Introduction | Why “Measure What Matters” Matters
“We want to hit two million in sales this year, no matter what!” Sound familiar?
Revenue generation drives company growth; it feeds the rest of the organization. Planting your flag on an arbitrary set of digits is great—congrats! What is the plan to achieve such lofty expectations? How does sales, marketing, operations, admin, HR, etc. play a role in the overall goal of two million in revenue? Not sure? Well then you might as well make it two BILLION in revenue, because you’re just as likely to hit that number if you don’t have systems in place to measure progress, adjust near term goals, and even scrap objectives. In other words if you don’t measure what matters and leverage Objectives and Key Results (OKRs) then all you have is a pie-in-the-sky revenue dream.
Fear not Entrepreneur, for there is hope! It all starts with a mindset shift—a little “thinking about your thinking” before you can successfully plan, measure, and analyze, your firm’s progress.
4 Hallmarks of the “Measure What Matters” Mindset
- Understand the difference between a goal and objective | Goals are the genuine end state for a company during a given period of time. Objectives and key results break down to a shorter period of time, giving us an accurate measuring stick and set of guidelines to ensure we’re driving towards our desired end state.
- Stop measuring against the horizon | Now, I have no issues with measuring LE vs budget, as it gives us a tangible measurement to work with. The problem is that it’s myopic and provides zero “why?” behind lagging financial performance. At my company, we measure against a designated start point, such as a quarter. We can measure that tangible progress in every corner of the company, while being able to look back and analyze business trends, competitive landscape, etc.
- Empower Your Leaders | Are you empowering departmental leaders to drive their performance objectives? Or is this a “cast down from the ivory tower” type scenario? Likely the latter due to trust issues, which is a whole different subject entirely. Start involving your leaders in how they can drive departmental success, thus helping the entire company reach their overall annual goals.
- Don’t fall in love with your objectives | This is extremely common amongst businesses at every level—they establish a set of measurable goals, then are willing to ride them into the ground at the company’s detriment. COVID-19 is a prime example of an external variable that necessitates a mid-year shift to account for market changes in order to drive company success. Simply stated, be willing to scrap objectives if they no longer align with company performance goals.
Objectives and Key Results (OKRs)
Now that we’ve discussed how to think, let’s dive into the process of establishing, and driving towards, objectives and key results (OKRs). This is a modified version of John Doer’s book “Measure what Matters” which quite frankly, helped me reevaluate the way I looked at company performance goals. If you’re leading a company and haven’t added this to your reading library then for shame!
Here’s a solid guide on OKRs : CLICK HERE
These should be your “north star.” I believe too many companies make these overly quantitative. For example: “2 million in revenue in Q1.” There’s nothing inherently wrong with this approach, but I prefer more aspirational objectives weighted against quantitative/qualitative key results. Further, make sure your objectives, regardless of their time benchmarks, push beyond the bounds of daily operations.
“Become market leader in our space by end of Q1.”
“Hire 10 new software engineers by end of Q4.”
Note that these are bold, audacious desires, meant to provide a level of inspiration to a team, while binding it with a time constraint and avoiding tip 2 (walking to the horizon).
My favorite way to phrase the meaning behind a Key Result (KR) is: “as measured by.” It provides the measuring capability to, and for, your quarterly objectives. Think of it as a set of check marks that, if accomplished, while naturally cause the team to hit the objective.
Example Sales Team Objective:
Become the market leader in our space by the end of Q1
As measured by: (Key results)
$500,000 in net new revenue
33% closing percentage
$2,000,000 in new sales pipeline
If you notice, the objective was aspirational with no real number values associated. However, to accomplish the objective, we need to hit some very measurable key results. “become the market leader in our space as measured by . . .” The natural reward for ticking off those boxes are becoming the market leader at the end of Q1!
- Avoid the waterfall effect to your OKRs | As the COO, I work with the CEO to set annual goals and company quarterly OKRs. It’s assumptive that my Key Results would become the VPs Objectives; their Key Results would become their directors’ Objectives, and so on. There’s a major issue is the rigidity and lack of creative thought associated with the waterfall effect. Allow your leaders to determine how their Objectives support overall organizational Objectives—don’t dictate success! This creative cascading mindset will permeate the company and allow personnel at all levels to think outside of the box.
- Avoid an abundance of OKRs | I prefer the 3-5 rule with most anything, especially audacious goals that we use as company drivers. If objectives are meant to focus efforts, too many can create confusion, stretch resources, and decrease morale. Pick a number that pushes teams, but doesn’t deflate them due to a wholesale failure to accomplish important objectives.
- Accountability | During our quarterly executive team meetings, each executive stands up and discusses successes and failures relative to quarterly OKRs. This isn’t an exercise in shaming shortcomings; rather it allows us to understand why we missed the mark and if their was viability to the objective itself. For example, if an objective was to implement a new CRM in Q2, but priorities and budget dollars shifted, that objective is no longer valid. Additionally, failure to accomplish an Objective can provide tremendous business intelligence into current operations, competitive landscape, consumer purchasing habits, etc. Dive into the “why” heavily and allow that to shape and mold the following quarterly objectives.
Running a successful business in this contemporary operating environment is hard enough; doing so blindly is just pure madness. Don’t rush to failure with your offering and operations…slow down, take the time to find out what’s important enough to measure, then provide your team with the what, how, and why of quarterly company success. Done right, you’ll find this exercise to be catalyst to organizational and personnel growth. Basically, you can’t afford NOT to measure what matters…
Additional Resource: 5 Problems & 5 Solutions | Business Operations
The word, “business operations” strikes both fear and confusion into the hearts of many business leaders. The term evokes a broad range of thoughts and emotions due to the diverse nature of a business operations department. Depending on the size of the organization and the industry in which the company operates, operations leaders may find themselves overseeing intercompany functions from sales and marketing to support to human resources and everywhere in between. As such, the operational issues companies face are as ambiguous as the term itself. That said, there are many agnostic operational functions, and subsequent issues, to be discussed. To that end, I will discuss five broad operational issues and solutions that often plague companies. Let’s go!
The 5 Problems | Business Operations
Problem 1 | Throwing More People at Problems
Problem 2 | Growth – Expenses Outpacing Profit
Problem 3 | Walking towards the horizon | Hoping & Guessing Vs. Measuring
Problem 4 | Inconsistent Cash Flow & Team Performance
Problem 5 | Corporate Ego & Complacency
Problem 1 | Throwing More People at Problems
How many times have we heard the phrase, “throw people at the problem?” Unfortunately, this is the approach most operational leaders take to leverage organizational growth. “If only I had five more engineers, we could decrease system downtime by 50%!” So, we “fix” the issue by making the hires, only to discover we’re no more operationally efficient, but profitability has dropped by 30%. We’ll get to the how? of that shortly, but I guarantee those personnel costs are killing your bottom line.
The Solution | Look to Operational Efficiency
People are the horsepower if your organization is a car. From an operations perspective, you can always add more horsepower to your car, but what does that matter if you’re using square wheels? When it comes to overcoming business challenges, throwing people at the problem is not where you should start. Evaluate how you could overcome the problem through more efficient means of applying your energy and resources. In other words, fix the square wheels on your business before you add more horsepower.
Problem 2 | Growth – Expenses Outpacing Profit
Like personnel costs, growth is often associated with the need for more: more software licenses, more cell phones, etc. This results in leaders projecting the expenses and pre-purchasing the perceived needed software, only to have it sit on the shelf or be under-utilized by their team members. Similar to our businesses, operational costs increase over time, and those increases are passed on to the consumer. Simply stated, those licenses get more expensive every year.
The Solution | Audit Your Tools & Contracts
Contracts are an easy expense to control through annual audits of licenses needed relative to current staff, annual negotiations with vendors, and a trick that I love: cancelling and re-issuing of AMEX cards annually.
3 Business Operations Hacks You Should Apply Today
- Annual audits of licenses relative to current FTE staff | Every company I’ve worked with or for has this issue—more system “seats” than employees. Even worse, they pay for redundant systems simply because nobody bothered to look at expenses. This should be an annual Q4 exercise, where departmental leaders go system –by system, counting licenses versus staff and making appropriate adjustments on the upcoming annual budget.
- Annual negotiations with vendors | This should be almost an extension of the first bullet point; if you’re not going back to your vendors annually and renegotiating pricing and terms—you’re doing it wrong. Similar to a personal cell phone bill, the provider slips in annual pricing increases that they’re not contractually obligated to disclose with customers. Empower your subordinate leaders to negotiate on the platforms they use daily; it will empower them as leaders and stabilize system costs company wide.
- Annual cancelling and reissuing of corporate credit cards | This is a trick that we use to reduce costs on the small and ancillary expenses too often associated with charge cards. It also prompts vendors to reach out for billing information, allowing you to renegotiate pricing and terms. It might be a pain to your admin/accounting team, but it’ll pay for itself with real dollars annually.
Problem 3 | Walking Towards the Horizon | Hoping & Guessing vs. Measuring
This mindset of hoping and guessing, rather than measuring, permeates small and medium sized companies that are struggling to find traction and progressive growth. They lack the ability to understand the desired end state and define progress along the way. As a result, they just blindly stumble along, walking towards the horizon and wondering why sales are lagging and teams are stagnant.
The Solution | Measure What Matters
Objectives/Key Results | Objectives and key results are an absolute MUST for companies of any size. O/KRs provide strategic guidance and direction for all company functions and provide a mechanism against which progress can be measured. O/KRs are preferable to SMART goals or stretch goals because they’re broken down on a quarterly basis and they empower departmental leaders to define and drive their team’s success. I’ll do a blog on this shortly, but for right now, you should start defining your quarterly goals and how you plan on achieving them. Set goals that are achievable and “near-term” (aim for quarterly).
Note: If you’d like a master’s class education on this subject, check out John Doerr’s book “Measure What Matters: How Google, Bono, and the Gats Foundation Rock the World with OKRs”
Metrics | What’s your closing percentage? Conversion percentage from marketing to sales qualified leads? Customer retention percentage? Of those customers you’re bleeding, how many are because of dissatisfaction with your product/service? The questions vary by industry, but the point is, are you asking the questions? Metrics should be nearly as important as driving sales because they provide the answers to so many operational challenges. Metrics go hand-in-hand with O/KRs and provide an accountability measure to leaders at every echelon of the organization. The numbers reveal the truth, and that’s what you should be after. When you are measuring what matters, you remove the anecdotal “I feel like” tendencies that get in between you and the growth you can realize.
Problem 4 | Inconsistent Cash Flow & Team Performance
Not much frustrates owners more than seeing big peaks and troughs in company performance and subsequent cashflow. It makes leveraging cash for growth difficult and can result in accumulation of accounts payable, further driving down cash flow. And the cycle goes on…
The Solution | Consistent Mechanisms for Involved and Engaged Employees
I find that inconsistency in team performance comes as a result of two failures:
Failure 1: A lack of effective employee training programs
Failure 2: A lack of effective feedback mechanisms for team growth
Failure 1 | A Lack of Effective Employee Training Programs
As an extension of problem 1, we often find ourselves throwing people at problems without being able to honestly answer the question of “Are my people trained?” This is a brutal question that makes many operational leaders squirm in their seats, but the answeris important for both company and employee performance. If you lack a consistent training program (not just on-boarding, but a structured, ongoing program), you will find yourself throwing people at problems, causing performance to dip despite the increased body count. Additionally, training increases team member confidence and cohesion.
Failure 2: A Lack of Effective Feedback Mechanisms for Team Growth
Are you letting your team members know how they, as an individual, contribute to overall team and organizational success? Probably not,. Similarly, are you actively involving your employees in efficiency measures? Didn’t think so. They’re often your eyes and ears, closely engaging with customers and the product/service, so who better to give feedback on how we can make things betterto improve?
Involved employees are engaged employees; engaged employees are high performers. High performers are consistent in their execution, alleviating the peaks and troughs in company performance and cash flow.
Problem 5 | Corporate Ego & Complacency
The final problem is more common amongst established companies who blindly believe their product is relevant and solves a genuine market need. Maybe it did; maybe it does—so why are we bleeding market share? One of the biggest problems successful companies share is that over time, they can grow a corporate ego that breeds complacency. If you rest on your laurels too long, you’ll lose your edge and relevance.
The Solution | Be Default Aggressive
Remember Where You Come From | Remember when you first started your company and the early days that followed? You were a scrappy outfit that had a “can-do” attitude, and you had to fight and claw for everything you got. At that time, you were “default aggressive,” and you need to find your way back to that in order to counteract complacency
Be “default aggressive” in your approach to the market and subsequent competition. Constantly engage your customers in how they feel about the product and their suggestions for improvement. Also, ask the customers lost in the sales process why they chose your competition—consumers tend to be open and honest if you’re courageous enough to ask “why?” Prospective, current, and lost customers will provide market fit feedback and intelligence for improvement of existing products/services as well as insights into potential projects.
Use External Variables to Pivot Your Market Offering | COVID-19 is a prime example of opportunities and consequences for businesses. There are endless stories of businesses shuttering doors as a result of COVID; conversely, there are just as many success stories from the pandemic. The difference between the two is often found in asking the question, “How can we do things differently?” If you blindly trudge along, thinking your offering is good enough to survive, don’t be surprised if the competition kicks your ass. Have the courage to constantly evaluate your product/service and be “default aggressive” in your market approach.
The sales function of a business brings home the meat; it’s business operations’ job to clean, cook, and maintain it. It’s far from being “sexy” and often overlooked by company leadership. It is, however, vital to sustained company success. Have a strategic plan and break it down to tactical-level functions. Provide guidance, train your people, and engage your customers, all while avoiding exploding overhead. Also, never forget who you are and where you come from. Never lose that “default aggressive” mindset that got you where you are today. Implement these operational items with discipline, and you’ll see an increase in your revenue, profitability, and employee satisfaction.
“Let the love of your people and product drive profits; not the other way around.”— Davin Marceau
Let me start off saying that this is not a political post. We are in the midst of a highly volatile transition of power, and there are many lessons for leaders to learn from this political season. Clearly, politics is a different animal from operating a business, but strong leadership transcends any industry, organization, or political party. And as much as we can learn from our nation’s leaders, we can also discover what not to do when it comes to being an effective leader. Let’s examine three lessons of this election season and glean the available wisdom from them to improve your capabilities and capacity as a leader.
The Three Leadership “What Not To Do” Lessons
- Shifting Blame
- Using Divisive Rhetoric
- Responding Poorly to a Volatile Situation
What Not To Do Leadership Lesson 1 – Shifting Blame
When a leader says that I’m failing or falling short because of various circumstances that are beyond my control, that leader is absolving himself of any responsibility for results or a solution. A lack of ownership is a hallmark trait of a weak leader. Those who can’t admit fault or take any responsibility cannot effectively lead. Strong leaders take ownership of what occurs on their watch, even if it’s not entirely their fault. Owning the situation is powerful because claiming ownership is associated with agency. If you have agency, then you have the propensity to affect change, meaning you can alter your circumstances. Leaders are not expected to be perfect. They are human, yes, but others look to them to be exceptional. Yes, taking ownership of mistakes can feel like it puts you in a state of vulnerability, but it actually leverages more influence and power with your people. To learn more, read Dare to Lead by Brené Brown. For additional insights into how ownership is associated with quality leadership, I’d advise you read Extreme Ownership by Jocko Willink and Leif Babin.
What Not To Do Leadership Lesson 2 – Using Divisive Rhetoric
One of the things we’ve seen through the course of this past election cycle is the use of the word “they.” Making these “us vs. them” types of statement is dangerous, as it polarizes sides as enemies, not as individuals who are working together towards a common goal. It denies multiple lenses of perspective, all of which are important when leading a team. We have seen leaders across many companies talk about other leaders or teams from other departments within their company in terms of “us vs. Them.” When you do this as a leader, you exhibit tremendous short-sightedness. While a bit of healthy competition can benefit an organization, ultimately, you are on the same team as other leaders and departments within your organization. You’re all shooting for the same goal, and you should align your collective time and energy as such. However, when you use this “us vs. them” rhetoric, you undermine the foundation of progress. Abraham Lincoln said it best on June 16, 1858:
A house divided cannot standAbraham Lincoln
What Not To Do Leadership Lesson 3 – Responding Poorly to a Volatile Situation
When faced with a crisis, we have seen our leaders respond in a volatile manner. As a leader, you do not want to escalate the situation of turmoil and tumult any further. Rather, what a good leader does is respond to a crisis in a manner that deescalates the situation. When you respond in a manner that escalates the situation, you are enabling them to further succumb to that fear and act irrationally. This “fight or flight” response to fear and stress can have a tremendously negative impact on performance. Rather, if you deescalate and call people to calm, then you instill in them a courage to face their fears and work against it. People who have a clear head in a state of crisis can be extremely effective.
Think of this in the terms of EMTs and personnel that work in the Emergency Department. Do you want your EMT responding with chaos and calamity or do you want them to have a calm and steady demeanor in the face of tumult?
A wonderful example we can look to is in Winston Churchill who led Great Britain through some extremely dark times. His slogan can still be seen as an expression of various forms of pop culture today.
Leaders are called to be the best among us. We need quality leaders in all walks of life, as they help us to be better. While strong leaders can enable us to become better versions of ourselves, weak leaders can lead us to be the worst version of ourselves. It is easy to shift blame, divide, and be reactive. Leadership is not easy, and anyone who is a leader will tell you that being effective requires consistent work over time; it is not a state of finality. As leaders, we are on a constant journey to improve our craft. We do this because that is what the world requires of us, it is what the world needs, and most importantly, it is what the world deserves.
We’ve all heard the axioms about millennials in the workplace: they’re lazy, unmotivated, politically-charged crybabies. The term “snowflake” has surfaced in recent years, used derogatorily in an attempt to marginalize this ever-expanding segment of our population and workforce. According to a Pew Research Center study, millennials became the largest demographic in the workforce in 2016; a similar Pew study done in 2020 revealed that millennials also wield the largest consumer purchasing power of any generation. If we as leaders approach millennials with such a negative mindset, we are missing out on a significant opportunity to work alongside this critical part of our population. So how do we work with and lead this seemingly challenged demographic? It is rather simple when viewed objectively; here are several techniques leaders can use to understand, motivate, and communicate with millennials in the workforce.
This word is incredibly foreign to Boomers and Gen Xers, particularly in a work environment. Mid-year reviews, growth plans, and weekly sit-downs are ideas that make these two groups want to crawl out of their skin. The only feedback they were used to receiving from their superiors “back in the day” was a pat on the shoulder followed by “good job.” The need for constant feedback used to be considered a weakness, but for millennials, it is a necessity.
While more complicated, communication is vital to the millennial workforce. The “what” and “how” of the job are often less important to them than the “why?” This passion is almost entirely unique to millennials, and, according to a 2018 Forbes article, they’re willing to let that passion drive their decision-making. The younger generations want to know that what they do contributes to the overall success of the organization. After all, this is the most connected generation in history, with endless information flowing at the tips of their fingers. They know how to research the answer to nearly any question, so how can we expect them to just shut up and take what their superiors say as truth? They want to be able to ask questions and they welcome individualized feedback.
If you want to maximize the potential of a millennial, take the time to outline their potential through performance plans and communicate their strengths and weaknesses through quarterly reviews. Do so and they will thrive; fail to communicate, and you’ll have considerable (and expensive) turnover.
This is a word that, as a millennial, makes me shudder. I was raised a farm kid in Northern Montana, so balance in life is a foreign concept. You work until the job is done, then use the remaining time and bandwidth as you see fit. Oftentimes, late nights and early mornings throughout my military and corporate careers left zero time for my family, but that’s just what I thought was needed to succeed.
This dichotomy is vital to leading millennials. They need time to explore the world around them, hang out in cool coffee shops, and discuss topics that are important to them. Expecting them to put in 80 hours of work for extended periods of time is a recipe for an unstable workforce. Companies like Amazon have done a tremendous job of blending the personal and professional together by allowing time for “passion projects” while in the office. Get creative with your younger workforce and allow them to be creative with you! Provide them with a level of balance, and you will find them to be extremely loyal to your company.
You’re probably thinking, “Well no sh*t, Davin. Everyone wants opportunity!” Sure, millennials desire upward mobility within the walls of the organization. Where they differ is in the opportunities available outside of your company. Opportunities to give back to causes, for example, allows them to feel a deeper connection with their work. To connect with your millennial workers, take up a cause: adopt a park, clean up streets, or volunteer with a nonprofit organization. Not only will you find the younger generation eager to join such causes, but you’re also likely providing them a perfect opportunity to promote your company on their social media accounts.
Outside of external opportunities to give back, millennials are also the first generation who really soaks up and desires personal development training. Again, this ties back to connectivity and communication with your team. If you tie in training opportunities to their growth plans, you will find them highly engaged in their work.
As a career military man, it drives me insane to hear Boomer or Gen X leaders state their disbelief that millennials cannot be successful in the workplace. Sadly, this sentiment isn’t contained to work, but is used culturally across older generations in general. Look across the ranks of our military and what do you see? Millennials leading millennials into combat to fight and die for our country. You’re telling me we cannot train, communicate, and lead them in the civilian sectors? Nonsense! Leadership takes elasticity of the mind and spirit. Adapt to the needs of the younger workforce and reap the benefits; fail to do so and you’ll find yourself likely relegated to dinosaur status in the market.
Millennials want open communication, opportunities to give back, and balance between their work and their personal lives. Maybe they’re not that different from other generations after all.
Gain more leadership insights by listening to our podcast where we cover this same topic.