Goals, Metrics And The Monkey’s Paw

Most people set terrible goals.
Sharp entrepreneurs set clear goals, which are easy to measure and genuinely contribute to their vision.
Frustrated entrepreneurs talk about their dreams and set micro targets for their days, but these never turn into real progress.

There are five main reasons for this: 

·      The goal doesn’t address what they really care about

·      The goal is vague

·      There’s never a good day to make a start

·      The goal creates unhelpful behaviour or bad side-effects

·      The goal is boring

The danger comes from setting goals that sound good at first, but are likely to backfire or slip into irrelevance.
Let’s look at some examples:

“I want us to really do social media well. Everyone must post five tweets per week”

·      What does “well” look like?

·      Does “well” mean lots of followers, high quality content, high engagement, engagement from influential people, or just aesthetically pleasing?

·      Would it be easiest to buy followers?

·      Is forcing your staff to tweet the best way of creating this change?

·      What should staff be posting about?

·      How will you know it’s working?

“Our goal is to do $1m in turnover next year”

·      How much will you get to keep?

·      What’s your margin of safety?

·      What sort of sales do you want to make?

·      Would you prefer higher turnover or higher profit?

·      Does the team need to change the projects they accept in order to hit this target?

·      Does the team understand how they’re tracking?

·      Did you pick $1m just because it sounds cool?

“Let’s aim to subsidise our overheads through a new social enterprise”

·      Will this genuinely make your team happy?

·      Can you recruit an excellent manager who’s motivated by covering your overhead?

·      Will the subsidisation drain cash and prevent the new enterprise from growing?

·      Would it be easier to just focus on reducing the overheads?

·      Do you actually want two new things; one cash cow and one impact project?

“My goal is to really build our Instagram page”

·      What does “build” mean to you?

·      Does this translate into sales and margins?

·      Is it more important to build a genuine following or to be seen as desirable?

·      How will you know it’s working?

·      Are your actual customers the same people as your Instagram audience?

·      Do you want more engagement or more customers?

In each of these “hypotheticals” the entrepreneur had a good dream, but struggled to pass this on to their team, let alone change their team’s behaviour.
Firstly, their goal didn’t have a well-chosen target.
Secondly, they didn’t have a meaningful metric.
Thirdly, their goal didn’t link to a reward or incentive.

What Do I Honestly Care About?
If you’re not honest with yourself about what you want, there’s a high chance that you end up feeling unfulfilled, even if the business succeeds.

It could be that you want some sort of improved functionality for your business, allowing you to make a better product or deliver a better service, or to scale up your operations.

It could be the status of your work.
Some view status like a ladder, and want to position themselves higher than their peers and competitors, and often like rankings and awards.
Some view status by proximity, how close they are to other high-status people or successful brands, and want association and collaboration.

It could be the stories you want to tell.
You might want to tell success stories or earn credibility with your audience, more than you want the increase in income.
A useful question here is “If I could have the underlying thing or the story, which would I choose?”.

It might not feel culturally acceptable to say these out loud, but they definitely motivate people.
A surprising number of founders measure success by exposure, acclaim and connections, rather than by margin or impact.
What are the means and what are the ends?
Are you building the company to become famous, or trying to attract attention to build the company?
What are you happy to compromise on?

Instrumental vs Ultimate
Aristotle defined two types of goods:
1. Instrumental goods, which help you obtain something else.
2. Ultimate goods, which are the final thing you’re actually after.
Money is an instrumental good, whereas a big family holiday might be an ultimate good.
A university degree is often an instrumental good, whereas your dream job might be an ultimate good.

The same terminology applies to goalsetting: instrumental goals and ultimate goals.
These are worth separating, since instrumental goals are likely to be shorter term, but also less emotionally motivating.
It also gives clarity to why you want what you want, as well as which goals are open for negotiation.
e.g. you might be open to growing on a range of platforms, but resolute on where you want to open your office.
We never want to change someone’s mind about their ultimate goals, but sometimes it’s helpful to re-evaluate the instrumental goals – there might be quicker ways to get what you really want.

The Simpsons, 20th Century Fox

Well-Chosen Targets
Perhaps you’ve heard of a concept called “The Monkey’s Paw” – it’s like a magic lamp that grants wishes, but each wish brings unintended side effects.
You might have seen it The Simpsons Treehouse of Horror II – Homer buys one from a mysterious market.
The wisher asks for something, and while the wish is granted, it does not bring fulfillment.
For example, you ask to become 6’3”, so your forehead becomes 5 inches taller.
Or you ask for $10 million, but everyone else in the world also receives $20 million, making you comparatively poorer.
In The Simpsons episode, Lisa wishes for world peace, but this leads to aliens taking over the planet.
The point of the Monkey’s Paw is that you’re given what you literally asked for, but not granted your underlying desire. 

I want…
A team to help me run the business
Granted.
You now spend most of your time in meetings, 1-1s, recruitment, performance management, culture setting, culture fixing, training and resolving conflict.

I want…
30,000 followers on our social platforms
Granted.
30,000 people follow your pages, but only 2-3 engage with your content.
OR, 30,000 people follow you, but 5,000 are openly hostile towards your content.

I want…
To make our operations 3x bigger
Granted.
You now have a bigger business, but literally everything you do has to change, including payroll, recruitment, meetings, culture, sales, advertising, HR, legals… and you need to move office.

I want…
Investment
Granted.
You now need to manage your investors’ expectations, pay interest or dividends, pull them into major decisions, and let them influence your business.

I want…
More members/users to sign up
Granted.
10,000 more members sign up… for 1 month each.

I want…
Access to capital
Granted.
You have access to capital, but don’t feel confident to deploy that capital.

I want…
Recognition and appreciation for my contributions to the industry
Granted.
You win awards and are appreciated, but not considered for the best work and contracts.

The Simpsons, 20th Century Fox

“Wait, no, that’s not what I want…”
If The Monkey’s Paw gave you literally what you asked for, would it make you happy?
Or is there a deeper need that should be the target?
There are some recurring themes that come up:

·      More vs Better

·      Bigger vs Easier

·      Visible vs Appreciated

·      Awards vs Assets

·      Money vs Flexibility

·      Fame vs Credibility

·      A Large Employer vs An Employer Of Choice

·      What my competitors are doing vs What I know I’m capable of doing

You’ll be constantly making choices that send you closer to one than the other.
Perhaps what you really want is financial stability, meaning a constant level of cash in the bank and a higher surplus.
Perhaps what you really want is good content that resonates with your customers, leading to increased sales and an improved reputation within your industry.
Perhaps what you really want is to kill two birds, and are happy to use two stones if that gets the job done. 

What Gets Measured Gets Done
Sean Covey said “People play differently when they’re keeping score.”
We have a natural tendency to improve the numbers that we understand.
Look at Fitbit; as soon as people could visualise their activity (and compare it to the target of 10,000 steps), they started making positive changes to their routines.
When they got into competitions with friends, they ramped up their steps even further.

When we have a way of measuring our performance, we start inventing ways to make those numbers nicer.
This power can be helpful or destructive, so we want to pick a metric that reflects our underlying goal.
Is your step count the right thing to track?
Or should it be how far you can run?
Or should it be your cholesterol readings?

Choosing the wrong metric leads to bad decisions.
Dave Trott explained why we shouldn’t pay for creative work by the hour:
“Counting has taken over from what counts.
And we’ve forgotten the first rule of advertising.
It doesn’t matter what went into it.
What matters is what people get out of it.
Imagine if we judged everything else this way.
Films: ‘No, I don’t want to see that film, it’s only 97 minutes long.
This one is 122 minutes long, that’s a much better film.’
Restaurants: ‘Waiter, can I see a menu with information next to each dish about
how long it took the farmer to grow the vegetables, and what the chef’s hourly rate is?’
Art: ‘I don’t want to go to the Louvre, the Mona Lisa is only 18 inches square.
They’ve got much bigger paintings hanging on the railings outside Hyde Park, let’s go there.’

If we’re looking for a way to judge value for money, we’re using the wrong criteria.”

It’s easy to see this flaw in other people’s industries, but are you making the same mistakes in your business?
Are you measuring the wrong things?

Google Analytics is a great example of metrics without meaning.
Most entrepreneurs have a Google Analytics dashboard, but few know what meaningful insights they can derive from all of those numbers.

·      What’s considered good?

·      Are the numbers going up or down?

·      Why are they going up or down?

·      Is there a quiet trend that we can’t see day-to-day?

You probably have the ability to deeply understand and track three metrics, which would mean not worrying too much about the other 20-30 indicators.
Maybe it’s page views, maybe it’s acquisition, maybe it’s sales, maybe it’s time on site, maybe it’s geography.
Do you want lots of visitors from around the world?
Or do you want to create a beautiful online experience for your customers in your city?
Both are good targets, but they have completely different strategies and completely different metrics.
The term “Clickbait” is perfect; you can learn how to trick people into entering your domain, but they’ll quickly work out that you can’t give them what they really want.
Which metrics will you mention to the Monkey’s Paw?

Leading and Lagging Indicators
These measurements can be split into two main categories, and they behave quite differently; leading and lagging indicators.
Leading indicators refer to you doing the work, and lagging indicators refer to the end results from that work.
e.g. for a teenager learning to drive, their lead indicator would be “number of hours spent driving” and their lag indicator would be “passing their driving exam”.
They care about the end result, but the lead indicator is the best predictor of how close they are to achieving their goal.

For a website, the leading indicator might be “number of blogs published this week”, and the lagging indicator might be “web traffic this week” or “backlinks to our blog posts”.
Backlinks and visitors are nice, but not in your control – you’re the boss of how much you publish and whether or not it’s actually interesting.

Sean Covey and Chris McChesney wrote in the book The Four Disciplines of Execution:
“Most company indicators are lagging measures because they indicate the company’s previous performance. Leading indicators, on the other hand, measure behaviors or factors that can predict lagging indicator performance and which the company’s employees can impact directly.”

“A good lead measure has two basic characteristics: It’s predictive of achieving the goal and it can be influenced by the team members.”

i.e. it is relevant to your success, and it’s doable for your team.
These might be things like:

·      Calls made

·      Events attended

·      Work published

·      Staff training sessions

·      Time spent designing new products 

What lead and lag measures make the most sense for your goals? 

The Whirlwind

Another useful concept from The Four Disciplines of Execution is “The Whirlwind”:
“The trick to execution and strategy is not about executing on the goal, it’s about executing on the goal in the middle of a 100pmh whirlwind.”

“If you and your team operate solely from within the whirlwind, you won’t progress—all your energy is spent just trying to stay upright in the wind.”

And later:
“To achieve a goal you have never achieved before, you must start doing things you have never done before.”

The Whirlwind is a helpful analogy because it describes what prevents us from doing the meaningful work – the busy-ness of running a business.
It’s unlikely that we’re delaying the work while we’re doing nothing, but rather are busy serving customers, cleaning up, attending meetings, trying to reach deadlines, all in an attempt to stay standing up in the wind.
These lead measures are only going to happen if you deliberately carve out time for them, and usually in times when you have enough energy to do the mental and emotional labour.
If you’re not proactively making space, all of your good intentions are unlikely to last more than six weeks.

Clever Incentives
Incentives drive most of our behaviour.
Some incentives are extrinsic, like a cash bonus for making a certain amount of sales.
Some incentives are intrinsic, like cleaning up a beach for the feeling of satisfaction.
Your goal might require unpleasant tasks – what incentive could make these more appealing?
Your goal might be self-rewarding, like how clean eating makes you feel better, or how an active online community becomes a joy to manage – what incentive could get the snowball rolling downhill?

Gimmicks are often useful – if it’s stupid and it works, it isn’t stupid.
The trick is in designing a gimmick that pushes you towards your goal, and which uses a metric that shows your progress.
A Fitbit buzzing at 10,000 steps is a gimmick.
Fun runs are a gimmick.
Sales contests are a gimmick.
Follower counts are a gimmick.

Just keep The Cobra Effect in mind – named after the bounty on snakes in India.
The British government offered cash for dead cobras, but this led to locals breeding more snakes to earn more money.
When this was discovered and discontinued, people let their snakes go free, and the snake infestation was worse than ever before.
Better run your gimmick past the Monkey’s Paw – could your wish lead to a nasty outcome?

Choose The Right Goal And The Teacher Will Appear
Well-named goals are much easier to achieve than broad sweeping statements.
A well named goal gives you a target to aim for, one that genuinely pushes you towards your dream.
A good target lets you see tangible improvements, and helps you identify the ways in which you’re falling short.
By identifying the areas that are short, you can find specialist advisors – especially online – who can teach you how to improve each of these areas.

If your Google Analytics tells you that your images are too large and are slowing down your site, you can learn how to compress them and re-upload them in a few minutes.
That change could see your traffic explode, all because you correctly identified the specific issue and sought out the right advice.
On the other hand, it might not make much of a difference and you need to get advice on content creation.
Both scenarios are useful, because your metrics (watching the change in traffic) guided you to the teacher you needed.

By the end of this process, you should have:

·      Some well-framed goals you genuinely care about

·      Lead measures and lag measures for each goal

·      A plan for getting things done in the whirlwind

·      Some incentives that will keep you going

A good starting point is to take your broader dreams and break them into 50 smaller components, each of which you can begin in a normal morning or afternoon.
Then give each of them a metric, and run them past The Monkey’s Paw.
Do they still make you happy?