How is your business doing?
Current results are trailing indicators, focus on what’s going to happen next.
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It’s easy to focus on results. We focus on new revenue, or new products, or even new financing because they are tangible achievements. Our goals are also based on results and we aim for revenue targets, new product launches and the next fundraise.
These are good goals! As a business, producing results is what matters and it should be your focus. If you don’t produce results, then you don’t have a business.
However, all of our results are things that happened in the past. The revenue we achieved is something that is already done, money already collected. The products we launched are already live. The money raised is already in the bank.
These are similar to your finishing time when running a race. Once the race is over, there is nothing you can do to improve the time. We can’t affect the past.
Accordingly, when someone asks “how is the business doing?” the correct answer is not the results! Or, at least, the results are an incomplete answer. What really matters is the results we might expect in the future. If we made $10M last year that is “how we were”, whereas “how we are” depends on whether we’ll make more or less than $10M next year.
Another way to think about this is that you, as a leader, take actions. Those actions have impacts and, hopefully, those impacts produce results. For example, you might hire more salespeople (action) which means you can pursue more deals (impact) and in doing so produce more revenue (result).
If you want to know what results you can expect in the future, you should look at the impacts you are having right now.
There are a surprising number of businesses where the actions taken by the leadership have no impact, and yet the business continues to produce results. These are extremely strong business models with strong product/market fit, and as a result the business can sustain itself in spite of (not because of) the leadership’s actions. Monopolies are a great example.
But that’s rare. For most of us, we need to make an impact to produce results. Keeping a close eye on the impact of the actions we take is important to ensure those results continue to happen, because if we wait for the results themselves it might be too late to do anything about it.
How is your business doing? The answer is not where you’ve been, but where the impact of your actions will take you.
For more on Analytics and Goal Setting, see:
Sean: How about a follow on this with some ways to measure/model the future?