eo new jersey oct 2014
DESCRIPTION
Lessons learned from working with thousands of SMB clients - Entrepreneurs Organization presentation - EO New Jersey - Oct 2014. Management in the Digital Age We are entering an era of “Digital Darwinism,” when society and technology is evolving faster than many companies can adapt. More specifically, it is the way we manage people that has struggled to keep pace with the rate of change. We need to reinvent management Using Radical Transparency to drive Accountability and Engagement Despite good intentions, most EO business leaders make the same fundamental mistake when they set goals for their people. Learn what really works and what doesn’t in terms of engaging and motivating your people, and holding them accountable for performance - based on direct observations of more than 5000 clients. Key Performance Indicators - the right way Research shows that 92% of companies do a poor job of measuring KPI's. Learn how to choose and track the key measures that will drive the success of your current business model, and drive the key functional areas of your company (the outcomes for this workshop are even more powerful if other members of your leadership team are present) RESULTS.com’s software gives them unique and privileged insights into the day to day operations of thousands of small-medium sized growth firms. We see what really works and what doesn’t in terms of strategy execution, goal setting, tracking performance, running effective meetings, engaging employees and holding them accountable. To save you from spending several lifetimes trying to figure it all out for yourself, you can access these powerful (and often counter intuitive) insights in his workshop.TRANSCRIPT
Management in the Digital Age
PRESENTER: Stephen Lynch Twitter: @StephenLynch @RESULTSdotcom
Email: [email protected]
EO New Jersey - Oct 2014
Management in the Digital AgeThe way we manage our businesses is struggling to to keep pace with the rate of change. We need to reinvent management
Radical Transparency & AccountabilityWhat works and doesn’t work in terms of setting goals and holding people accountable - based on direct observations of thousands of client firms
Key Performance IndicatorsHow to define and track the key measures that will drive the success of your business model,
Agenda
MANAGEMENTin the digital age
“This is a fantastic time to be entering the business world, because business is going to change more in the next 10 years than it has in the last 50”
Bill Gates
18,446,744,073,709,551,615
“We’re in the second half of the chessboard”
“Digital Darwinism” (when technology and society
evolve faster than your company’s ability to adapt)
“It is not the strongest who survive, nor the most intelligent,
but the ones most responsiveto change”
“We are going to have to reinvent management; the way we lead, we plan, we organise, we hire, we motivate... because today, organisations are facing a set of challenges that are truly unprecedented."
– Gary Hamel
TECHNOLOGYchange
Taxi rides
What major technology changes
will impact your industry?
SOCIETALchange
I like the people
I work with.
Someday I’ll meet
them in person.
ALIGNMENT
company-wide goal
Company goal
Team goal 1
Individual goal 1
Team goal 2
Individual goal 2
Individual goal 3
Baby Boomer1946 -1964
Generation X1965 - 1980
Millennial / Gen Y1981 - 2000
Key life influences Cold War nuclear threat, NASA, Vietnam, Civil rights, Drug culture, John Lennon
AIDS, Divorce, MTV, Cold War ending, Heavy Metal, Personal computer, Bill Gates
Internet, Always connected, Share everything online, Apple and Google
Work environment Long hours, Office only Office, Increasingly working from home
Office, Home, Wherever, Desires flexible schedule
Work ethic Workaholic, Quality focus, Team player
Clear direction, Get tasks done, Self reliant, Free agent
Entrepreneurial, Variety, Multitasking, What’s next?
Management style Hierarchy, Chain of command Everyone should manage themselves, Challenge people
Collaboration, Consensus
Personal Motivators Salary, Job title, Feeling valued and respected
Money, Freedom, Break the rules and do it your own way
Meaningful work, Work with creative people, Maintain personal life
Mentoring Does not like feedback. Does not take negative feedback very well
Does not think feedback is necessary. Will ask for it if wants it
Wants constant feedback, on demand at the push of a button
Internal communication Face to face meetings focused on process, Memos
Face to face meetings focused on results, Emails
Face to face participative discussions, Emails, Collaboration software
Client communication Face to face, Phone Face to face, Phone, Email Email, Social Media, Instant messaging
Career Goals Climb the ladder at one company, Job security
Build transferable career with variety of skills & experiences, Build a business.
Build several parallel careers or businesses simultaneously
What major societal changes
are you experiencing?
MANAGEMENTmust change
“We are going to have to reinvent management; the way we lead, we plan, we organise, we hire, we motivate... because today, organisations are facing a set of challenges that are truly unprecedented."
– Gary Hamel
STANDARDIZED
Industrial age CUSTOMIZEDNetwork age
LABOUR:obediencesystemsprocessesproductivity
TALENT:initiative
innovationcreativitypassion
Management 1.0
Management 2.0
18%
actively disengaged
52%
not engaged
30%
engaged
DISENGAGED
70% of employees are
[1] Renaissance Solutions Survey, 1996[2] Kaplan and Norton, Harvard Business School Press, The Strategy-Focused Organization, 2001[3] Strategy & Leadership Journal, May/June 1999[4] Covey and Whitman , Predictable Results in Unpredictable Times, 2009
1.0 is NOT WORKING
MANAGEMENT
▪ 92% of organizations do not measure KPIs
▪ 90% of strategies fail due to poor execution
▪ Only 27% of employees have access to
their company strategic plan
▪ Only 5% understand their company strategy
▪ Only 15% of employees know their
company’s top priorities
▪ Only 6% of employees know their own
priorities
GOALS & TASKS
▪ 70% of employees want regular conversations about their Goals with their manager
▪ But, only 36% of employees report their managers are having such conversations
ACCOUNTABILITY & RESULTS
▪ 67% of employees want regular performance feedback from their manager
▪ But, only 29% report actually getting feedback on their results from their manager
FEEDBACK
EMPLOYEES WANT MORE
[1] Training Magazine - July 2013
[1] Harvard Business Review, May 2014, Your Scarcest Resource
MEETINGSare NOT WORKING
▪ 15% of an organization’s collective time is
spent in meetings
▪ 67% of meetings are rated as “ineffective”
by managers
▪ 92% of people admit multitasking during
meetings (checking email, unrelated work)
▪ $37 Billion wasted on unproductive
meetings per year in the USA
We leave the manner of accomplishing the mission to the soldier, allowing them the freedom to take whatever steps deemed necessary based on the situation. The leader prescribes the method of execution only to the degree that is essential for coordination
Transparencydrives results
Radical
Transparency
REDUnacceptable performance standard
YELLOWWatch closely. Need help?
GREEN Target performance standard
Traffic light concept
In the past we used spreadsheets
don’t engage peopleSPREADSHEETS
Now we use software
+ multiple integrations
How do you make performance
transparent in your organization?
Always aim for the STARS, if you miss…
..you’ll at least reach the moon
CELEBRATE small wins
What % of the time do your
people achieve their Goals?
If not “most of the time”, what do
you need to do differently?
ALIGNMENT
company-wide goal
Company goal
Team goal 1
Individual goal 1
Team goal 2
Individual goal 2
Individual goal 3
Key Performance Indicators
Projects + Tasks
See how other teams are PERFORMING
Drill down to identify ISSUES
Looks like someone is struggling GOALS MISSED?
What’s happening here?LET’S HELP…
Assign a TASK to address the issue
Good data drives good meetings
What have you learned from
introducing technology change
in your organization?
Drivers● Task-focused managers● Set high standards● Push people to go the extra mile● Keep employees focused on high
priority Goals and Tasks. ● Focus on getting things done.
Enhancers● People-focused managers● Build strong relationships and trust● Give encouraging feedback● Keep employees happy &
motivated.● Focus on taking care of people
“Drivers” vs. “Enhancers”
Which style of manager are you?
Which style of management is the most likely to increase employee engagement?
1 on 1 Meetings
● Booked in calendar every week. 30 minutes max
● Dashboard data must be updated
● Status update on Goals & Tasks Reinforce focus and accountability
● What’s happening here? Weed the garden
● What next? Capture Tasks in software & follow up
● What support do you need from me?
● How are you feeling?
● Finish with praise and encouragement
1 on 1 Meetings
What do you need to do
more of (or less of) in order to
practice the 5 to 1 ratio?
MEASURE THE
RIGHT KPI’s
Tropical Island Test
Questions / Answers:#realKPIs || @RESULTSdotcom
…
Imagine this…
Questions / Answers:#realKPIs || @RESULTSdotcom
Business Model / Industry KPIs (example)
Questions / Answers:#realKPIs || @RESULTSdotcom
Business Model / Industry KPIs
Questions / Answers:#realKPIs || @RESULTSdotcom
KPI TablesWorksheet Table Available:
http://bit.ly/KPI_Tables
The 4 Gears
Questions / Answers:#realKPIs || @RESULTSdotcom
Create leads
Convert leads into sales
Provide product / service that delights customers
Grow cash & make a profit
KPIs - The 4 Gears
Questions / Answers:#realKPIs || @RESULTSdotcom
Outcome
Activity Effectiveness
Outcomes are good, but what drives them?
Questions / Answers:#realKPIs || @RESULTSdotcom
Outcome
Activity Effectiveness
$ Sales
# phone calls# appointments booked # sales presentations
% who attend presentation% who buy at presentation
Convert leads into sales
Scope out your KPIs (example)
Questions / Answers:#realKPIs || @RESULTSdotcom
KPI Hierarchies (roll ups) (example)
Questions / Answers:#realKPIs || @RESULTSdotcom
KPI Hierarchies (roll ups) (example)
Questions / Answers:#realKPIs || @RESULTSdotcom
Questions / Answers:#realKPIs || @RESULTSdotcom
Single Point Accountability
Questions / Answers:#realKPIs || @RESULTSdotcom
The sniff test:
Questions / Answers:#realKPIs || @RESULTSdotcom
Questions / Answers:#realKPIs || @RESULTSdotcom
Create leads
Convert leads into sales
Provide product / service that delights customers
Grow cash & make a profit
KPIs - The 4 Gears
Team / Functional Area KPIs
Questions / Answers:#realKPIs || @RESULTSdotcom
KPI Hierarchies
Questions / Answers:#realKPIs || @RESULTSdotcom
Marketing KPIs (sample) What it is
Total Leads Lead shows the total raw number of leads being created by your marketing endeavorsMarketing qualified leads Marketing Qualified Leads (MQL) tracks the number of Leads that meet the qualifying criteria as being an
ideal target market customer for your offering, based on information known about the lead
Sales qualified leads Sales Qualified Leads (SQL) tracks the number of Leads that have been qualified as interested in your offer, and potentially "ready to buy" within the desired timeframe
Cost per sales qualified lead Cost per Sales Qualified Lead measures the average cost required to get a lead to the sales team for further contact from the sales team. It is calculated by dividing total marketing spending by the number of new SQLs generated.
Sales by lead source Sales by Lead Source measures the sales generated by each available sales source (e.g. reseller, affiliate marketer, search engine, client referral). :
Click-Through Rate Click-Through Rate measures the rate at which an ad or link on a landing page is clicked relative to the number of times the ad or page is shown (impressions). It can also measure the success of an online advertising campaign for a particular website as well as the effectiveness of an email campaign by the number of users that clicked on a specific link. .
Cost per conversion Cost per Conversion measures the average cost incurred to acquire a lead or sale through an advertising campaign.
Total Impressions Total Impressions measures the total number of times an ad is displayed, whether it is clicked or not. Each time an ad is displayed it is counted as one impression.
New Subscribers Subscribers tracks the number of new subscribers to defined media content.Website Visits Visits tracks the total number of visits to a website. One visitor can account for multiple visits.Visitor bounce rate Visitor Bounce Rate the percentage of visitors who enter the site and "bounce" (leave the site) rather than
continue viewing other pages within the same site.
Page views Page Views tracks the total number of times a web page is viewed by visitors to a website.
Questions / Answers:#realKPIs || @RESULTSdotcom
Create leads
Convert leads into sales
Provide product / service that delights customers
Grow cash & make a profit
KPIs - The 4 Gears
Team / Functional Area KPIs
Questions / Answers:#realKPIs || @RESULTSdotcom
KPI Hierarchies
Questions / Answers:#realKPIs || @RESULTSdotcom
Scope out your KPIs (example)
Questions / Answers:#realKPIs || @RESULTSdotcom
KPI Hierarchies (roll ups) (example)
Questions / Answers:#realKPIs || @RESULTSdotcom
Sales KPIs (sample) What it is
Appointments booked Appointments books tracks the number of appointments made with Sales Qualified leads in the period (typically per week).
Sales presentations given Sales presentations tracks the number of sales presentations your sales team actually delivered to Sales Qualified leads in the period (typically per week)
Sales made Sales tracks the number of sales made, or the $ value of sales closed in the period (typically per week)
Average Sale Value Average Sale Value shows the average amount spent by customers
Sales Qualified Leads (SQL) to Sales conversion
Sales Qualified Leads (SQL) to Sales Conversion measures the number of sales as a percentage of Sales Qualified Leads.
Presentations to Sales conversion Presentations to Sales Conversion measures the number of actual sales made as a percentage of sales presentations given
Cost of Customer Acquisition Cost of Customer Acquisition measures the cost to acquire a new customer. It takes into account both the marketing and sales costs, divided by the number of sales made.
Sales Pipeline Sales Pipeline displays the estimated $ value of Sales Qualified Leads in the pipeline that are expected to purchase within the desired timeframe - based on existing sales qualified leads conversion rates
Sales vs. Last year Sales vs. Last year compares last year's sales to this current year's sales over the same weekly or monthly period, typically expressed as a %
Customer orders Customer orders shows the number of orders placed , or the $ value of orders placed
Upsells Upsells shows the value of sales made to existing customers during the period.
Questions / Answers:#realKPIs || @RESULTSdotcom
Create leads
Convert leads into sales
Provide product / service that delights customers
Grow cash & make a profit
KPIs - The 4 Gears
Team / Functional Area KPIs
Questions / Answers:#realKPIs || @RESULTSdotcom
KPI Hierarchies
Questions / Answers:#realKPIs || @RESULTSdotcom
Operations KPIs (sample) What it is
Customer Satisfaction Customer satisfaction is a survey measure of how well your customers are satisfied with your product / service by aggregating the results of satisfaction surveys sent to customers. Net Promoter Score is commonly used here
Lost customers Lost customers shows the number of customer accounts that have been lost due to other competition, dissatisfied customers, or any other reason.
Customer retention Customer churn measures the proportion of contractual customers or subscribers who remain customers during a given time period. It can be based on the % of customer accounts retained, or % of "existing customer revenue" that is retained
Customer churn Customer churn measures the proportion of contractual customers or subscribers who were lost during a given time period. It can be based on the % of customer accounts lost, or % of "existing customer revenue" that is lost. In the case of revenue churn it is possible to have "negative churn" if upsells to existing customers exceed lost revenue from customers who terminate
Complaints Complaints show the number of customer complaintsSupport Tickets Support tickets show the number of customer requests for supportAverage response time Average response time measure how quickly you respond to customer support requestsDeliveries In-Full and On-Time
DIFOT shows what percentage of orders has been fulfilled successfully
Return Rate Return Rate shows the rate at which products returned to due to damage or dissatisfactionCost of Inventory on Hand Cost of Inventory on Hand shows the current cost of the inventory owned by the company in its various
stages. The inventory stages are Raw Materials, Work-In-Process, Finished Goods, and In Transit.
Inventory Turnover Inventory Turnover shows the number of times inventory is sold or used each month during the period. Inventory turnover is also known as inventory turns, stock turn, stock turns, turns, and stock turnover.
Labor Costs Labor costs is usually calculated as a percentage of revenue. It includes all expenses associated with employees, including wages, insurance, taxes, and benefits
Questions / Answers:#realKPIs || @RESULTSdotcom
Create leads
Convert leads into sales
Provide product / service that delights customers
Grow cash & make a profit
KPIs - The 4 Gears
Team / Functional Area KPIs
Questions / Answers:#realKPIs || @RESULTSdotcom
KPI Hierarchies
Questions / Answers:#realKPIs || @RESULTSdotcom
Finance KPIs (sample) What it is
Gross Profit Margin Gross Margin measures difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments.
Net Profit Margin Net profit margin is the percentage of revenue remaining after all operating expenses, interest, taxes have been deducted from a company's total revenue.
Accounts Receivable Days Accounts Receivable Days (also known as Days Sales Outstanding or DSO) shows the average number of days that a company takes to collect revenue after a sale has been made.
Monthly Recurring Revenue Monthly Recurring Revenue (MRR) is a measure of the predicable and recurring revenue components of your subscription business. It will typically exclude one-time and variable fees.
Annual Recurring Revenue Annual Recurring Revenue (ARR) is a measure of the predicable and recurring revenue components of your subscription business. It will typically exclude one-time and variable fees.
Customer Lifetime Value Customer Lifetime Value (LTV) assesses the average financial value of a customer. The present value of the future cash flows attributed to a customer during their relationship with the company
Average Subscription Days per Customer
Average Subscription Days per Customer shows the average number of days customers have been subscribing to the product / service
Cash Balance Cash Balance measures the amount of cash contained in company bank accounts.Cash Burn rate Cash Burn rate is a term synonymous with "negative cashflow". It is the additional capital that needs to
be injected per month to finance operations. For example, a burn rate of 1 million would mean the company is spending 1 million of capital per month to stay afloat.
Cash Runway Cash Runway is the amount of time until your cash runs out, assuming your current income and expenses stay constant. Typically calculated by dividing the current cash position by the current monthly burn rate.For example, if a firm that's not generating profits is burning $20,000 per month and has $100,000 in the bank, it has a "runway" of five months.
Revenue per employee Revenue per employee is a measure of how efficiently a particular company is utilizing its employees. Divides revenue by the number of employees.
Revenue growth Revenue growth represents the percentage growth in a company's revenue, often measured over the trailing 12 months
Individual KPIs
Questions / Answers:#realKPIs || @RESULTSdotcom
Questions / Answers:#realKPIs || @RESULTSdotcom
Questions / Answers:#realKPIs || @RESULTSdotcom
What’s your number?
Individual KPIs
Questions / Answers:#realKPIs || @RESULTSdotcom
Individual KPIsWorksheet Table Available:
http://bit.ly/KPI_Tables
By what day each week / month will the KPI data be posted?What 1 person will be accountable to post this data?
Questions / Answers:#realKPIs || @RESULTSdotcom
Review KPI performance thresholds every quarter
Questions / Answers:#realKPIs || @RESULTSdotcom
Questions / Answers:#realKPIs || @RESULTSdotcom
They wish they had dealt with poor performance sooner!
#1 Regret of Business Leaders
Questions / Answers:#realKPIs || @RESULTSdotcom
“He that is good for making excuses is seldom good for
anything else.”
Benjamin Franklin
Leaders owe it to the organization& their fellow workers, not to tolerate non-performing people in important jobs
– Peter Drucker
“
Questions / Answers:#realKPIs || @RESULTSdotcom
“Accountability is meaningless without consequences”
…
Questions / Answers:#realKPIs || @RESULTSdotcom
Questions / Answers:#realKPIs || @RESULTSdotcom
Review your performance thresholds
KPIs – getting it right
RESULTS focused management dashboard
A COMPLETE SOLUTION FOR SMB
IDENTIFY WHAT’S HAPPENING IN YOUR BUSINESS RIGHT NOW
VISIBILITY INTO WHAT DIFFERENT PEOPLE AND TEAMS ARE WORKING ON
IDENTIFY WHICH AREAS ARE WORKING WELL AND WHICH REQUIRE ATTENTION
UNDERSTAND WHO’S EXCELLING AND WHO NEEDS HELP
#RealKPIs
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WHO are trying to take control of their business, engage their workforce, and achieve extraordinary RESULTS
OUR PRODUCT
IS ARESULTS focused management dashboard
THAT PROVIDES
transparency into your entire organization from company-wide strategic goals to individual tasks
UNLIKE other software providers, we offer SMBs the complete suite of tools to manage their business and engage their team
OUR PRODUCT engages your workforce to accelerate your success
OUR PURPOSE to end employee disengagement by reprograming management