I get asked a lot of questions about performance measures, so I wanted to share some thoughts about measuring processes and measuring results. I believe the old saying that says: “if something is important you should measure it.” Likewise, I believe strongly that you get what you “inspect”, not what you “expect.” So, let’s start the conversation agreeing that we need to measure the things that are important to your business, and that if you want to have success, you should be inspecting the processes that you have in place.
Many of you may have heard of the initials KPI which usually stands for Key Performance Indicators. These items are related to the result of a process. Revenue for a company, division or branch might be a KPI as an example. Inventory turns is a common KPI in manufacturing and operations. Oftentimes companies have a standard set of KPIs that they watch like a hawk, post them all over the place and hold meetings about them. This is of course very important. Or to quote one of my favorite business quotes, “Make no mistake, you get paid for results.” So, looking at and discussing performance indicators is crucial to understanding what is happening in your business; however, it is often not enough. In order for you to truly drive your business, you must understand what the inputs are that are producing the results that you are getting (whether you like them or not, you need to understand what is causing them).
I would like to introduce you to another way of looking at measuring your organization. Instead of KPI only meaning Key Performance Indicators, please consider KPI also standing for Key Process Indicators. Where performance indicates the results you are getting, the word process represents the inputs. The inputs then are the actions we are taking to produce the performance. Instead of only looking in the rearview mirror (results/performance), we need to be looking at the windshield and side windows as we are on our business adventures.
One of the clients that I was working with was developing the revenue plan for the year. Out of 4 sales people, 3 of them were relatively close to each other in terms of revenue dollars, and there was another sales person who was a solid 30% higher than highest of the other 3. As a data nerd, I wanted to understand why? As a consultant, I wanted to figure out why 1 out of 4 was killing it compared to the other 3 to see how to replicate and leverage it to drive revenue.
The whole organization (including the leader of sales) didn’t like the results they were getting. I was asked to help them dig into it after we started the planning process for the upcoming year.
I started discussing with the leader of the sales team why this was so, and got everything except what I thought was an acceptable answer. His territory is bigger, he is smarter, he has been doing it longer…and, and, and. So, I started probing on the process side of sales. How many calls do they make? How many calls on potential versus existing customers are they making? What is their close rate and install base? How many potential clients in his area verses the other areas. While the sales leader had some data, it was very clear very quickly, that we were flying down the highway while focused on the rearview mirror when it came to measuring inputs and producing results.
What I got was not new, and it was the usual pushback on the sales management/leadership discussion…my guys are professionals, I don’t want to micromanage them, I don’t want them doing admin work. These are lame excuses. Don’t be lame. Most people want to be led and challenged. Most people want to strive for something bigger than they currently have in place, and most people want to feel the thrill of victory in the face of adversity.
What I hear when someone who doesn’t like their current results, but doesn’t want to change the approach, isn’t I don’t want to micromanage. What I hear is I don’t want to lead.
So, I was left at the end of the day with a “leader” who was basically telling me two things:
1. I don’t like the results I am getting.
2. I don’t want to do anything different.
Which I am pretty-sure is the definition of insanity according to Einstein.
We are still having dialogue, but we are at least talking about the inputs instead of the results. I needed to help this particular leader recognize that the results will remain the same or at least very similar until we do something differently. As a sales leader, he should be looking at the inputs of the sales process to identify potential correlation and causation. For example:
1. How many calls are made by each person to existing and prospective customers?
2. How many quotes are submitted by each sales professional, and what is the close rate?
3. How many sales calls and requests for literature by product line by sales person?
I’m sure that there may be others worth watching, but at the end of the day, the results you are getting are based on the inputs to the process. Two things happened when he started asking these questions.
1. He set a very new, and very clear expectation for his sales team.
2. He now has a whole new opportunity to dialogue with his sales team about what is and isn’t working.
He is starting to see some improvement, and if he stays the course, his sales revenue will increase. No doubt about it!
Whether you are selling something, making something, or even dieting. If you aren’t getting the results you like, stop looking at the results and start looking at the inputs.
If I eat more calories than I burn, I am going to gain weight. It really isn’t complicated and looking at the scale without changing my diet is just dumb. I try really hard not to be dumb.
If what I am doing isn’t working, I must change what I am doing to produce a different result.
Please remember “Make no mistake, you get paid for results.”