Recently, I was in a working / training session with our CEO, Patrick Thean. During our meeting, he brought up the movie Moneyball as an analogy over a challenge we were discussing. Afterward, I thought more about this film and all the business lessons that could be derived from it. I thought about the factors that led to the 2002 success of Billy Beane and Oakland Athletics and realized that one of the biggest moves made was to challenge the presumed "leading" Key Performance Indicators (KPIs) within the baseball industry. A lot of our clients struggle with KPI's. Some have too many, others too few, some none at all. But the most common problem we see with KPI's is that they don't have the right leading indicators to forecast, measure and monitor the desired outcome. KPI's should not be created, put into a crystal report, and glanced at every week for reasons no one is quite sure of. KPI's should be reviewed, challenged, tested, updated or replaced where success is not being achieved. If you are measuring things that are not telling you where you are going, you are not measuring the RIGHT things. And you don't have to measure everything, just the things that drive your desired outcome. Moneyball delivers a great story of how an entire industry can function on measures that either never have been or no longer are the right indicators for success. This is a common occurrence.....and mistake. Billy Beane was up against almost insurmountable obstacles that seemed to relegate his team to being "stuck" at the bottom rungs of the baseball ladder. He realized that in order to "win", he had to come up with a better way to build a strong team. But how? Oakland Athletics did not have the budget to recruit premium (A) players. They did not have a history of winning that would inspire premium players to join the team. But, he was determined to find a way to overcome these limitations. He discovered someone who had identified possible measures to forecast player success by looking at various performance factors that would potentially increase the overall odds of winning with the right combination of player performance. The indicators Billy pursued in 2002 were performance factors never before considered, i.e. how many walks did a given player have and how could that improve the potential for winning. They were rejected, he was criticized, but he believed he had found a formula for winning. Then, he put his "measure where his mouth is" and he won. Oakland Athletics did not win the goal Billy set out to achieve. What they did win was 20 consecutive games in one season. And Billy won the battle of proving that he had identified the right leading indicators to forecast success.The results of his teams' performance in 2002 is a powerful demonstration of the magnitude of impact having the "right" KPI's have on success.
- What are your leading indicator KPI's? Are you sure?
- When was the last time you asked if they are working for you? If not, why not?
- When was the last time you considered why your business is not yielding your desired results?
- When was the last time you asked if you are measuring the right things?
- When was the last time you considered whether you are driving with your headlights on or off?