Why KPI’s both matter and don’t matter.

I can see that there is a lot written in the areas around measuring performance and that this cripples a companies’ creativity, that this can suffocate a company.

Two blogs i recently enjoyed reading on the subject are Barefoot Sales Process and Look Past the Measurements.

The purpose of a KPI usually comes with good intentions, but as they say…

The road to hell is paved with good intentions

We cannot ignore the fact that KPI’s are extemely powerfull, used in the right way with the right measurement.

I am a runner, as my VP Stefan is. We both have set the goal of running Lidingöloppet (30k in tough terrain). We discuss running a lot, we have totally different approaches to running. Stefan runs with his gut, if it feels good, he is content and as a goal for the race his ambition is to keep a good pace, but to leave some energy for the last 10k. He has no program, he will run as often as he can and run as far as he feels like at that time. I have a different approach, a set target for this race, a time I want to achieve, so I have put together a training program based on last year’s training program. I have a goal and a plan.

My strategy is to train hard without getting injured. My vision is to feel good, to feel fit. This is where Stefan and I agree.

My plan is ambitious. To achieve the goal, I need to train in tougher terrain this year compared to last year. I have two KPI’s for operational measurements, two for tactical, and one for reaching my goal.

Operational
For each training in the plan there is a purpose of how it will influence my physique. So as operational KPI’s I have heartrate and pace as a feedback every 5 minutes. This helps me pace my training to reach the development it intends to provide. After each training I try to reflect on the general feel of my health, to see if I am in tune with my strategy.

Tactical
Every week I look at the summery and how it compares to the other weeks. My KPI’s are average pace, to see if I’m moving in the direction, and distance, because I need to reach a certain level of endurance. The distance is a measurement that needs to be in line with my plan. If I don’t reach the distance I could change the plan for the week to follow.

Goal
To reach my goal I have one KPI and this is my best pace, this needs to go down to a certain minutes per km and then stay below this level.

Now all I have to do is stick to my plan, no matter what the weather is or if I don’t feel like running.

There is no right or wrong in the different approaches, but in Stefan’s case it would be a waste of time to use my KPI’s, even if we were to have the same goal.

This is where the confusion begins
The tricky part is if we are asked to pass on our experience, or if we are supposed to report our progress to a coach. Once again, the right KPI’s are of value, but not without presenting the correct arguments. You need to sell the KPI to the people providing the information. There needs to be a clear understanding of:
1. The purpose of the KPI (WHY)
2. When is the result presented, what frequency (WHEN)
3. How to report, how to read the result (HOW)
4. Who takes part of the report (WHO)

If you get a buy in on all points there is no problem, if you don’t, well you might have your work cut out for you…

The Ultimate Sales Boom – Have You Done Your Toothbrush Test?

All sales people are looking for easy sales. When the customer buys – not you selling. No matter what, the customers seem to flow into your order books without any effort at all.

You’re in the Tornado.

The term “Tornado” is perfectly defined by my favorite marketing author Geoffery A Moore; author of the bestselling book “Crossing The Chasm” and following “Inside The Tornado”. In the serie of books Moore dicusses how to bridge the chasm in the technology life cycle between visionaries and pragmatists by defining your smallest niche and buildning a bridge-head on the pragmatist’s “Tornado” shore of the chasm using a bowling pin strategy. In my blog post Niche Marketing Defeats Large Competitors I go a little deeper in this topic of how. Interesting though that’s a lot of efforts and may take good piece of time.

And – more important – that strategy was introduced long before the social medias were born.

Nowadays we have examples as King (Candy Crush Saga) and more companies that really take advantage of the social media technology for their success. I’m pretty sure Candy Crush hasn’t been that huge success without Facebook. What’s new is that King builds the social media into the business model itself.

In Candy Crush Saga, Facebook is not a fancy add-on, it’s literally the true salesman for aquiring new users, collaboration between them and of course building the loyal community that will continue to spend time and money in the product.

Well. You may say this would only apply for consumer products or services, not B2B. I think it can, at least for digitial services. And if you do your Toothbrush Test.

Toothbrush

A toothbrush test is a way of testing if your product is used frequently enough to change peoples lives. You’ll not gonna change somebody’s life if your product is used one or twice a week. But if your product is so compelling or desirable that people will use it as often they brush their teeth – in average two times per day and as a habit – then you will have a good starting point for a tornado.

Then it’s a question of how large your target group is – how many people would change their lives using your product. It doesn’t matter if your product is even so amazing for your favorite customer, if it’s not applicable to more than them.

A couple of weeks ago I visited Singularity University in Silicon Valley. Their mission is to research in and inspire leaders to apply exponential technologies to address humanity’s grand challenges. To change the lives of billions of people. I learned, if you want a massive tornado, start change your perspective: For how many can my product change their lives? And in what way?

Here’s the paradox; you need to narrow down your idea to a tiny vertical, but the customer need have to be valid for many more people than in this initial vertical to get a tornado in place. As it’s told in the book “Crossing The Chasm” you first become the market leader in one verical and then, maybe after years, the adjacent verticals will fall as bowling pins since they have identical needs, and at the end creating that tornado.

Of course you haven’t got that time. You want the tornado now. The toothbrush customer need is your key to very fast create your tornado.

To succeed, you need to switch your perspective looking more at customer need than features you have in your existing product. To start, ask the following questions to yourself:

  • Can you narrow your business idea to fulfill one single core need?
  • Would that fulfillment change the lives for many people you’re targeting?
  • Will your product be used (at least) twice a day?
  • Is it easy to make it a habit? Gamification has the potential to add stickiness to your product in a whole new way
  • Is your product easy to share or – better: is the social medias a part of your service and business model?

Happy to be with you today, we’ll keep in touch!

Stefan