Business Today 14th January 2018 - Page 178

The Best Management Lesson I Learnt
of the most important activities for any young entrepreneur . The sooner you do that , the saner your business will be and the faster you will be able to accelerate it .
Our first business was a desktop search application . The game was simple . It was all about tracking the number of downloads and eventually , we realised consumption was more powerful than that ( in our defence , we were rookies ). When we moved on to our next venture , it was a platform to help students with their math / science problems . Our core commitment was a quick turnaround time with solutions from experts . It was a slow and okay start . Then we somehow realised that the key to our platform ’ s success was not the number of questions asked or the number of people visiting , but
the speed of query resolution . So , we changed our KPI immediately . We started tracking one thing – if a question is asked by a student , how quickly it is being answered by an expert . That single shift in KPI changed it all . The traffic growth rate changed from 100 per cent a month to 300 per cent a month . That was the first time I realised how one small performance index could change the course of business . Since then , for every company I have been involved with , the key has always been to dig deeper and deeper to understand what the real growth parameter is .

KPI is a two-edged sword ! You track the

wrong ones , and the world can go for a toss .
The e-commerce industry in India has been a classic example . Barring the top few , it has been an out and out bloodbath . The entire industry started to track just one KPI , namely , GMV . ( For the uninitiated , GMV means gross merchandise value . If you are selling a product , you will track the sale value of the product even if it is returned , or in some cases , if the order is cancelled .) No other benchmark was considered as vital as this one for a long time . When the smartest guys in the country are told “ the only
Business , small or big , young or in the growth stage , is all about taking multiple decisions every single day . At a start-up , you follow your gut more than data
parameter of your success will be the orders you book ”, they can get pretty creative . What followed was a lot of fishy transactions – multiple bookings of same inventory by many new players . Eventually , physics and mathematics took over , and sanity had to prevail .

Now I run a lingerie brand , and we operate KPIs at multiple levels . The two KPIs that bind the company together are : Net promoter score , an indicator that says how likely it is for the customer to refer the brand to other people ; and Repeat purchase . If the customer is buying and referring too , we , as a brand , are in the right direction . But then things get more granular at team levels . So , here is a bunch of small rules to keep in mind while setting the KPIs :

• Do not overdo it . The more complicated you make it , the more difficult it is for the team to stay aligned at all times ;
• Make all KPIs visible to all employees . Do not get too paranoid about hiding inter-department data . The more your employee is plugged into the trackable goals , the more aligned he / she is to the company ’ s vision and execution . Of course , extra sensitive information can always be restricted at group levels ;
• Keep the tracking period as short as your business allows . If the focus is sales , think how you can make it visible in real time – be it hourly , daily , whatever your business restrictions allow . Innovate there .
• Whatever is a show-stopper , your first thought should be to make it trackable and visible . For us , gross margins were as critical as sales . So , while we started tracking sales first along with marketing , we eventually integrated cost-of-goods to real-time tracking . As soon as the costs shot up , it was easy to understand what the customer was buying to trigger bad margins and we could figure out ways to improve the purchase basket . It is just a small set of rules , but we are entrepreneurs and creativity is our middle name . Get creative , think hard what will be the key driver of your business and get bonkers quantifying it . Avoid generic growth indicators . While you continue to seed , test , stabilise and grow businesses , the one major rule will always be critical to keep in mind : What you cannot track , you cannot excel !
178 I BUSINESS TODAY I January 14 I 2018
The Best Management Lesson I Learnt of the most important activities for any young en- trepreneur. The sooner you do that, the saner your business will be and the faster you will be able to accelerate it. Our first business was a desktop search applica- tion. The game was simple. It was all about track- ing the number of downloads and eventually, we realised consumption was more powerful than that (in our defence, we were rookies). When we moved on to our next venture, it was a platform to help students with their math/science problems. Our core commitment was a quick turnaround time with solutions from experts. It was a slow and okay start. Then we somehow realised that the key to our platform’s success was not the number of ques- tions asked or the number of people visiting, but parameter of your success will be the orders you book”, they can get pretty creative. What followed was a lot of fishy transactions – multiple bookings of same inventory by many new players. Eventually, physics and mathematics took over, and sanity had to prevail. N ow I run a lingerie brand, and we operate KPIs at multiple levels. The two KPIs that bind the company together are: Net pro- moter score, an indicator that says how likely it is for the customer to refer the brand to other people; and Repeat purchase. If the customer is buying and referring too, we, as a brand, are in the right direc- tion. But then things get more granular at team levels. So, here is a bunch of small rules to keep in mind while setting the KPIs: � Do not overdo it. The more complicated you Business, small or big, young make it, the more diffi- or in the growth stage, is cult it is for the team to stay aligned at all times; all about taking multiple � Make all KPIs visible decisions every single day. to all employees. Do not At a start-up, you follow get too paranoid about your gut more than data hiding inter-department data. The more your em- ployee is plugged into the trackable goals, the the speed of query resolution. So, we changed our more aligned he/she is to the company’s vision KPI immediately. We started tracking one thing – if and execution. Of course, extra sensitive infor- a question is asked by a student, how quickly it is mation can always be restricted at group levels; being answered by an expert. That single shift in � Keep the tracking period as short as your busi- KPI changed it all. The traffic growth rate changed ness allows. If the focus is sales, think how you from 100 per cent a month to 300 per cent a can make it visible in real time – be it hourly, month. That was the first time I realised how one daily, whatever your business restrictions allow. small performance index could change the course Innovate there. of business. Since then, for every company I have � Whatever is a show-stopper, your first thought been involved with, the key has always been to dig should be to make it trackable and visible. For us, deeper and deeper to understand what the real gross margins were as critical as sales. So, while growth parameter is. we started tracking sales first along with market- ing, we eventually integrated cost-of-goods to PI is a two-edged sword! You track the real-time tracking. As soon as the costs shot up, wrong ones, and the world can go for a toss. it was easy to understand what the customer was The e-commerce industry in India has been buying to trigger bad margins and we could fig- a classic example. Barring the top few, it has been an ure out ways to improve the purchase basket. out and out bloodbath. The entire in хѕ)%Ё́Ё͵͕Ёձ̰Ёݔɔɔ)ѼɅЁ-A$䰁5Xȁѡչ)ɕ́ɕѥ٥䁥́ȁ)ѥѕ5X́ɽ́ɍ͔مՔ%)ɕѥٔѡɐݡЁݥѡ䁑ɥٕȁ)ɔ͕ɽՍаԁݥɅѡͅمՔ)ȁͥ́Ё́Յѥ她иٽ)ѡɽՍЁٕЁ́ɕɹȁͽ͕̰)ɥɽѠѽ̸]ԁѥՔѼ)ѡɑȁ́9ѡȁɬ݅)͕ѕах͔ɽ܁͕̰ͥѡ)ͥɕ́٥х́ѡ́ȁѥ])ȁձݥ݅́ɥѥѼ)ѡ͵ѕЁ́ѡչ䁅ɔѽqѡ)]ЁԁЁɅԁЁፕ),($ UM%9MLQ=d$)ՅЁ$