Making good metrics into better metrics

The last two weeks I’ve been dancing around the topic of metrics without getting to the point, which is: How are things?

More importantly, how do you know?

Most businesses have some metrics. Some are very data-driven, some are barely so and there are plenty in between those two points. One of the differences between the very data-driven companies and those that are “sort of driven” is the quality of the metrics.

Good data vs. great data

There’s nothing wrong with good data. It’s certainly better than no data. Good data includes facts and figures like sales, costs, profit, inventory, payables and receivables.

Here are some good metrics: We have 1207 trucks on the road. Our drivers make $0.38 per electronically logged mile. It costs us $1.39 per mile for truck, driver, fuel and overhead (taxes, insurance, maintenance, etc).

Key to making good metrics into better metrics: Drill deeper. Hiding inside most good metrics is better, actionable information.

Quality isn’t just about accuracy, it’s also about the depth of the metric and the insight it communicates. What would happen if you drilled deeper into your good metrics? Would you find additional information to take action on?

Let’s drill deeper into the trucking metrics I mentioned above – on one topic: downtime.

Downtime isn’t on the list of metrics. It’s hidden inside overhead. It’s not solely about the maintenance to get the rig back on the road. It has hard costs (repair parts, repair labor) to you and to the driver (lost mileage and thus lost pay), in addition to the possible cost to your reputation. Showing up late or not at all not only risks your relationship with the client, but may also put their client relationships at risk. Embarrassing a good client by showing up late with their clients’ goods and materials can cost you far more than the price of that run.

What if that downtime makes you late for the next pickup? How far can this cascade across your business and the business of your clients?

Drilling down into good metrics

Here are a few downtime related questions to drill down with:

How many minutes of unplanned downtime do your trucks average per 100000 miles? What’s the average cost to get them back on the road, per incident? Per downtime hour? What would the change in revenue and expenses be if you could cut the average time in half?

If all of your rigs are company-owned, which model and model year are accruing the most downtime? For companies who lease rigs from drivers, which model and model year accrue the most downtime?

Is this downtime consistent across all owners or is there an 80/20 breakdown, where 20% of the drivers are accruing 80% of the downtime? Same 80/20 question for company-owned rigs. What costs are within 10% of the rest of the industry? Which ones aren’t?

Can any of these differences in performance be resolved with references to a better repair shop, a different brand of part / fuel / oil, better record keeping, more frequent maintenance or a different maintenance process?

For the ones that are outside industry norms, what can be done to leverage and improve the ones where you are beating the industry? Is there a legitimate reason for your business to be “below industry standards” in some ways?

Getting to better metrics

Having the answers to your business’ drill-down questions helps you improve consistently on a sustainable basis.

There are a couple of keys to drilling down:

Get organized. Before you can find better metrics inside your good data, your good data needs to be organized.

Take it a bite at a time. It’s easy to do one pushup before you get in the shower. Tomorrow, it’ll be easier to do two. Next week, 10 will seem easy. If you try to take on all of this at once, it will be discouraging because of the size of the task and the complexity of it. Keep it simple so it’s easier to delegate later.

Leave the rabbit chasing for another day. There will be plenty of time to address the things you notice while drilling down into one thing. You will almost certainly notice other things that require attention. Resist the urge to jump on them. Instead, make note of them and then finish the task at hand.

Procrastination is not a good metric. Start today. The more you know, the better prepared you’ll be for radical industry changes, like big rigs without drivers.

Habit forming: What do you do every day?

Trails

Habits – at least the good ones – tend to help us get big things done that we might otherwise never accomplish.

One of the things I do every day is read a page from “The Daily Drucker“.

The Daily Drucker is a 366 page book of one-page-per-day excerpts from Peter Drucker’s books on business, management, entrepreneurism and leadership – all 36 or so of them.

First Things First

Why should you do something like this?

What do you do now?

Having a routine, a ritual or habit (call it what you will) seems like a good way to start the day. Not only does it go well with coffee, but more importantly, it acts as a transition action that signals your mind that it’s time to switch to “work mode” from “whatever you’ve been doing that morning” mode.

This may not seem like a big deal, but think about your current morning routine a little. You get the kids off to school and/or care for your pets, livestock, clean snow and ice off the car and maybe you run into someone on the way to work who is just now learning to drive. You know what I mean…

The point is, while all of these things are going on, you’re really not in a prime mental state for being productive. Your staff isn’t either, if they’re going through this every day. It might take 30 minutes for your mind to settle down and get focused after all that – even if your office is at home.

Over the years, I’ve learned that even a brief minute or two to read and process what Drucker has for me that day (along with some java) are enough to reboot and refocus after the morning’s activities – no matter how hectic, stressful, annoying, cold, wet or pleasant they might have been. A distinct mindset shift point became useful at first and later became a regular part of my day.

You don’t have to use the same technique, but if you check into the habits of highly-accomplished people, you will find that most of them have rituals, habits and the like that they perform on a daily basis.

Many go through their ritual/habit process early in the morning before anyone “wants a piece of them”. Ever notice that no one wants an appointment with you, or a phone call with you at 5am? While this may not be the easiest time of day for you – it’s more than likely going to be a time when no one but you will ask something of you – even the kids.

These people are at least as distracted by travel, family, daily life and their business as you and I, so they use these rituals, habits and so on to keep them on track and doing the right things. It was Drucker (among others) who reminded us that “doing things right isn’t nearly as important as doing the right things”.

Helping your staff with this can produce massive leverage. If 5, 10 or 30 people start their day in a better, more focused mindset – would that help your business?

Beyond the morning

Daily habits go well beyond the morning routine. What else are you doing every day?

Think about the most important work you have to get done each week. Certainly, the “real work” you do – building things, delivering product, installing systems or parts and providing service – are the things that generate value for your customers, but (for example) the marketing of that work product is what allows that work to find a home.

Has your marketing and sales effort established an important enough part of your day that *something* from this part of the business is done every single day?

What other parts of your business merit daily, habitual attention? Are they getting it? Are they truly strategic or are they “what you’ve always done”?

Improvement

Be sure that your work habits include personal development. It doesn’t matter if you’re a butcher, baker or candlestick maker, much less an electrical engineer, diesel mechanic or whatever – your business is changing all the time. Keeping up is essential just to stay in the game. Make “getting ahead” a habit as well.

That’s a little bit of the trick to reading Drucker. Not only is it a transition maker, it refines the strategic and management thought process each day.

What happens if I refuse?

Minnesota Guard removes floodwall, opening Minot bridge

Yesterday, we talked about backups.

Did you do anything about it?

If you didn’t, think about this: What would happen to your business if the hard drive containing your customer list, orders, accounting and communications with customers and vendors failed? What would it cost if you lost that data?

I asked startup CEO Doug Odegaard from Missoula for a quick angle on the cost of not keeping good backups. He said “Add up how much people owe you and how much it cost to build your business and that is how much it is worth.

Pratik, a tech business owner from New Jersey who also owns a restaurant, added this: “and don’t forget the good will and revenue loss until operations can resume again“, then reminded me of his experience with a fire:

Mark, if you recall when we had the fire caused by lightning at the pizzeria, I had the entire customer base with purchasing and sales history synced to my home. Insurance company had the first check cut in 10 days of the claim. This practice is so important. We had our standing corporate catering resume in one week from an alternate commercial kitchen which kept revenue coming in as well as routed our VOIP phone service to my mobile for those customers that tried calling. Made recovery a bit easier.

What’s it worth?

That metric Doug offered merits consideration. If you can’t wrap your head around the cost of starting over, doing inventory from scratch, calling all of your customers (assuming you have their contact information somewhere) and asking them to tell you what they orders, how much people owe you and so on, then ask yourself this:

How would you like to go back to the day you started your business and start over?

Ask your insurance agent how many businesses survive a fire or flood if they don’t have these things taken care of.

Put your mask on first

Fire Smoke IndyW 1428

Professional development mentors remind us that we must take care of ourselves first.

They advise that we improve ourselves mentally, physically and emotionally – in other words, attend first to our overall health – so that we’re better prepared to perform well in our roles at work, at home and in our community.

Personal finance mentors do the same when they remind us to pay ourselves first. If we don’t, something will always come up that consumes those funds, leaving us ill-prepared for our future.

Airline flight attendants ask us to put on our oxygen mask first, then help others sitting near us, because we can’t help our kids or significant others if we’re unable to breathe.

Here’s the technology version of putting your mask on first:

  • Backup your business data.
  • Test your backups regularly to be sure you can restore them.
  • Rotate your backup media off-site so that a theft or on-site fire or water damage don’t render your backups useless at the time you’ll need them most.
  • Document your backup and restore process so that you can restore and get systems running again even though your technology wizard is on a 16 hour flight to Australia.
  • Investigate, plan and implement real-time disaster recovery for your business data, particularly if your business model has little downtime tolerance.

This may seem like a hassle. It may seem like unnecessary overhead. Don’t be tempted by those thoughts.

Fact is, if you put your mask on first, you’ll be in a better position to help your customers solve their problems, grow their business and keep paying you. Why? Because your business will be more resilient.

Look back at the business impacts from an event like Hurricanes Sandy or Katrina. If you were impacted by those storms, how would you service customers who weren’t in the storm track? If you can’t, you know they’re likely to find someone else who can.

Your “Someday” is coming

These kinds of things that happen when your business can’t take a power outage, a hard drive crash or similar disruptions. The question is… when?

No one can point to a date and declare (in their Darth Vader voice) that “Your systems are going to fail on this day.”

What I can guarantee, even without considering Katrina, Sandy, Boardwalk fires, blizzards and ice storms, is that it’ll happen…Someday. These things happen to electronic, mechanical devices. You can either be prepared for them or not.

At least once a week, I hear from someone whose “Someday” has arrived. Three times last month I saw it happen to businesses who didn’t have backups. Like a TV show involving the Kardashians, it’s drama you don’t need.

You might think that hardware failures happen more often to businesses that don’t have backups. The reality is that businesses with good backups simply restore them and keep working, so we don’t hear much about their hardware problems. One result of this is that making backups is ignored until it’s too late.

This puts the security of your clients, your employees, your clients’ employees and the families of all these people at risk.

If your most important database disappeared right now, how would that impact your business? How would you recover? How long would it take to get back to where you are right now, productivity-wise? When did you last test your ability to restore your data from a backup?

If you don’t know the answers, ask your technology people. Don’t do it in an accusing fashion, just explain that you’re concerned about the possibility of hardware failure and natural disasters, so you’d like to know what the backup and recovery plan is and how long the recovery period will take for your business. These are things management should know.

Remember, it’s an asset

While there is no good time for this to happen, history suggests that failures are likely during your busy season, or during financial month / quarter / year end.

The good news is that if you have your backup and restore act together, you might lose some time and productivity when your Someday comes, but you’re far less likely to lose your job or your business.

Backup your data. Test your backups to make sure the restores will work. Schedule these tasks.

Care for your data like an irreplaceable asset.

The most expensive, most stressful thing on your desk

Nothing destroys a work day like distractions.

Ever realize that it’s “suddenly” dinner time and all you remember doing since lunch is reading Facebook?

That’ll show up nicely on a deposit slip. Hello, stress.

Distractions are a product of your work environment, your work habits and how those two things are communicated to others.

Your work environment

What you surround yourself with is critical to your work. Clutter doesn’t help – and I mean clutter of all kinds – physical as well as electronic.

These things are waiting to distract you, so you have to eliminate them from your work environment. Eliminate doesn’t necessarily mean trash.

Electronic clutter is particularly distracting to me, so I’ve surrounded myself with systems that “protect” me from it. Instapaper helps me get rid of open browser tabs that I was saving to read. Things, a GTD-oriented system, helps me store ideas and to-do items on notes, in my head, in emails, etc.

Because I know they’re not “lost”, they don’t clutter up my browser, mind, desk or subconscious. Don’t take the last one lightly. Worrying about forgetting something is very distracting.

Random phone calls are also a form of clutter, so I only take calls by appointment (with very few exceptions). I know – you think you can’t do this without losing sales. I thought the same thing.

My tools may not fit you. Use what fits. Discard what doesn’t.

Your work habits

Last night at a local restaurant, I spoke with one of my Scouts who’s home from college for the summer. He’s in amazing physical condition and has been for years, despite being a skinny little guy years ago. He says people often say they want to “look like him”, but they don’t want to do the work he did to get that way.

He tells them it’s as easy as working out every day, which may be hard to do until it becomes a piece of your life you aren’t willing to give up for anyone – even your immediate family. That hour a day that no one (or nothing) can take from you for any reason isn’t neglect. It’s building a better you so you can be better for them.

Habits are just as critical at work.

One of my mentors would growl “Just do more of what matters. Make more time by doing less of what doesn’t.” While he’s right and yes, it’s common sense, most people need help doing it.

Consider the three most important tasks you need to finish next week. Do you have to think about it to remember them? That’s not good.

I use my calendar and Things to tell me those three tasks. Neither tool forgets. I review Things every weekend and schedule work tasks on my calendar as if they were meetings, speaking gigs or other commitments.

In an age where you can watch TV on your phone and people can contact you almost anywhere, you have to take managing yourself seriously. Scheduling things (even blog writing) in my calendar is how I make sure that the important things get done – including family stuff and paying bills.

A full calendar makes it easy to say no to less important things you don’t have time for. If the important things like work and family are booked first, stuff that doesn’t matter enough has no place to go.

How those two are communicated to others

People appreciate when you don’t immediately answer your phone, but always return their call.

People appreciate when you don’t immediately reply to an email, but always reply.

People appreciate it when you don’t miss a ball game, a play, a concert or a night out, even if you have to work afterward.

When people see you glance at and then ignore a vibrating phone while in a meeting with them, they’ll ask about it the first time. When you tell them that you aren’t answering because you booked this time solely to give them 100% of your attention, your previously “unreasonable” call policy suddenly becomes reasonable.

If you work (or play) with focused attention, people will notice and appreciate it.

You mentioned stress. What about that?

How much stress would you have if you didn’t forget important things and routinely completed them?

 

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Disclosure: I am blogging on behalf of Visa Business and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business. The Page serves as a space where small business owners can access educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently. Every month, the Page will introduce a new theme that will focus on a topic important to a small business owner’s success. For additional tips and advice, and information about Visa’s small business solutions, follow @VisaSmallBiz and visit http://visa.com/business.

What are your customers doing online?

I mentioned the Meeker internet / technology trends report last week on Facebook, but I thought I should summarize a few important nuggets from it for small businesses, particularly small software businesses.

  • 30 percent growth in mobile users in the last year.
  • 50% growth in bandwidth use by mobile devices. Specifically, 15% of all internet bandwidth use is mobile, up from 10% last year.
  • Tablet use continues to expand quickly. Apple sold more iPads (140k) than iPhones (60k) last year.
  • More tablets shipped in the last quarter of 2012 than desktops, despite being on the market only 3 years.
  • Photo sharing is on pace to double since last year. Last year, about 375MM photos were shared per day. This year, users have already shared more than 500MM photos per day on average.
  • Wearable device usage is doubling every month so far this year.
  • More people access the internet via mobile device in China than via desktop – in a population of over 560 million internet users.
  • 45% of Groupon transactions are now online. 2 years ago that number was 15%.

I recommend you check out the whole slideshow, even if you aren’t in the technology business. This stuff affects almost everyone in almost every business.

Can you find the quality in this kitchen? It isn’t the bacon.

Baconfest Chicago Chef Rose
Photo credit: Chicago Serious Eats

People send me bacon links and/or bacon photos on Facebook almost every day.

I’m not sure what started it. You’d think they see me around town with a fistful of bacon all the time (they don’t, I rarely have any) but it’s entertaining nonetheless.

Today, I found my own link about Baconfest Chicago and it’s all business (OK, there is a little bit of bacon too).

Check out the slideshow illustrating how Chef Rose cooks his Baconfest winning dish and look for ways he’s managing the quality of the food his kitchen produces.

Hint: One of my favorite quotes is from Chef Gordon Ramsey: “Without a leader, there are no standards. Without standards, there is no consistency.”

Where do you see Chef Rose managing quality?

Does packing a suitcase make you more productive?

Think about the process you go through when preparing for an important business trip.

You make a todo list so you’re sure you get all the bases covered.

You think of every scenario that might come up at home while you are gone and every scenario that might up come while out of town.

Based on all the conditions and situations you can think of, you pack/prep/research accordingly and give instructions to the pet/house sitter.

Do it every day

Do you also use that same process to prepare for the next week of work? For the next trade show? For the next sales meeting? For your next customer appointment? For your next deployment?

Even though this kind of preparation works well for a big business trip, it’s unusual to find businesses doing it on a day by day basis. If you plan your work weekly, you may not need to do it each day – but that depends on the nature of the work you do, as well as the work you delegate.

Harvey Mackay says “dig your well before you’re thirsty” – which most of us tend to do before going out of town. So why would we do so little of this when we’re in the environment that we’ve (presumably) optimized to produce our best work? Yes, I mean your office, shop or whatever place you work in on a regular basis.

The earlier, the better

Recently my wife (who teaches junior high kids) and I were talking about our area’s proposed use of tablets in school. Personal electronics use in schools is all over the place policy-wise, depending on the school system. Unfortunately, discussions about electronics in school tend to focus on what can go wrong, perhaps due to the political pressures schools face.

Because junior high kids are at a highly impressionable age, it’s the perfect time to teach productive, socially-acceptable use of mobile devices. It’s also an ideal time to teach critically important work habits that help improve productivity, focus, accountability and follow up skills they’ll need to succeed in high school. If mastered before leaving junior high, they’ll help students meet goals they haven’t even discovered in high school and beyond. While it isn’t too late to learn these habits in high school, the earlier they’re learned and used, the faster they’ll benefit the student.

The value of “The earlier the better” works the same way for your company.

Do you also encourage your staff to do the “before packing a suitcase” kind of prep? When improving your own work processes, include your staff early. The habits you pass along will help your business in the short run and grow your staff in the long run. Finally, don’t forget to ask them about their best work habits – you might learn about the best one yet.

If you aren’t doing this, it can put your staff and your customers at some level of risk. Maybe not the risk of failure, but certainly you risk achieving “average industry performance”.

What’s wrong with average industry performance?

How does this sound: “We deliver average products and services in an average time frame at average prices.” That just screams “you gotta buy from us”, doesn’t it?

This is one reason the term “best practices” sets off alarm bells for me. Industry organizations publish their members’ “best practices”, but really – these practices tend to be the common practices of the average industry member. Why? The organization assembled the list of tactics and strategies from its membership, or in best case, from those considered to be leading that industry. Few recognize the practices that the highest performing organizations have adopted as their advantage until they become widespread – ie: average.

Below average organizations who are trying to improve work to adopt today’s best practices of their industry. Industry leaders have already created (or discovered) what will be tomorrow’s best practices, which will soon be the norm. That is, when everyone else figures out what the new norm is. By then, the industry leader has raised their game.

Everyday habits like your “before packing a suitcase” ritual are what set industry leaders apart.

PS: Here’s the story of the concrete suitcases in the photo.

Business insight from the back of a shampoo bottle


Creative Commons License photo credit: thejbird

When are you going to get serious about your business?

Identify one thing you can do today to attract a new customer, educate a prospect or answer a common question.

Do it again tomorrow. If daily is just too much (seriously?), can you do it every couple of days, or at least once a week?

Once the habit is cemented in place, don’t stop. Ever.

Now find another rough edge in your business. Repeat the same process.

Like the shampoo bottle says: “Wash, rinse, repeat.”