Monday, September 27, 2010

KPIs - a really powerful tool

"Not everything that can be counted counts, and not everything that counts can be counted."
Albert Einstein, (attributed)
US (German-born) physicist (1879 - 1955)

Albert EinsteinImage via Wikipedia

Deciding on a set of KPIs is one of the most important things we normally do when starting to work to build the business with a founding team.
What to measure? how frequently? what to publish? and to whom? are all good questions to be thought about.

Key Performance Indicators are a fundamental tool, the dashboard by which the company is monitored, guided, controlled and managed. It is surprising how frequently this really simple device is not properly used.

In many traditional businesses, the monthly management accounts serve as the barometer of corporate health and comparisons to budget help to drive actions by the philosophy of 'management by exception'. This approach is completely out-dated and inadequate for fast moving web businesses capable of generating vast amounts of meaningful data in real time.

Distilling all this data down to the key numbers and tracking them against expectations is where the effort needs to go in setting up the set of KPIs that are going to drive the business.

No board should burden the management team with data requirements beyond those which are needed to run and plan the business, so an agreement as to the KPI set - should be sought as soon as possible.

Make sure that everyone in the senior team 'owns' one of the KPIs.  The big goals of the business which are agreed by the board should be represented at the targets against which the KPIs are measured.

I like to get an email containing KPIs at least once a week (preferably auto generated, untouched by human hand) and in some cases every day! I find this no burden at all - its easy enough to glance at the headline (in the subject line) and delete.

Some teams prefer to give non-execs access to the analytics or admin dashboards inviting them to look up the numbers when it suits.
For me this misses a very important point. That of being 'top of mind' for your board. Most NEDs sit on multiple boards and if you want them to think about your business and provide meaningful, helpful advice, contacts etc then its best that you keep reminding them of your existence.

You'd be amazed at how efficient your board meetings can become when everyone is up to date with the performance, has lived through the month's ups and downs through the KPIs and has a good idea of where the issues lie.
You will spend less time reviewing the month past and more time discussing the issues and planning the future.

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Thursday, September 23, 2010

Am I just naive? Or is this type of stuff just 'par for the course'?

One of the things I really enjoy about the early stage technology scene is its collaborative nature. Companies routinely compete and co-operate and "frenemies" co-exist pretty happily.
Lots of people give freely of their time and expertise understanding that we are all part of a larger eco-system with many mutual dependencies.
There is a time to compete really strongly - and this is normally done by being faster and smarter.

I was shocked recently by the behaviour of one of MyBuilder's competitors - namely MyHammer.
This German company, with operations now in the UK has behaved in a way that is frankly very difficult to understand or justify.
[I need to declare a direct interest in this matter as a board member and investor in MyBuilder]
Firstly, MyHammer registered the MyBuilder trademark in the UK - back in June 2008, AFTER MyBuilder had launched their site in May 2008. Clearly this was an 'own goal' on MyBuilder's part and is a lesson to all startups to register your brand as soon as possible.

Then,recently, MyHammer initiated a PPC campaign / new affiliate site, my_builder.com (ie my underscore builder),  just when MyBuilder's TV advertising campaign launched. See screen grabs below - 

Following a strenuous complaint by MyBuilder, MyHammer agreed to take down the offending site - no doubt having hoovered up a decent number of potential customers. I would also hope that they would hand back to MyBuilder their brand registration and URL - the goodwill in which has been built by MyBuilder at considerable cost and over a number of years.

I'm interested in what people think about such practices and how widespread they are. Certainly there is no board that I sit on which would sanction such an approach to competition.

This is the TV commercial which is helping to build the MyBuilder brand:

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