Tag Archives: metrics

The Only Startup Metrics that Matter

Data AnalysisI like this a lot. In The only startup metrics that matter — Medium, Josh Elman, who has had upper echelon stints with Facebook, Twitter, and LinkedIn, writes:

“One of the things that I felt working on each of these is that we never looked at numbers or metrics in the abstract — total page views, logged in accounts, etc, but we always talked about users. More specifically, what they were doing and why they were doing it.”

That strikes me as very good advice. Get past the startup metrics for their own sake, and back into why. He continues:

How many people are really using your product? You need a metric that specifically answers this. It can be “x people did 3 searches in the past week”. Or “y people visited my site 9 times in the past month”. Or “z people made at least one purchase in the last 90 days.” But whatever it is, it should be a signal that they are using their product in the way you expected and that they use it enough so that you believe they will come back to use it more and more.

I confess that as I was growing Palo Alto Software I would occasionally, for some presentation or other, browse through available metrics as if reading a menu, and choose the one that made us look best. I liked steep curves in line charts, and inflection charts. And if page views didn’t show it, I’d look at users, or downloads, or conversions, or hits … until I found one that showed a curve I wanted to show.

I bet I’m not the only one. Josh’s suggestion makes a lot more sense.

How Human Recall Screws Up Management and What To Do About It

When the experts dig down into it, human recall doesn’t work. What you remember isn’t what happened; it’s a mosaic of truth, impressions, past experience, guesswork, etc. If you have any doubt, watch the riddle of experience vs. memory and why eyewitnesses get it wrong on TED. 

bigstock stones path management

This cuts hard into the fundamentals of management. What do you do with following up on what was said, and what was done, when every individual story is different? And no one story is more valid than the other? We agreed what? When? 

Traditional management makes this simple: the boss’ version is correct. Just like they say that history is written by the winners. 

The right way, however, is also simple, but only if you have the patience and discipline to record the steps:

  1. Always look for objective measurable goals and progress reporting. Sales and costs and expenses are obvious, but also tweets, follows, likes, leads, calls, presentations, minutes, trips, or whatever. Agree on the future goals and acceptable progress. Make something both boss and worker can track, via objective tools. Make the numbers visible. 
  2. Track, measure, and follow up. Watch the progress. Review performance. 

Everybody wants a score. Everybody wants to be in charge of their own numbers. Make it real. 

But Can You Run a Company Without Performance Reviews?

In my years in business I’ve seen performance reviews from several angles, good and bad. As my employee numbers grew past a handful to several dozen, the reviews seemed more necessary than they were when we were smaller.

One of my earlier employees took the job offer only on the condition of two reviews per year.

But I was never comfortable with them. My management style was working shoulder to shoulder with the people, when we were a smaller team. It was hard to suddenly get into a boss-subordinate mode and deliver a report card.

The people who worked for me would tell you, I often put it off, and I didn’t do that good a job when I did it.

On the other hand, people need and want reviews because they want to have some sense of how they’re doing. And as your company grows, it needs management too, as well as leadership. And reviews help people keep on track.

I caught an interesting post called Should Performance Reviews Live — or Die? posted by the Summers Hospitality Group earlier this week. It’s a good post on an interesting topic, listing some common problems with performance reviews, some advantages, and the predicable conclusion: it depends.

The disadvantages I relate to best to are the focus on what went wrong, the link to pay, and that they happen on an annual basis. They list others as well.

The advantages they cite are are accurate: the whole idea of feedback, consistency, keeping an organization focused on performance, and several other good ones. .

One thing that seems to work better than the formal reviews is a good management system identifying external, measurable, metrics for an employee and then watching those metrics together. I mean like calls, sales, expenses, emails sent, click through or conversion rate, subscribers, posts, tweets … a number we could watch together. When I was able to get that kind of system going, instead of the formal review, it ended up meaning regular collaboration. There was a visible objective metric and doing better or worse than planned led to discussion, and collaboration, without the stiff formality of a report card.

Accountability Is Going to Whack Us Good

Here’s an interesting quote, from an email:

Did you know that within the next five years it is expected that 63 million employed Americans will telecommute either regularly or occasionally?

accountabilityI got this in a press release from AVG Technologies, the anti-virus software, about the dangers of people working offsite. It came with a link to AVG Technologies’ Community Powered Threat Report.

To AVG, with good reason, this is about threats and hackers. To me, however, this is a reminder that the thing we’ll be watching, worrying about, and working on, in the foreseeable future, is accountability.

And it’s not just the boss keeping track of us. It’s just as much us, workers, having away to stand proud with measurement of what we’re really accomplishing. It goes both ways.

We’re all going to need a new way to track progress, measure performance, motivate team members, and work together. My biased view is that accountability comes through business planning, which, when done right, sets goals and measurements for the team and individual team members.

Part of good planning is getting each member of the team to agree on the objective, measurable numbers to track for his or her area. That might be dollars, delivieries, units, trips, presentations, leads, page views, unique visitors, subscribers, Klout score, posts, comments, phone calls, or whatever; but it’s a number that’s objective and trackable. And then the planning process means tracking those numbers, sharing results, and talking about it. That becomes management by collaboration, and it generates accountability via teamwork and regular process. That’s the best way to do it, in my opinion.

The Soft White Underbelly of Metrics

I believe in metrics. Metrics and management go together.  You really can’t manage without them. But damn, don’t you hate them sometimes?

By metrics I mean measurement: sales dollars, costs per unit of sales, expenses, profits, cash … calls, leads, conversions, page views, presentations, trips, clicks, and all of that. You establish specific metrics, then track results, and manage the difference between plan and actual. For me, that’s critical to business planning, which is critical to business management.

But still, damn! Metrics are a hard master. Take a day off, and metrics go down. I went through December holidays worried that if I didn’t keep up my twitter activity, then my Klout score would go down. Or if I let a day go without a blog post, then my blog grade goes down. There’s no letting up.

And it’s all so visible, too. Every post on this blog has that tweet button on the top right, so when a post is boring, you can tell. And I put my Klout score and blog grade right there on the sidebar, too, where not only I see them, but you too … very stressful. (ok, you’re right, I could take them off, but then what would you think?)

Thank goodness I’ve got a good ego and a strong self image.

In Planning, Not All Metrics Are Created Equal

This is an important point. More and more I’m focusing on metrics as a vital component of any useful business planning process, but then I read Entrepreneurs: Beware of Vanity Metrics from Harvard Business Review, which warns of …

… the curse of vanity metrics, numbers which look good on paper but aren’t action oriented: website hits, message volume, or “billions and billions served.” They look great in a press release, but what do they accomplish?

Metrics are magic, or at least that’s what I’ve written in a number of places, related to business planning. But maybe I should have written good metrics, or valid metrics. Metrics as measurement become accountability, which becomes management. Build the metrics into your planning process, and you have better management, better steering, and better teamwork. Not just dollars, but metrics you can track, and metrics that are specific to different jobs, functions, and goals.

Good metrics might be sales, costs, expenses, trips, seminars, ads placed, publications, leads, presentations, posts, tweets, retweets, calls, minutes per call, incidents per serial, and so on. You need things you can track.

But vanity metrics happen all the time. Those are the numbers that look good but come after the fact, without a direct link to cause or performance. I’ve used vanity metrics often enough to know. When preparing a presentation, find a number that looks good, and pretend that it shows progress.

Cool … but is that what you were aiming for?

(Image: 3DDock/Shutterstock)

Contradiction and Paradox Are the Spice of Business

Measurement, metrics, and accountability are everything. Except when they aren’t.

Yes, I contradict myself. No, I don’t mind. Contradiction and paradox are reality in business as in life. As soon as you develop a general rule, you find exceptions.

And I have posted here both the magic of metrics, and do we undervalue marketing we can’t measure. Like the old folk song says, both sides now.

So with that in the background I read with relish Management by Imagination on the Harvard Business Review’s The Conversation blog. Here’s the lead:

The perception that good management is closely linked to good measurement runs deep. How often do you hear these old saws repeated: “If you can’t measure it, it doesn’t count”; “If you can’t measure it, you can’t manage it”; “If you can’t measure it, it won’t happen”? We like these sayings because they’re comforting. The act of measurement provides security; if we know enough about something to measure it we almost certainly have some control over it.

But however comforting it can be to stick with what we can measure, we run the risk of expunging something really important. What’s more, we won’t see what we’re missing because we don’t know what it is that we don’t know. By sticking simply to what we can measure, we come to imagine a small and constrained world in which we are prisoners of a “reality” that is in fact an edifice we’ve unknowingly constructed around ourselves.

The Harvard post goes on to question the more extreme exercises of metrics:

if you stick to measuring what you can already measure, you cannot create a future that is different than the past.

On the other hand, there’s no denying that the underlying mathematics of computing, as applied on the Web, are total luxury of measurement in today’s business world, especially when compared to what we all did as recently as the 1980s and early 1990s. Back then we’d spend the marketing money on ads and direct mail and such, and then hope for the best, waiting weeks and months to get at best a distorted view of results. Now we get clicks and conversions and return on investment almost instantly.

When I worked as a wire service journalist in the 1970s, the turn of a headline made a huge difference. So we crossed our fingers and hoped it would work. We’d find out the next day. Today the industry leaders like the Huffington Post test headlines, and adjust them, in real time.

Conclusion: I love the truth of case by case judgment of so much of real business. Know the rules, follow them when it makes sense, and break them when it makes sense. Paradox and contradiction are the spice of life. And good business.

Or, if you prefer, take this, straight from the Harvard blog, as a conclusion:

We need to get away from all those old sayings about measurement and management, and in that spirit I’d like to propose a new wisdom: “If you can’t imagine it, you will never create it.” The future is about imagination, not measurement. To imagine a future, one has to look beyond the measurable variables, beyond what can be proven with past data.

(Image credit: Vlue/Shutterstock)