I was contemplating numbers whilst walking to work from a breakfast meeting on a cold, crisp morning. The meeting was about a board session one of my clients is having on Friday, and about how well we focus on relevant KPIs. Metrics are everything in a business: they can be used to motivate, to inspire, identify where help is needed, and make decisions.
Assigning the right measurements to the right people is critical. If you’ve read the excellent Scaling Up by Verne Harnish, you’ll know about the idea of turning the P&L clockwise by 90° and assigning accountabilities to specific people within an org chart. Once you’ve done that it’s easier to work out what KPIs might be appropriate (as well as of course working out who should be accountable – as opposed to having responsibility – for specific aspects of the business’s profitability) for each person.
Measurement is therefore critical in order to see how to drive results. And ultimately results are of course what counts.
I put in place board processes and chair boards in agencies of all kinds: marketing, digital, CRO/PPC, web design, content and innovation agencies. The Senior Management Teams are the ones who do all the work. I am simply responsible for making sure they have the tools to set their goals and turn them into reality. I don’t have KPIs myself, other than being there when I promise to be and putting into place then running effective board processes.
But that doesn’t mean I don’t have numbers I can – and should – be evaluated on. I thought it might be interesting to share them:
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Agency,3-year goal,2016 vs. 2015,Current Financial Year*
A,Sale value £12m,1.55 x Revenue,1.6 x Revenue (1.41 x EBIT)
B,Sale value £3m,1.32 x Revenue,1.68 x Revenue
C,Sale value £10m,1.5 x Revenue,3.13 x Revenue
D,Sale value £2m,2.02 x Revenue,1.39 x Revenue (2.35 x EBIT)
E,Sale value £7m,5 x EBIT,1.33 x Revenue (4.9 x EBIT)
Agency F is brand new for me, so nothing to report – though the founder is a ‘no limits’ thinker with a £20m valuation target. And Agency G, based in the US, hasn’t made the table yet, because all I’ve done so far is help the founder define the agency’s market position, competitive differentiation, strategy and Year 1 tasks. We’ve set a target of £1m profit in three years (no point in setting something that doesn’t demand radical thinking!), but they haven’t really started yet.
That said, the founder did write an astonishing and unsolicited review of the process we went through on Medium.com. Wouldn’t it be nice if all clients surprised us like that?
It’s winter, yet walking through London I had a spring in my step. Numbers mean something. Results mean more. But enjoying going in to work? Priceless.