CEO Notebook: Metrics 101

Founders often toss out various metrics in their employee updates and investor meetings with casual ease.  However, too often those metrics do not get achieved and the business stumbles. Below are some basic guidelines for venture CEOs to develop, communicate, and operationalize metrics in order to effectively build the business.

What is a metric?

Most of the CEOs I have worked with think about a metric as just a number. For example, the metric might be a revenue goal or a number of new accounts or total active customers. But setting the metric with just a number is an incomplete metric. For a metric to be complete it must have five elements:

  1. a number
  2. a due date (“December 30”);
  3. a checkpoint (“$150,000 booked by November 15”);
  4. a party responsible (“Donn, SVP/National Sales”);
  5. the resources required (“no additional headcount”).

How to measure metrics?

What is the right time period to measure the metric? In any venture or growth business, it is vital to measure the metrics and collect the data so that you and your team can learn. You should measure metrics on a weekly and monthly basis so that you know what is on and off track without wasting too much time or capital and can make rapid and informed course corrections.

As a mentor of mine says, “if we miss this week, we will miss this month, then we will miss this quarter, and then we will miss this year.” So every week really does matters. The sooner you know what you are missing or hitting, the better decisions you can make along the way.

How to communicate metrics?

A metric only exists if it is written down and it is understood by your organization. Write them down everywhere you can. Post metrics throughout the company office so your employees have daily reminders. People will only do what they know and understand. Personally, I like to prepare a simple card with the core metrics on it that people carry around with them. When team members joke about hearing the metrics too much, then you have communicated them the right amount!

Remember that key metrics are the friend of any founder and CEO — they focus everyone on what matters and empower people to act every minute consistent with what matters. The key metrics for your company should be like the Pledge of Allegiance – can everyone recite them?!

About

Donn Davis

Donn Davis is Managing Partner of Revolution Growth and he co-founded Revolution LLC with Steve Case in 2005. Revolution Growth is a venture capital firm that invests in and helps build innovative, consumer-facing companies that aim to disrupt large, existing industries.

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