Measuring for Success - Don't Forget the Basics
- Nov 7, 2017
- 6 min read
There is a well-known quote that says, “What gets measured gets done.” I have always associated this quote with Peter Drucker, but several others have been attributed to it as well.
Based on my experience though, it only tells half the story. As for the “pros”…the benefits of measuring performance drivers and outcomes are many and real. I’m sure most of you have seen the presence of a “scoreboard” change behaviors in a big way. A small and simple example…you are visiting one of your favorite restaurants, ready and excited to eat some fried wings! However, just as you’re about to place the order, you noticed they added calories to all the items on the menu. Ugh...grilled chicken salad, please.
On the flip side, it is a big mistake to assume that just holding people accountable to quantifiable metrics will result in success. Goal driven metrics, I will define here as “Key Performance Indicators” (KPIs) as measurements and metrics have slightly different meanings, can lead an organization down the wrong path quickly if set incorrectly. This wastes time, money and cultural capital. Yes, I know…duh. Of course you need to pick the right KPIs to measure, everyone knows that. “Eat more vegetables,” “stay in school,” “don’t swim for 30 minutes after you eat”…and “measure the right things.” Got it, but as an executive leader, I’ve seen this "must have" business basic consistently fumbled.
Let’s break it down further as to why this happens, especially since it’s such a “Performance 101” fundamental. The core issue isn’t knowing to measure the right things; it’s thinking you already are. Most mid to lower level KPIs within a business have a shelf life and are candidates to become “sacred cows” over time. Taking that metaphor a little further, a certain number of sacred cows should be taken out to pasture as you change and grow. But like most organizations they are kept around and turned into "petting zoos," becoming permanent fixtures. Take a page from Marshall Goldsmith, a noted author and leadership coach who coined the term, “what got you here won’t get you there.” The punchline - you must change and get uncomfortable, even with what you measure, to grow and succeed.
LEARNING THE HARD WAY
A personal story may help illustrate. I had just been promoted to lead a rather large inside sales team, and I was told that focusing and having success with one specific KPI would produce amazing financial outcomes for the company. No one doubted that this KPI was very critical, everyone was on-board. The real question was whether we could actually influence it. If we could, people would be singing our praises and, the money would be pouring in. I was ready!
So I went to work with my team, and after some effort, we were able to influence and move that KPI in a pretty big way. I was feeling good. I happened to be catching a flight in Cincinnati when I got a call from our top business analytics person. He was calling to give me the results of our performance shift. He said, “I’ve got some good news...and some bad news”, but based on his tone I knew it was all bad news. He said that while we were able to successfully influence that important KPI, it did not yield the financial outcomes we had hoped. I was deflated. The airport was eerily quiet as Delta had recently bought Northwest and the Cincinnati “hub” had been gutted, so that allowed me the opportunity to be very alone and honest with my thoughts. I had to humbly acknowledge to myself that I didn’t know where to focus. I could not even answer the basic question “how do we make money?” with any level of detail, which means I could not direct our company resources effectively. On the positive side, I now had the catalyst I needed to dig in and make real changes to our business. Also, since I had already been humbled, I could start from the beginning without reservation.
By the next day I had collected myself, and with this same financial guru, we went to work to find a new KPI or set of KPIs that drove our desired business outcomes. We started by looking at the most profitable and successful stretches of the business. An analysis was then done to find correlations between different lead metrics and those successful periods. After some time and effort, we found a handful of new KPIs that were clearly correlated to the outcomes we desired. The team then went to work on influencing them. In the end, we did successfully drive and move those KPIs in the right direction, which led to one of the most successful years for that company.
KNOW WHERE TO LOOK FOR THE DISCONNECTS
So why does this happen, why do we get stuck pulling the wrong levers and pushing the wrong buttons? Here are some reasons I’ve experienced and have seen at all levels of management:
“The trees will always continue to grow to the sky” belief. There is a limit to most things regarding growth and value (including your KPIs), at which point you must shift your thinking and actions to find other ways to keep growing and getting better. Translate “you must shift your thinking and actions to find other ways” as “embrace change.”
People associate change with a loss, even with KPIs. All humans are much more likely to take action to avoid a loss than to achieve a gain, so it needs to be built into the culture that if you don’t keep changing you will die (cue the dramatic music). If you don’t, most folks will defend the status quo, as removing a KPI that is understood and associated with “what got us here” will seem like a loss.
Not removing temporary “Corrective” KPIs. Corrective KPIs are sometimes put in place to quickly adjust an area of performance that needs a significant shift. The issue is that they are mistakenly not removed once the shift is made. Here is a simple visual - think of a pilot adjusting an airplane's heading during a strong crosswind to correct for an intense breeze. When that strong crosswind subsides, so must the correction.
Measuring what is convenient versus what is important. I’ve witnessed several reasons for why this happens: 1) It’s easy and fast; 2) Organizations are too stretched on time and resources to connect the dots effectively; and 3) Leadership wants immediate actions taken by the organization to improve results, but are not empathetic to the support needed to do it the right way. A simple illustration of measuring based on convenience. Many times I’ve seen customer service teams measure talk time without measuring other critical metrics, like retaining a customer. Why? The reason is that “retaining a customer” can be very tough to track, but "counting time" is easy. In the end, this may provide a false sense of security and achievement as the team is busy. However, in reality, no points are being scored for the business.
So, picking or influencing the wrong KPIs can happen without too much thought, and the negative impacts are all too real.
IT’S ALWAYS A GOOD TIME TO REVIEW YOUR FUNDAMENTALS
Here are some actions you can take now:
Challenge your KPIs before they challenge you. The core KPIs you establish set the foundation for your success. Jack Nicklaus, the greatest golfer of all time with 20 major championships, started every golf season with his coach and a lesson to review all of his fundamentals. He even re-visited how to hold a golf club and how to aim, the most basic of basics. Jack knew that even little bad habits could creep in and bring down his entire game, so he took nothing for granted. Take a lesson from Jack and establish a solid foundation, then check it regularly.
Ensure your KPIs tie to and have a measurable and material influence on your desired outcomes. While your desired outcomes may not change often, the lead KPIs to influence them can. It takes a little effort to do this but will save time and heartache in the long run. In other words, sharpen your ax before you start chopping at that tree.
Don’t take a “shotgun approach” to KPIs. Creating and managing a lot of key metrics for every process makes for a very confusing scoreboard, and waters down your focus. Instead, invest the time and find the few critical "cause and effect" KPIs and focus on them. Typically, 3-5 aligned KPIs for any major process or key sub-process is enough.
Don’t ignore the culture. As I said earlier most people associate change with a loss. Changing or removing a KPI that served the business well in the past can seem like a loss. Make intentional efforts to build a culture that embraces the fact that things must change for the business to stay alive and keep growing. Culture influences everything.
Hopefully, my experiences, observations, and mistakes have helped to illustrate how and why the very basic fundamental of choosing and maintaining the correct KPIs gets mishandled. To run a successful organization, division, business, team, etc., nailing down the basics is critical. Knowing the key levers that drive your desired outcomes is indeed a “no-brainer,” but don't get ahead of yourself and skip this load bearing step. If you do, it will be hard to build that “dynasty organization.”
