Marinating in My Stench: Benchmarking

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Have you ever walked into a room where someone was seated comfortably and walked right out because the stench chased you out?

The first thing I wonder in those situations is “Does he not smell that?”

Well, it turns out that I am that guy – the one in the room “oblivious” to the stench.  

A few months ago, I got a unique opportunity to visit a competitor of ours

I walked into their offices, the first thing I noticed was the sunlight coming in through the windows that brightened up the room. Our inherited space is a warehouse. We go outside to get sunlight. That could explain the massive productivity gains I’ve experienced since transitioning to working from home.

Right above the windows were 4 monitors. It looked like I was staring at one of those dashboards that greet you as soon as you enter the airport. I could tell within seconds how they were doing that day. The boards were loaded with visually appealing KPIs being tracked and updated on a second by second basis directly from the field with almost no human intervention as an intermediary step to collect the information from the place of activity to the place of report.  

No google spreadsheets! No reminders to different metrics owners to “ADD YOUR NUMBER BEFORE THE MEETING!!” 

Then the silence: No phones ringing…..Hmm. That didn’t jive with what I was seeing. No orders from customers with this elaborate set up? And only two employees? We have about 7 in our call center in 3 countries! 

We are an international team! What a ridiculous vanity metric. 

It turns out that they did not need to take phone calls from customers. They had built a customer portal and during the onboarding process for each new customer, they would train each one on how to enter their orders themselves, eliminating the need for a large call center team and more importantly, passing on the responsibility for incorrectly placed orders to the customers rather than theirs. We’ve had to eat the cost of inaccurate orders one too many times!

So my “International Call Center” was immediately relegated to the position of that esteemed medal you get in grade school for your 6th place finish in the spelling bee contest. 

This was just a part of what I saw during my visit.

It was an equally exhilarating and miserable 4 hour drive back home. I realized I had been reveling in the stench of incrementalism. 

To be fair, this is a 2.5 year old startup with no legacy clients or broken culture to reform. In spite of the enormous strides we have made in our journey, there is a TON more work to do and this visit was a reminder of that fact.

An Aside about Small business KPIs

Running a small private company has many unique characteristics. One of them is that measuring your progress day to day can be somewhat subjective. The objective metrics of Revenue, EBITDA, Cashflow etc though objective are output metrics, meaning they are the outcome of other activities rather than the activities themselves that result in progress.

On the other side of the coin, you have input metrics which are supposed to be proactive measures of your company performance. For public companies, you can usually find these numbers readily available from quarterly reports, or industry periodicals. In a small company like ours with no direct public company benchmarks, the process for setting our KPIs are more of an art than a science. Any effective KPI development process starts with a clear view of your strategic priorities which should be influenced by introspection and benchmarking with external resources.

Roomination

Fighting to get perspective is so critical to objective progress. Without perspective, what do you shoot for? Are your goals too high, low or just right? I mentioned my exhilaration at what I saw. In 3.5 years of running this business, I have developed a vision for where we wanted to go. But it seemed so far-fetched that it was sometimes difficult to communicate to stakeholders internally and externally until I was able to say “Look, they are doing it”.

Now I am trying to acquire the company! Why build when you can buy right?

Here are a few ways I’ve found to gain perspective on where we are in our journey.

New Employees

This is a powerful and somewhat underutilized tool. When we hire people, we rightfully want them to assimilate to our way of doing things. But we shouldn’t do that at the expense of muting the attributes of their experiences that are different from ours that could add tremendous value to what we do. There are a myriad of ways to do that. In addition, The interview process is particularly a strong way to glean new perspective. We use case studies and “a day in the life” exercises not only to evaluate candidates but also get their perspective on how we are doing in relation to the marketplace.

Curate your content diet – Clubhouse, Podcasts, LinkedIn, Twitter

For those that have sworn off social media “because its all crap on there”, you are missing a massive opportunity to learn about how customers, employees and other leaders think. Each platform allows you to curate your feed to varying extents. Clubhouse has been an incredible source of perspective for me. I get to talk directly with my customers, benchmark with other entrepreneurs.

Competitor Benchmarking

You don’t always get an all access pass to see competitors’ operations. But if you do not try, you will definitely not get access. Different niches have varied levels of transparency around metrics. Real estate for instance is a very metric rich niche. E Commerce is as well. Corn farming not as much. But you are more likely to be let on the farm. 

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