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We can get so obsessed with strategy, our great idea, and finance, etc. that we ignore parameters which can be critical to our success. One of the biggest mistakes I see startup owners make is failing to consider parameters as their North Star.
“If you don’t know where you are going, any road will get you there.” – Lewis Carroll, Cheshire Cat
Over and over, entrepreneurs come to me without a clue about what they’re aiming for. Short term vs long term, profits vs growth, risk and efficiency vs innovation all need to be considered in executing strategies.
One of the most important goals is the changing consideration of effectiveness. MacKenzie Scott and Melinda Gates illustrated this beautifully with their approach to charity and wealth.
- They’re spending more instead of building big war chests.
- They’re donating to small, more community-based charities rather than established institutions and providing seed money as well as operational funds.
- They’re using more subjective funding criteria, requiring less proposal work and demanding less extensive reviews to encourage new organizations and facilitate innovation.
- They are funding more women’s and poverty groups.
Their goal was to approach charity more effectively. Their rationale was that funding hunger, health, poverty and social justice with innovative contributions would provide more benefits than the opera or large universities. The result was a complete shift in charitable donations.
Measurement: Just Do It: Measurement is one of the most important parameters. At its simplest, it’s looking at where you vs. where you want to be.
Measurement for the sake of measurement. however, gets you nowhere. Ask yourself (and answer honestly!):
- What am I measuring?
- What metrics am I using?
- What is the purpose of the measurement?
Here’s the thing every successful business owner knows but no one ever tells you: measurements of sales, profits, service, and customer satisfaction are vastly underrated.
Measurement also needs to consider qualitative metrics like speed, motivation, innovation, employee satisfaction, and quality. I recommend using qualitative questions like “How am I doing?” as well as more traditional qualitative measurement tools (remember: these tools run the risk of measuring the wrong information or letting bias inform results).
Embracing change, finding alternatives, being flexible, and innovation are the keys to success. AI, climate change, income inequality, and women’s rights are key factors affecting parameters and strategies. For example, we cannot ignore that baby boomers are aging and whites are less than 50% of new births.
As startup owners, this means the traditional revenue generation approaches may not be working as well as they used to. New markets and demographics need increased attention.
The advantages of AI – in terms of efficiency and speed – are yours for the taking if you take the time to familiarize yourself with the new technology.
Take the time to examine your processes for developing solutions and assessing progress. Many organizations continue to use authority, hierarchy, etc to govern decision making. However, the world – and business – has evolved to recognize commitment, success, teamwork, logistics, collaboration, and coordination as critical parameters in most successful organizations. Invest time in looking at how you come up with solutions, determine what progress has been made, and coordinate across teams.
Tips for Understanding Parameters
- Consider Both Social and Analytics Issues: The realities and changes in parameters like population, the economy, political environment, and social values should be regularly assessed. Variables are changing faster and more frequently than ever. The more you understand these parameters, the easier it is to keep up as they change and evolve.
- Commit to Action: Nike said it best, “Just Do It.” Refusing to make a decision is a decision in and of itself. Knowing what’s right and failing to act on that knowledge is one of the biggest mistakes startup owners make. Do your research, make your measurements, check in with your gut, then act.
- Move Beyond Cause and Effect: Cause and effect is the go-to answer for “why” something happened. One of the oldest questions on cause and effect is the proverbial chicken and egg issue. However, most relationships involve a variety of factors. Dig deeper to identify all the factors involved in an outcome.
- Embrace Risk and Trust Your Intuition: Analytics can produce quantifiable data that paints a black and white picture of your reality. Faced with the chance to take a big risk? Check in with your gut — and then trust that feeling. We all know the names of the billionaires who chased dreams others said were insane. The people who think outside the box are the ones who create real change in our society.
- Avoid the Pitfalls of Bias: The biggest problem with parameters is the management of bias. Most bias, especially in small businesses, is simply human. Your assumptions, analysis, and data can all unknowingly affect assumptions — ignoring this fact is foolish.
- Improve Your Prediction Capabilities: One of the crucial aspects of parameters is risk and outcomes, which are greatly affected by probability and information. Predicting results where significant and consistent historical data is available is fairly simple. Predicting results for new programs with little or inconsistent data requires developing educated estimates.
In summary, understand the importance of parameters in your decision processes. The assumptions, results, effort and process can be greatly aided.
Related: If You’re Not Measuring, How Do You Know if You’re Succeeding?