Are You Avoiding Your Numbers..Still?

I have the privilege of advising some of the brightest entrepreneurs out there in CPG today. Yet, intelligence alone (IQ) does not prevent a founder or her team from literally becoming blind to very likely, but negative interpretations of her brand’s KPIs.

Again and again and again, I perform some pretty fundamental smoothing analysis of critical numbers on a new client’s business, and I see something, often velocity growth, that just isn’t very good.

What’s the root cause of this malaise?

The founder’s early optimism (and insecurity) prevents a more skeptical, disciplined analysis of the essential KPIs. It’s not that I desperately want founders to be less happy with their performance than they are. It’s that founders who learn to pursue their business goals with an institutionalized skepticism are honestly the ones most likely to succeed long-term. It’s a professional habit.

You have to have a ritual process of stepping back and objectively, putting your business performance through a skeptical lens. If the surface topline growth is excellent, you should not applaud right away. You should ask yourself: Am I missing something? Is this topline growth based on good behavioral patterns I want to see in a healthy business?

One Pro Tip: Never produce a chart that uses a default axis layout. It will almost always use the smallest possible absolute numerical range to visualize your data. This can create all sorts of illusory notions of change. Instead: anchor any key axis’ min/max values to known performance benchmarks or targets, say for $ velocity. This allows you to see how quickly you’re approaching those targets.

Otherwise, you’ll quickly see some upward movement that is statistically and strategically meaningless.

What I’m getting at here is: don’t believe the internal hype on your performance until you’ve pressure tested it mathematically. Even if you still see nothing but awesome, you must confirm why consumer behavior is rewarding you—that is why it is critical to reproducing a national playbook.

If you’re a Founder/CEO and would like to join my VIP e-mail list, take my Founder’s Quiz, and you’ll be signed up for semi-monthly e-mails, early announcements of events, invitations to beta-test new courses, etc. Take the Quiz here.