I heard recently that 70% of drivers consider themselves to be above average. Obviously, that can’t be true – if you need some help with that math, just drop me a line.
I don’t consider myself to be part of the majority. I am not a good driver. I’m not bad in any meaningful way, I don’t think. But I don’t really enjoy driving – and I never pay much attention to the car instrument panel. So, I know that I accelerate too fast (that is really fun), put on the brakes too hard, and more. And I haven’t really thought about actively managing the gas mileage since my father would force me to do long division as he tracked his miles per gallon in a ratty notebook in the glove compartment in his late ‘70s Ford LTD.
But this week, on a business trip, in my non-descript Chevy rental car, front and center was a cool little graphic that showed the miles per gallon that the last driver had averaged of the last 50 miles. And there was a graph that showed your current MPG. Seeing this little scorecard sparked my competitive juices. By golly, I was going to beat that last driver’s average MPG.
I slowed my acceleration. I coasted as far as I could as I pulled into parking lots. I would mozy my way to stoplights. I happily resisted my urge to accelerate in service to this little positive feedback loop that I was getting while I drove. Winning by out-accelerating the driver next to me was subverted to winning on MPG. This gorgeous little feedback device helped me change my behavior.
And I did – eventually. I had to do serious highway coasting management to match that last driver’s results – cruising in to the rental car lot, I was 0.1 miles per gallon better than the last driver. So here is a the big question. Why did I care about MPG? I like to think it is because I am environmentally conscious. And while that is true, I can honestly say that other than the general guilt of using fossil fuels when I start my car, I never pay attention to anything having to do with miles per gallon. I am almost always focused on the clock and how soon I can stop driving (because, as I mentioned before, I don’t think I am particularly good at it, and I really hate that I can’t be doing something else while I am driving). Part of it is because I am competitive. I don’t like to not win. I will cop to that. The little squirt of endorphins that I get when something empiric tells me that I am good or better is rewarding. But here is the real reason why the aforementioned MPG became important to me: IT WAS RIGHT IN FRONT OF MY FACE, MEASURING MY PERFORMANCE – IN REAL TIME.
I can only imagine that you are asking yourself now, “OK – Tim – I get it, you like to win and are attracted to little quantifiable dials. How does this me save my business?” Well, there are thousands of metrics in your business that matter. Capacity, inventory, budgets, revenue, profitability and more – the actual metrics change, likely on your business. But the issue with measurement and feedback in a business perspective is that it is almost always delayed. You may not have a quality measurement on your marketing adjusted profitability until you get the books done – 30 days after the end of the month. And that is just about 60 days from when you started your month’s budget. Or you may not know how many hours your team put into development for a client that month until everyone’s timecards are finalized – so you won’t know if you are profitable for the month on that client.
In smaller businesses, where there is less cash in the bank, and every dollar is geared to growth, you can be unintentionally robbing yourself of resources by not having your own MPG measurement staring you in the face. In business, where you are doing multi-variable calculus on a daily basis (eg, how many dollars do I have left for marketing, how many dollars until I hit my sales goals, how much is payroll on the 15th, I have to fly to Boise to do a presentation on the 19th, and we have to add 2 new people to health insurance on the 1st…) all of those things are inter-related, but independent. So having real-time feedback on crucial metrics can give you the information that you need in order to course correct so that you have the resources available to do all of that complicated resource-math.
The feedback loop should not be a time-delayed, we will do that next time kind of process. Modern business, especially modern businesses that are small or are resource constrained need to create real-time feedback loops. Otherwise, errors get magnified over time. The 1 degree miscalculation can result in being way off course. For jets, if you are 1 degree off course, at the end of 60 miles, 1 are 1 mile away from where you want to be. In a cross-country flight that means if you were shooting for the San Francisco Airport, you’d land in San Jose. Not the end of the world, but not where you planned on. If you were were shooting for Sydney from NYC, you’d end up in Canberra – which is definitely NOT Sydney. But real-time data allows you to course correct.
How can you implement that in your business?