Your priorities are wrong and so are most other businesses’.
No, I’m not referring to your work/life balance. I’m talking about how you and other businesses have let metrics become the captain of the ship while your vision is forgotten. Businesses tend to fall into the trap of thinking that metrics should set your goals which in turn create your vision, when it’s actually the other way around!
This doesn’t mean being data driven is wrong, it’s a necessity, but most companies go about being data driven in the wrong way. Here’s how to do it the right way:
Vision: The Key to Success
Even though the term “data driven” would suggest that your data drives your business, you’ll actually want to be driven by your vision. Your vision is why you started your business in the first place. It’s what determines where you’re heading and will determine what you achieve!
Your vision is more important than your metrics because metrics can only tell you where you’ve been and how you’re doing. They don’t tell you where you will be going like your vision does.
Taking Action
First, ensure you have a vision. If you don’t have one, now’s the time to make one. Hint: why did you start your business?
Many companies display their metrics with dashboards on TV’s, but few put their vision on the wall like they do their metrics! Be one of the few companies that proudly displays their vision so that your employees know to work towards that vision.
Some examples of famous corporate-brand visions:
- “To offer designer eyewear at a revolutionary price, while leading the way for socially-conscious business.” (Warby Parker)
- “To create a better everyday life for the many people.” (IKEA)
- “To bring humanity back to the skies” (JetBlue)
Once you’ve got your vision, you can begin to create goals.
Goals: Milestones Towards Achieving Your Vision
Goals are the smaller chunks that make up your vision broken down into achievable milestones. Ideally, these are in the form of quarterly SMART (Specific, Measurable, Achievable, Realistic, and Time-bound) goals.
Each goal that you successfully complete brings you closer to achieving your vision.
Taking Action
Take the time to create a few SMART goals based on your vision. Unlike a vision which isn’t always measurable, these need to be clearly and quantifiably completed.
Here’s a great example of a goal:
Based on Warby Parker’s vision (“To offer designer eyewear at a revolutionary price, while leading the way for socially-conscious business.”) we can create the following goal:
- Lower the price of our glasses to $85 from $95 by the end of Q4.
You can have one goal or create multiple goals, just ensure that you don’t lose focus with too many goals! Once you have your goal (or goals) you can move on to discovering your KPIs.
Metrics: Making Sure You’re Reaching Your Goals
Metrics, and more specifically KPIs, are what you use to ensure you’re on track and will reach your goals and eventually your vision.
Contrary to popular belief, your KPIs don’t actually tell you how much progress you’ve made towards a goal. They only indicate your performance. Here are a few other things that metrics can and can’t do:
Metrics can:
- Measure performance
- Inform decisions
- Expose opportunities and challenges
Metrics cannot:
- Fix your problems
- Motivate your staff
- Run your company
Taking Action
Your KPIs will be determined by the goals you set, and they should be able to provide the full picture as to how your business is performing. You want to avoid choosing more than 5 KPI’s as it would become too difficult to actually track performance, but choose too few and you won’t have the picture. 3 or 4 KPIs is the sweet spot.
Example KPIs:
Continuing with the Warby Parker example, if your goal is to lower the cost of glasses here are the metrics you may want to track:
- Total cost of goods
- Profit
- Number of glasses sold
- Number of glasses returned for quality issues
These metrics would allow you to see your cost of goods which tell you how much you could lower the price, profit to ensure your margins are still good, glasses sold to see how the new pricing is affecting sales, and the number of glasses returned for quality reasons - important if you switched to a cheaper material and it’s not holding up as well as previous materials.
Conclusion
Remember, vision is more important than goals which are more important than your metrics. Get your priorities in order and become data driven by starting with your vision. If you don’t, your business will lose what drives it in the first place.
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