I’m an extremely competitive person.
In our household, I am still banned from playing Settlers of Catan because of my intensity levels. Don’t even get me started on my Chess ban — I have nowhere to channel my Queen’s Gambit energy. With COVID and lockdown, unfortunately these days my partner gets the brunt of my competitive streak. Poor guy. 😦
In other life scenarios, I’d like to think I am more amiable than aggressive. But there’s just something about numbers and points. They turn me into this hyper aggressive person focused solely on beating the game. And I’m curious (and hopeful) that I am not the only one.
People play differently when they are keeping score.
Chris McChesney, The 4 Disciplines of Execution
Once you assign points to something, it becomes a metric: a clera score at the end that determines how successful I was. There is no room for ambiguity.
I’ve taken your rook, or I have not.
I’ve amassed enough resources to build my settlement, or I have not.
The result is binary.
Why is measuring important?
What you measure is what you improve. This concept originates with Peter Drucker, the man known for inventing modern business management. Measuring is immeasurably valuable; by measuring or tracking data, it provides you a benchmark. A direction.
Businesses use metrics like key performance indicators (KPIs) as an information gathering resource to identify how a company is progressing to meet their goals. These metrics help firms identify whether they are on track and if not, how much distance separates them from where they are and where they need to be.
In a nutshell, businesses study and enforce metrics to help them achieve better and better results over time.
Now, I’d like to ask you: Why not do the same for yourself?
A Study in Business History: Metrics and Success
I touch on this subject briefly in the earlier post My Quarter in Review regarding how I assess my own “reporting,” and I’d like to elaborate further here: Businesses, like science, operate on hard and quantitative data. Hard data retains a sense of objectivity and no room for interpretation or vagueness.
You either reached your sales forecast, or you did not. You gained this many new customers, or you did not. You can tell if customers like your product based on your sales. Or the quality of your company culture based on your employee turnover.
There’s no guessing: Do we have a good product? Have we built a good team? The metrics themselves help you answer these questions. By making the metrics tied to your goal very clear and defined, it can begin influencing your behavior to help you meet these goals.
And what Jim Collins has discovered in his book Good to Great, is that the great companies are the ones that know what to measure. They’ve properly identified the metrics that help them drive ultimate value to their customers and their organization.
Walgreens, for example, grew to be the largest drug retail chain in America by strategically assessing the correct metrics to measure.
In 1975, $1 invested in Walgreens would skyrocket to $562 by 2000 under his leadership, easily beating the stock market index by 1,500%. Hedge fund managers on the other hand, are considered widely successful when they beat the market by 1.5% annually.
During this time, Walgreens achieved this by having one strategic goal: to build the best, most convenient drugstore in America.
How does one assess the success of this big, hairy, audacious goal, though?
Walgreens determined a core metric that would align the executive team on what determined convenience.Large retail chains like Walgreen’s rivals at the time focused on profit per store. This metric however created an incentive to REDUCE the number of stores in high traffic and expensive locations and RELOCATE to cheaper and more remote locations.
No one ever called driving 20 miles out of the way to buy some paper towels “convenient”.
Based on competitor strategy, it becomes distinctively clear that while Walgreens and their competitors have the same goal — gaining market share in the convenience store space, — the metric their competitors defined clearly was not aligned with their goal at all.
In fact, their metric inhibited it. How you define your metrics determines your focus.
By redefining the metric, Walgreens no longer focused on profit per store, and instead began buying up corner lots to focus on high traffic areas. They invested in services that would optimize for a convenient shopping experience in store. They shut down revenue generating stores only to move them one block closer if it meant for a more convenient location.
And these tactics worked.
By 2004, Walgreens chief rival Eckerd sold to CVS, and Walgreens has now upheld its reputation as the most convenient drugstore for multiple decades.
Metrics determine focus
We might not be looking to be the most convenient drugstore, however it is undeniable that as humans, we all carry goals that we want to accomplish for ourselves.
You’ll find tons of quotes related to goals: usually some inspirational quote with beautiful typography backset against picturesque scenery that that doesn’t have much to do with the subject matter at hand.
And while I am all about planning, I do challenge this approach to goal setting and attainment. Instead, I wonder if the priority should not be in the plan, but in the metrics you define for success.
With established metrics that align with your goals, I sincerely believe the plan becomes easier to build, pivot, and execute. Because you now have a target, understanding what’s working and what’s not becomes crystal clear. This limits the uncertainty and decision paralysis we often face when it comes to vague and unclear goals. It allows you to experiment, try new things, and then return back to your metric to see if the numbers have improved or not.
Businesses recognize that a deliverable needs to come with a metric (and even better, a correct metric) attached to it. Generating a key metric for their business goal then allows them to deploy strategies and initiatives to pursue this target.
Understanding the Walgreen’s case study and recognizing the frequency that metrics are discussed in the business world, I’d like to ask again: How can you apply this to yourself?
Think like a CEO, Measure Yourself
When you begin to think like a business, it becomes much easier to sift through the subjectivity of experience.
There is great value in thinking like a CEO. You belong to a company called You, Incorporated. The product is you. The CEO is you. The metrics are the metrics associated with progress towards your goals.
If you’re not tracking your spending, how will you know if you have enough to pay off your credit card? If you’re not tracking improvement towards your goals, how will you know if you’re getting any better?
Therefore, it’s important to 1) measure yourself and 2) pick the right metrics to incentivize the behavior you are looking for.
Stay tuned for Part 2: Think Like a CEO, Pick the Right Metrics