How to Determine That One “Winning” Metric

May 5, 2015 — 1 Comment

By Bill Fotsch

Some people say the journey is just as important as the destination. That’s certainly the case when it comes to defining winning. True, you want to be sure that the definition of winning you come up with is right. But the process you use to develop that definition is just as important.

We have continually refined our process of helping companies define winning over the past 20+ years. It’s the typical starting point of our work. Our current recommended process involves the following five steps, done in parallel:

  1. Gathering input from all employees through an employee survey
  2. Gathering input from management, using a management questionnaire
  3. Assembling the past five years’ worth of financials, along with budget versus actual for the current year to date
  4. Assembling existing management reports
  5. Gathering input from customers as captured in our customer outreach script. (This will be used in determining your winning metric; it should also increase repeat and referral revenue.)

You can see how much participation we recommend in the process. Every employee is asked for his or her input—all in confidence, to encourage candid responses. We suggest you ask them questions like these: What is the biggest opportunity to increase profits? What is our biggest opportunity to strengthen our relationship with customers and increase revenue? Such questions not only generate great input; they also get employees thinking about the business in a more holistic way. The same is true for input from managers, though in their case you’ll want to focus a bit more on competition.

Analysis of trends from the financials tells the company’s story from a financial perspective. We particularly look to see if the company is heavily in debt and has weak cash flow. If that’s the case, we know that “winning” will involve some measure related to generating cash. As for existing managerial reports, those usually reveal what the company is currently focused on.

In the past five years we have added customer input to the mix. We have found that using a modified version of Fred Reichheld’s “Ultimate Question”—how likely is it that you would recommend us to a friend or colleague?—has been very powerful. It produces great input and at the same time strengthens a company’s relationship with its customers.

Since all five steps can be done more or less simultaneously, you don’t need much calendar time to complete the process—typically two or three weeks is plenty. Then we suggest you hold a working session with six-to-twelve team members to go through this input and come to a consensus on the key issues facing the company in the next few quarters. Usually, you can then distill the key issues down to a performance metric that defines winning. Depending on your situation, winning might mean increasing your revenue, boosting gross margins, increasing customer loyalty, or something else entirely.

Since everyone in the company has at least some input into the process, the level of understanding and “buy in” is very high. Of course, there’s always some need for reinforcement and education, but this approach provides both better definitions of winning and better implementation. That’s why I recommend both the process—the journey—and the resulting destination, a company that understands and can focus on winning.

One response to How to Determine That One “Winning” Metric

  1. 

    Reblogged this on The HR Partner @ HRO Partners and commented:
    Great insight!

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