Relentless Enablement & Implementation
How to move the needle?
08 Jun 2020
Companies have long struggled to translate strategic mandates of the board to actual delivery on the ground. Even after defining what seems like clear metrics and milestones, ownership often remains diffused and the desired results are hard to come by within the stipulated timeframe. This is especially relevant in today’s scenario wherein businesses are a part of larger ecosystems and value-chains comprising multiple stakeholders. For example:
- An apparel manufacturer lists itself on two online marketplaces. While sales are growing in one of the marketplaces, there is minimal offtake on the other platform despite heavy spends on promotions
- A large consumer goods manufacturer launches its in-house eCommerce channel to complement its strong reputation in the offline market. However, even after pouring millions of dollars, the company’s Ecommerce channel does not take off
- A FoodTech player has an ‘urgent need’ to decrease customer acquisition cost (CAC) without hampering the topline. However, sales continue to be very sensitive to discounts and promotions offered
The above situations reflect common problems which growing businesses struggle with even after devoting significant resources to put their strategy into action. Linking strategy to financial and operational metrics is a necessary, but not sufficient condition. There are multiple pitfalls in the journey from the boardroom to the marketplace, ranging from employees losing sight of the core strategic issue to a narrow and often superficial focus on the outcome. Based on our work across a wide spectrum of clients and business problems at Praxis, we have identified five principles that successful companies use to metricize their strategic goals into specific implementation plans that win in the marketplace:
- Clearly outlining the strategic, financial and operational KPIs with a detailed understanding of their interlinkages: A leading online fashion marketplace built a metric-tree linking its targeted sales numbers to leads generated across multiple platforms thereby improving the efficiency of ad spend and directing it to the most effective platforms
- Walking the tightrope between stability and flexibility: The metrics need to be flexible enough to evolve as the business or initiative matures over time, and at the same time, consistent and stable to enable measurement against agreed standards of all stakeholders
- Sophisticated and robust yet not complex: The best strategy teams ensure that sophistication and robustness of metrics do not create complexity - a metric tree may need to incorporate N underlying factors, but all stakeholders intuitively understand the role of each of the factors in the overall metric-tree
- Rigorous, systematic and internally consistent KPI cascade: The overall strategic KPIs need to be deconstructed into its constituents, and each team and individual knows exactly what they are responsible for. A leading real-estate tech player broke down its aggressive customer acquisition targets across various levels of employees, incorporating productivity differences and geographical peculiarities
- Consistent review and refinement: As the environment changes, the benchmarks/targets and sometimes the metrics themselves need to evolve. For example, a rigid and dogmatic growth rate assumption for a fast-changing business is a recipe for failure
In our work with clients, we have come across a wide array of initiatives across customer, product, operational and people dimensions. We have, in addition to the above principles, identified six characteristics of a best-in-class metric movement playbook:
- A mix of lead and lag indicators: Typically, the strategic goals are outcomes or lag indicators. Unless the metric playbook has a good mix of lead or input metrics, it becomes too late by the time the organization recognizes the need for course correction. Lead indicators act as the management’s ‘ears close to the ground’ and provide early warning signals. For example, to monitor progress against market share (a typical lag indicator), lead indicators such as inquiries, customer pitches, leads, demos, registrations, etc. need to be part of the scorecard.
- Quantitative measurement reinforced through qualitative assessments: For example, in addition to customer acquisition data, it would be very valuable to conduct in-depth customer interviews to help understand the ‘why’ in addition to simply knowing the ‘what’.
- L3 principle: A strategic initiative should have at least three levels of drill-down below the headline metric, so that any adverse movement in the headline metric can be easily explained.
- Do not boil the ocean: With the advent of technology, it is very tempting to publish reams of data, real-time, however, managers should know what they are not required to measure! This needs to be a consistent refrain from the corner office to the teams fighting it out in the trenches so that the entire organization stays focused on key issues.
- Broaden the deliverables: Managers need to be rewarded for meeting goals on multiple metrics of a strategy rather than just one. This ensures sustainable change and discourages ‘narrow-minded’ thinking from blind pursuit of a single metric.
- Test and fail rapidly: The best metric movement strategies are those which are ‘tested rapidly’ to see whether they work rather, and reworking or dropping what doesn’t, rather than ‘wait for the final strategy to be ready’. Pilot launches, prototypes, minimum viable products, etc. with clear stop-loss thresholds are excellent tools to ensure early course correction and reduce wasteful use of resources.
What gets measured, gets done. What gets measured well, gets done well!
Authored by (at the time of writing):
Shishir Mankad, Leader, Relentless Enablement and Implementation Practice
Sushman Das, Member, Relentless Enablement and Implementation Practice
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