The best-laid plans don't matter if they amount to nothing.

And too often that is the case.

So our goal today is to make sure that doesn't happen for you.

We're going to talk about how to:

1. Identify the right metrics
2. Track the metrics
3. Guarentee success

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PlanningOS: KEEPING SCORE

Annual planning gets a lot of hate. But most of that hate is misdirected.

Annual planning helps set the vision, but it doesn’t help you get there. You only get to the goal if you take consistent action in the direction of your goal.

And the only way to take consistent action in direction of the goal is to measure your progress.

Today we’re going to talk about how to go from planning to doing.

At this point you should have set your goals for next year. Now we’re going to setup the tracking systems to “keep score” during the year.

To keep the score, there are four steps:

1. Identify the right metrics
2. Determine your method & cadence
3. Set up a push system
4. Track & adapt

IDENTIFY THE RIGHT METRICS

This seems simple, but too many get this wrong. The wrong metrics are:

1. Not tied to a goal
2. Not predictive of the outcome desired
3. Not easy to measure
4. Not actionable

In turn, the right goal is the opposite. So, pull out your goals and start brainstorming the metrics tied to those goals.

In doing so, let me introduce two concepts:

1. Metric types
2. Connected KPIs

METRIC TYPES

Understanding metric type helps us understand what we’re looking at and helps us see where a metric could fail.

If we’re scoring based on feeling (non-financial or qualitative), we’ll have more variability than a quantitative number such as sales calls. There is place for both, but you have to understand if this is the right place.

We also have process versus input metrics. Process metrics are typically a calculation of input metrics and help us make sense of the input. If someone worked 60 hours in a week, that sounds great. But if they only billed 30 and were expected to bill at 90% of their hours, something is off. If they expected to have a 40 hour week, they were only 6 short on billable, but 30 non-billable hours could be a sign of other problems.

Integrating different types of metrics into this process is key.

And lastly, you have leading versus lagging measures, which leads us to the connected KPI concept.

CONNECTED KPIS

Each KPI is connected in a chain that should ultimately link the desired result you have.

Leading measures should be predictive of lagging measures.

Equipment maintenance to downtime.R&D investment to new product launches.Training budget to higher sales call conversion rate.Sales calls should be somewhat predictive of revenue.

But what’s often not done is a chain-link analysis to determine all the things that could be measured between those two points.

That’s where this idea of Connected KPIs comes in.

We want to understand the lead domino and final domino. The lead domino is the one you push over, which creates a chain reaction down the line. The final domino falls and reveals the final outcome.

This is also linked to input versus process. Input is often that lead domino. Process is often a middle domino on the way to the final outcome or goal.

So ask: what are each of those dominoes? Or what are all the lead KPIs in the chain before the lagging measure?

The idea is that we want to trace from our lagging goal (for example, a revenue goal) back to the primary inputs that are driving that result.

For example, say you’re in a sales-led organization and want to track a revenue goal related to “Product 4.” By tracking back the leading measures, you can see that your Sales Team drives the majority of the performance.

It’s then up to you to determine which measurable from the sales team is the most important leading metric for Product 4 Revenue.

When you do this, you’ve identified the key thing you need to track day in and day out.

—

Once you’ve linked the leading and lagging measures to the goal, you should have a pretty good idea what you should track.

Don’t throw out the rest, though, because we’re likely going to track more than one metric related to each goal.

DETERMINE YOUR METHOD & CADENCE

Now, take your linked metrics and consider: what do I need to keep tracking to get a full picture?

Sometimes input alone won’t tell you the whole story.

Talking about the tracking method may seem a little obvious, but I’ve seen too many not identify how they’re going to collect and compile the data.

Look at your systems and how easy or hard it is to collect what you’re trying to collect, then determine how you’re going to compile it. Spreadsheets are great to keep it simple and you can create completely custom “dashboards” that put all your most important metrics on one page.

As you start to create dashboards, consider what type of dashboard you’re trying to create:

1. Strategic: Monthly, Quarterly, or Annually
2. Analytical: Daily, Weekly, or Monthly
3. Operational: Daily or Weekly

Strategic dashboards look at your goals. Typically you’ll create goals that are SMART, as we previously discussed, which includes measurable. So on these strategic dashboards, you’ll include the measures identified in the SMART goal.

Analytical dashboards are the next link the chain, typically viewed on a Weekly or Monthly horizon. The reason they’re analytical is because you’re zoomed out enough to see trends, but not something you look at on a daily basis.

Operational dashboards are the ones you use daily when operating the business. You should measure your teams based on these, with them being the inputs into the system.

You’ll likely end with goal-focused metrics on each type of dashboard.

Again remember: we want to establish lagging measures based on our goals, then link those lagging measures to the leading inputs. This way, while we’re only looking at the lagging measure attached to the goal once a month, in effect we’re looking at them daily as we review the leading measure.

SET UP A PUSH SYSTEM

Documenting your process for tracking the metrics is another area I often see businesses fail. They track for a bit, then someone misses a week or leaves the business and the “process” disappears.

This process should answer:

1. Where you’ll get it. If you don’t know where to get it, you’ll slow down and no one else can duplicate it.
2. How frequently you’ll report it. If you don’t choose a frequency, it’ll be “whenever” which is the same as “never.” Frequency also creates consistent numbers to look at. You’ve likely made this decision in dashboarding, but this also determines how often you need to pull it and this should be included in your documentation.
3. Who is responsible? If you don’t have someone responsible, it won’t happen.
4. Who needs to know? If they collect it but don’t report it, what was the point of collecting it?

Getting metrics delivered to your email inbox or printed and put on your desk is a great way to make sure you’ll always see it.

Some I know still like to manually look through the data and that’s fine too if that’s your cadence. But if not, that’s a surefire way to forget it’s even happening.

I’d encourage you bring these dashboards to meetings and have intentional conversation about them. It forces accountability from all parties. It forces you to study them, but also forces the team members to study them as well. They know that if they get asked about a number being off, they need to have an answer.

TRACK & ADAPT

You won’t be perfect at selecting the right metrics. No one is, as there are always unforeseen things that are unexpected. So, don’t fall in love with what you picked. Monitor them, but don’t be too attached.

Sometimes the leading measure is just not as predictive of the lagging as you hoped.Others the leading measure is more difficult to track than you anticipated.And still others, the lagging measure ends up being a bad measure too.

The key is to recognize these things and adjust. Look for trends and where the metric doesn’t line up with the ground truth in the business. When you see this, it’s time to switch it out. Here you’ll go back to your original list and pick one that you think will be more predictive.

This iterative process takes 3-6 months and in some sense, you’re never done adjusting.

Falling in love with a metric is a great way to end up looking at the wrong thing. Sometimes, when you have 2-3 metrics that can measure the same lagging, it even makes sense to switch them out just to see something different.

This process takes time. Be patient and diligent.

But when you commit to it and end up with the ideal dashboards, it can completely transform a business.

Measuring the right leading measures can:

1. help you hold your team accountable
2. keep you on track to achieve your goals
3. provide a level of insight impossible without it

While this is the end of the process, I want to reiterate: your process of evaluating your metrics is never over. Always take an active mindset when looking at your numbers and be critical.

I hope you’ve walked through this strategic planning with us.

I’d love to hear your feedback:

1. What resonated
2. What questions do you still have?

Reach out and let me know.

Next week we’re going to talk about year-end planning and what you should be doing in the next 30 days to prep for taxes.

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