What you measure gets done. This is a known principle in life, and in business in particular. Conversely, what you don’t measure you will not achieve. That’s true for your fitness training, as well as your weight loss program. It’s equally true for your business goals, including financial targets, market share, and product quality.
But what about success? How do you measure your success, or your company’s success? Should you even measure it at all?
What is Success?
We all aspire to be successful. Both in our personal lives and our professional careers. Companies strive to be successful. We often use the term “successful companies”, and “successful leaders”. And yet, only few of us have a clear definition of what is success for us.
There is a good reason why we desire to be successful. It has a significant affect on our self-esteem and confidence. Also, success is a source of pride and satisfaction. It can raise our social status, and provide us with great career opportunities.
Furthermore, almost every company has clear goals and objectives. Some also have a company vision. And yet, few companies have a clear definition of what is success.
I coach and advise entrepreneurs, CEOs, and startup companies. In my introduction meetings with them, I often ask them what will they consider as a success for them. In most cases, they don’t have a clear definition of success. What it would look like, and how will they know they have achieved it. Also, it’s not unusual to find management teams in which each person has a different idea of what will be a success for them.
Define Your Own Success
So, if success is so important to us, and we want to achieve it, we need to measure it. But how?
First, we need to define what is success for us. I’ve written about this in one of my previous posts. This is probably the most important step. Too many people are using other people’s definitions of success instead of their own. As the philosopher Alain de Botton argues, we are greatly influenced by others, including our parents, TV, marketing messages, and society. In effect we are trying to live someone else’s life instead of our own. Consequently, many people do not truly fullfil their goals. As a result they are unhappy.
The same is true for companies. For example, if you are a startup incubator, what will you consider as a success? Would it be the number of your startups that went on to become viable companies? How much money your startups raised? Or, how many of your startups had an “exit” of some kind?
And, if you’re a founding team of a startup, how would you define success? An exit? What kind of an exit? Perhaps making a difference or an impact in the world? How would you measure it?
What if you’re a public company, what is your definition of success? Profits? Stock price? Number of satisfied customers? Number of satisfied employees? Brand recognition?
Therefore, you must take the time to think and clearly define what is your success. Write it down. If you’re a startup team, or a company’s leadership team, share it with all the key stakeholders. Everyone in your company should have a common definition of success. That creates a shared purpose and focus.
The next step is to define success metrics. Actual tangible metrics that you can measure and track. This is critical. If you can’t measure it, it will not happen. Plain and simple. Measuring your success will ensure that you are doing what is required to achieve it. It enables you to decide what to do, and what not to do. In addition, it gives you a tool that you can use to set priorities and create focus.
After we have clear and simple metrics to our success, we can start tracking and reviewing them as often as needed. For companies I think that once a year is the minimum. It really depends on the metrics you’ve defined, and consequently, the appropriate sampling rate. You want to review meaningful results that can tell you what is your trend. Are you on track to achieve your success goal, or do you need to make a change.
For example, one quarter of lower profits could simply be a seasonal effect. That does not indicate a strategic problem that might affect your long-term success goal. While a whole year of consistent reduction in profits may signal that you must make a change.
For startups, I recommend defining early indicators of success. Time is of the essence, and resources are scarce. Hence, you can’t afford to miss a critical mistake or “pivot”. If you find out too late that there is a need to change your business model, you may not be able to correct it. You will simply run out of money and have to shut down your company.
For example, if you define success as an M&A exit of more than $50M. That is, to be acquired by a large company in your industry for an amount greater than $50M. Then you might want to define an early success indicator, such as establishing some formal relationship with one of your target acquirers. This could be a development of a joint solution for your market. Another example is a joint sales activity, OEM agreement, etc.
The same applies for individuals, as well as small businesses. I think that we all should take the time, at least once a year, to reflect and review our success metrics. We need to verify that our metrics are still aligned with our definition of success, and that we’re on track to achieve it. If we find out that we are off track, we should not be afraid to make the necessary changes. We have only one life, we must not waste it.
In conclusion, success is too important to be left to chance. To achieve our success we must clearly define it, measure and track it. I wish you all great success.