out?
Did you spend the ‘90s waiting for APPs to come out so that you could do more on your cell phone?
Of course NOT…
Metrics can be used for some things… but not all…
In theory we should be able to create metrics to define all the important stuff… and maybe someday we will… but we ARE NOT THERE YET…
There is NOTHING MORE VALUABLE than CONVERSATION…
TALKING TO OUR CLIENTS… JUST TALKING… FIGURE OUT WHAT THEY ARE DOING…
TALKING TO OUR EMPLOYEES… JUST TALKING… FIGURE OUT WHAT THEY THINK and WHAT THEY ARE STRUGGLING WITH…
TALKING TO OUR PEERS… JUST TALKING… AND SEE WHAT IS WORKING FOR THEM, WHAT CONCERNS THEM…
You see its NOT about METRICS…
It’s about INTELLIGENT CONVERSATION… and METRICS if used RIGHT can be the spark, the platform and the basis for INTELLIGENT CONVERSATION…
Conversation isn’t sexy…
It’s hard to sell a book that talks about “The power of conversation in driving strategy!”.
It’s hard to sell the 4 points to successful chats with your employees…
I am sure that someone somewhere is trying it…
The fact is – that management and leadership is best done ITERATIVELY…
Every aspect of our business should be up for discussion… at any time that anyone wants to talk about it… and we should use measurable things to BETTER understand our business, and to create RICHER AND MORE OBJECTIVE conversation about our business…
But metrics should be THE START of the conversation…
METRICS SHOULD BE THE SPARK of the conversation…
NOT THE LIMITS of it!
The issue with metrics is that when we decide on them, we think our work is largely done… when in reality, that is when the work starts AGAIN.
The issue with metrics is that we spend our lives trying to optimize them instead of trying to optimize our businesses by leveraging them.
The issue with metrics is that we think they are ANSWERS to the problems of business… instead they should be the platform for NEW QUESTIONS and thus NEW PROBLEMS to solve in our business…
I am not sure if “you get what you measure”.
Perhaps you do, and that is precisely why you have to be extremely careful that you are measuring the “right thing”.
But, business is complex, and “the right thing” may be different today than it was yesterday or last year…
METRICS are a critical part of our success…
A company is more powerful WITH metrics… ASSUMING that they are using metrics to BETTER understand and question their business…
At EMG, by the end of 2014 we will have grown 400% since 2009. We are still working on our metrics, and have started
So very often, executives become so proud of the fact that they have crafted a dashboard, that they manage their business right over a cliff smiling at the green lights on the screen… and failing to look out the windshield.
We shouldn't worry so much about having the perfect metrics... We should be much more worried about whether we are having frequent and great conversations...
Management by intelligent conversation… sparked by goals that are measured and questioned…
That my friends is what makes a great company possible.
Yours in harmony,
Nestor