How to Be a Data-Driven Business
Okay, Matt. We are wrapping up this topic of data driven business with a really practical episode. Set people up for what we're about to walk through and how they should engage with it.
Matt Aiken:Yeah. One of my favorite things to do, whether it's in my business or as a coach, is to have a whiteboarding session around what are we looking at, how are we going to track our success, what data do we have, And then building that new rhythm or structure as we try to accomplish a new goal or recommit to a goal we've already had. I just love doing this with my customers and my team. So today, what we're going to be doing is a lot of doing. So if you want, grab a pencil or share this with your team and let's start figuring out what we want to start tracking and how we're going to go about doing that successfully.
Alex Judd:That's right. And the principle that I want to encourage, particularly founders, to keep in mind as we engage with these actions that Matt's got, there's gonna be six of them, is nothing small done right is actually small. And so these six actions represent getting into the nitty gritty of measuring something right. And what I can tell you is that if you just even choose the smallest thing in your business that you say, ma'am, we're going to create a standard. We're going to measure that standard.
Alex Judd:We're gonna evaluate and improve. The ramifications for that go well beyond even the the minute scope of that individual thing. And so I want you to stay motivated for doing this in a way that might not feel like it's making sweeping changes to your business, but just know that it's going to be really meaningful. So with that, Matt, let's get really practical. What's action number one?
Matt Aiken:Yeah. Action number one, get clear on desired outcome. So many leaders that I work with, they're not clear on why they're looking at data or they're not clear about where they're going. And so really to that point, just highlighted to us of like, we're trying to make progress. We're trying to move towards a different version of the business, hopefully tied to your vision.
Matt Aiken:Let's get clear about desired outcome. And so right now, let's get clear. We're trying to define the outcomes organizationally. Like these are the things our organization wants to achieve. Are we getting clear departmentally?
Matt Aiken:Like right now we're focused on an underperforming department or we're doubling down on a highly performing department. Or are we talking about individually? What's the vision for what we want to accomplish by sitting down and looking at the data? And so that could be something along the lines of, hey, we want to grow our podcast reach and effectiveness. Let's start with a statement.
Matt Aiken:We want to grow the podcast reach and effectiveness. Or for my business, we want to become the top selling national parks board game on Amazon. What is the outcome that we're trying to accomplish?
Alex Judd:Yeah. And I mean, we, myself, Michelle, our director of operations, Phil, the guy that's helping us with marketing right now, we had a conversation around this for the podcast the other day, and we wrote the success statement. This is the most broad standard. Right? We're gonna we're gonna use this as an example for the future actions as well, but the podcast audience is growing.
Alex Judd:Right? That's our that's our outcome that we've now applied ourselves to, which it may sound like ridiculous, but hopefully y'all can empathize with this in the business you're in. It's like there have been years of our business where we never said that. We never said that that's a stated goal, and it was something where in in my heart, I was like, man, I I would like for it to be growing. There would be seasons where it wasn't, but then it's like, well, we never established the desired outcome is podcast growth, and therefore no one could own that outcome, and no one asked the question, how should we measure that?
Alex Judd:And so therefore, shocking. It didn't, right? So now, where was this episode four years ago? I could have used it. Okay.
Alex Judd:Anything else you want to share on number one of establishing the desired outcome?
Matt Aiken:With establishing the desired outcome, the goal is one, what is the statement? We want to be true. And then how would we measure that? I think don't have to write it down yet, but start to have it in the back of your head, how would we measure if this is true? So if it's the podcast is growing, well, we would measure that by what?
Matt Aiken:Hey, this is how many people listened or this is how many people downloaded, this is how many people completed. Start to think through what are we going to measure? What's the specific metric that if that metric were true or at a certain level, we would know that our desired outcome is happening. So there's that statement. And then also start to think about what metrics could we or will we be tracking.
Alex Judd:Yeah. So that's so good. We established that as an outcome out of one of our meetings where we discussed this a couple weeks ago where we were like, what format will we look at this in? Because we can look at people that just listen to thirty seconds. We can look at downloads, which represents more listening time.
Alex Judd:We can look at subscribers. We can look at number of people in The US that listen versus in the world. And so we're like, which one of those feels best? And where we landed was like, we don't know exactly the metric. We'll get to that here in just a second, but we didn't know the metric at this point, but we said we're gonna look at downloads.
Alex Judd:So we're gonna measure downloads, that's gonna be the outcome. Okay, set us up for action number two now because what we're really doing is we're going from broad to specific.
Matt Aiken:Yeah, and so now that we've got the outcome, what we want to do next is identify the processes or outcomes associated with that outcome, I. E. What are the ingredients that will help us to move the needle or to influence that metric? Now, you want to be focused on the things you're doing right now. It's a trap to go, what are the things we could be doing?
Matt Aiken:Or what are the things we could track? We're not actually interested in what data we have. We're actually interested in the levers that we may or may not be pulling. Pro tip, this is what I like to do. I come from a supply chain lean manufacturing background.
Matt Aiken:I like to think about this outcome through the lens of it being at the end of a manufacturing line. Okay? So imagine you walk into your factory, coaching factory or podcast, the podcast factory, and I'm trying to produce downloads. Okay, great. What are all the ingredients of downloads?
Matt Aiken:And and so you might have a an assembly line that is impressions. How am I getting the podcast in front of as many eyeballs as possible? And so that's where you go, okay. Well, we wanna advertise on Google. We're going to reference it in a newsletter.
Matt Aiken:We're going to talk about it in in one of our workshops. Right? Mhmm. That's an assembly line of impressions. So impressions is assembly line number one.
Matt Aiken:Well, now we've gotta do conversion. Okay. How many now we got impressions. How many times are people actually clicking on the link? How many times are they opening that email?
Matt Aiken:How many times are we getting customers to take a next step? Right? That's another assembly line. We've manufactured impressions, now we're manufacturing conversions. And then you can maybe go like retention.
Matt Aiken:Okay, how often are the same people coming back to listen again another time? And so what are you doing? You're documenting the ingredients that ultimately results in downloads. And so be thinking about the processes, outcomes associated with that big outcome.
Alex Judd:Mhmm. I mean, you can go so deep into this, right? With limited resources, limited time, how deep should people go?
Matt Aiken:Yeah. One of the things that, I guess, I've grown adept at is realizing I have sixty minutes to talk about this. Okay. I know I've got six steps. So how long can we spend time here?
Matt Aiken:The reality is, is I've never seen someone mess this up by under identifying the ingredients. Because what's gonna happen, we'll talk about it in a later step, you'll realize, well, something's happening to my outcome. The ingredients aren't changing. Are we missing an ingredient? And so, hey, set set a time limit, get a whiteboard, have someone asking those questions, make it visual.
Matt Aiken:And then at some point say like, hey, do we have enough to move to the next step? Yes, that's totally going to be a gut reaction. So maybe you start with individual over organizational, But give yourself a time limit and commit to documenting as much as you can.
Alex Judd:And are ingredients the inputs that will contribute to the desired output? Is that a fair way to think about it?
Matt Aiken:Yeah. I I bake sourdough. It's a hobby that, like so many others, I I picked up early on. And so how do you make great sourdough? Well, there's a mix of ingredients, like we call it impressions, conversions.
Matt Aiken:And then there's also a mix of environment. There's a mix of order and steps. And so when you start out with data, you are trying to figure out what are the inputs that create the outputs, but also how would we measure the environment in which which those the context. Right? Context is king.
Matt Aiken:The context in which we could evaluate those those ingredients.
Alex Judd:Yeah. Okay. So for our podcast, it's like the number of times we're talking about this on LinkedIn and referencing the podcast. The proficiency in which we're getting guests are like the assets associated with their episode ahead of time so they can share about the episode with their audience, the quality of guests we get. All of these things we know.
Alex Judd:I guess that's another thing that's helpful to point out is almost everything we do, which is true for the audience we talk to as well, someone has done it before. So it's not like you're like, oh, we have to go think of this original input list of how do you go about growing your downloads for podcasts. It's like, no, success leaves clues, so go figure out what is the recipe, and then you might modify for your brand, for your audience, for your community, or for your customer base. Okay, let's go to action number three, Matt.
Matt Aiken:Yeah, so action number three is pick one to three of the most important categories, right? So you have that assembly line, you've got that visualization, you've got that list of all the things you could really pay attention to. And where I'd encourage people to start is focus on what you think are the one to three most important attributes that will create success. We talked about this in the first episode, decisions are bets, not certainties. So think through the lens of like, if I were to bet on one to three attributes creating the desired outcome, what are the one to three attributes?
Matt Aiken:I said this to a customer this week. We had about 25 different things we could have looked at on the page. And I said, Hey, you're about to buy a business of a similar size as you. And they're like, yeah, I'll tell you anything about three of our metrics. What are the three metrics that you would pick to know in their business?
Matt Aiken:Like use that gut or use that kind of thinking prompt as a way to go like, well, what does matter? What would I want to know about a healthy business in my industry? And so that's the idea. We want to just kind of get one to three because, man, looking at 19 different metrics is going to do what? It's going to distract us.
Matt Aiken:We're going to maybe get lost in vanity metrics is what Peter Drucker calls them, things that don't actually matter, not as far as moving the needle. And so trying to get hyper clear and aligned around, you know, one to three potential outcomes.
Alex Judd:It is kind of wild in our case, and and I would say that there's a lot of parallels to this in multiple parts of business now. Like, the thing that I think people stall out with as it relates to growing a podcast is not a lack of data. In some ways, it can be an abundance of data because you go to your podcast publishing platform, and you see all these different and it can be really enamoring. You're like, oh, this percentage is listening in The UK, and oh, this percentage is listening in this region in The US, and oh, this percentage is listening on Spotify versus on Apple. And it's like, you can start getting into all of that, and and then you take your eye off the ball of what really matters.
Alex Judd:And so let me let me make sure that this is a proper application of this step, is we said, Okay, we're going to look at our seven day download metric, and we're going to look at our thirty day download metric. And that's what we're going to be laser focused on is how many people are downloading the episode seven days after release? How many people are downloading the episode thirty days after release? And we've got reasons for those things. But is that a proper application of the step, Matt?
Matt Aiken:Yeah, I think I love the idea of those are measuring the outcomes. We've got growth, but that's really speaking to trajectory. Is this episode getting talked about and then, oh, more people are coming in. Okay, cool. That must be a topic that other people are talking about.
Matt Aiken:It's telling us something. It's giving us some context. So that would be one, an outcome based or we maybe call it a vision based dataset. But I'd also want to make sure we've got the right ingredients tracked. And if it's we're doing an email campaign to our email list We're talking about the latest podcast or growth guides.
Matt Aiken:We're doing growth guides now that you get information in a PDF about this episode for you to walk through later. Tracking the open rate of those growth guides versus the click rate in those growth guides will tell you something about the effectiveness of that tool as a metric for increasing long term retention in downloads.
Alex Judd:Yeah. So the thing that I would really like for our audience to understand here is the language that was most helpful for me was from the four disciplines of execution, and it's the difference between lead measures and lag measures and the idea that both are necessary. So what are lag measures? It's the result or outcome that you're trying to achieve. So sales, lag measure.
Alex Judd:Right? Downloads, lag measure. What are lead measures? It's the activities that have a greater than 80% likelihood of achieving that outcome. And so what are the things that if you do them, it's not a guarantee, but it's greater than 80% likelihood.
Alex Judd:Like, man, when people do these things, it traditionally leads to this outcome being achieved because there is so much power to measuring those lead measures as well, which I think is directly what you're alluding to there, Matt. But then I think the art, and that's why it's really helpful, you know, that in particular the customer you're talking about, I think the thing that our customers often get value from is like in the process of simplifying, like whittling down what actually matters most, how do we cut through the clutter so that we measure what matters and then focus on growing what matters. So simplifying I think is a key discipline in all of this. Let's go to action four.
Matt Aiken:Yeah, so the next one, and really these last few are in a very specific order. So the first one is identify a metric owner. So once you know the one to three things And again, it's not a hard and fast rule. We want to base this on principles. It could have four, you could have five, but identify an owner.
Matt Aiken:Based on the size of your business, hey, you might be the owner for some, most or all of them. If you're a solopreneur, guess what? You're probably the owner of all of them. But the idea is we want someone to go like, Yeah, this is my number. And what does identifying a metric owner mean?
Matt Aiken:It means that they're gonna be the person that makes sure that the number is accurate and we have some amount of story around that number. So they own it. They're responsible for it. And why? Why does it matter that we identify an owner?
Matt Aiken:For accountability, because ultimately someone needs to give account for this number. But also two, so that people can understand their role in looking at and thinking about the number. And I'd encourage you to do this. As much as possible, if you're a CEO, if you're a founder, don't be the metric owner. Practice that in wisdom, but don't be the metric owner.
Matt Aiken:Why? Because you want other people on your team to be experts on those areas of the business and you can play the role of visionary to help steer and guide and connect and storytell. And so, yeah, number four, identify a metric owner.
Alex Judd:I can speak to where my head goes with something like this is, like, measuring and managing metrics like this is a lot of work. And, like, everyone's already full. Right? Like, we we don't have, like, a place for all that work to go. That's that's the devil on my shoulder talking, right, to which here's how the angel, the data driven angel on my shoulder would respond.
Alex Judd:Remember, we're having a conversation around measuring what matters. So what's true here? Either you're thinking about measuring things that don't actually matter, or you've got people focused on things that, like, aren't being measured or don't matter. Because if we're if we're saying these are the metrics that identify what matters for our business to be successful, that should be people's jobs. Those things should be in people's success statements because that's what helps them win, and that's by nature what helps the business win as well.
Alex Judd:So it's highly likely that either we don't have we either don't have the patience to say, oh no, we just want to measure what matters because that's going be good for the people and good for the business, or we're actually spending time, and I'm using the word spending very intentionally there, or even wasting time on a bunch of things that don't actually matter as it relates to the health and growth of the business. And so it's just important to remember that like if you are truly identifying what matters as the core question from which we start all these steps from, then in some ways it's like you got to find the time because this is in everyone's best interest to measure these things and maintain and even prosper these things.
Matt Aiken:Yeah, which then plays into this fifth action, set the target. Why did we choose an owner first? It's because so often leaders come in and they're like, here's the target, let's go. And oh, by the way, you're in charge of this number. Oh boy, it can be overwhelming.
Matt Aiken:If you want to build a culture, because that's really what I'm interested in this lesson is not just, I want to help you get from the plate to first base, I want you to get to the team knowing we're playing baseball. And so to that end, you've got to bring them in as an owner first and then work with them to set the target. And when you're setting the target, right, you want this idea. Jordan Peterson says, optimal struggle voluntarily undertaken. If we're going to ask our team to invest their time in tracking and optimizing their metric that they own, we want them to feel like there's this optimal struggle that they're voluntarily undertaking.
Matt Aiken:That'll just help you and your team get some momentum to creating this data driven culture.
Alex Judd:Yeah, and I think sometimes as it relates to setting targets, visionary leaders, we've got one play in our playbook, and that's set an incredibly audacious goal. And so we reestablish the equivalent of God parting the Red Sea is what would have to happen for a strategic physical. And it's like there can in a proper context, there can be something really inspirational about that. But let's also remember, there can also be something really defeating about that as well. And what we're doing here is investing more in the patient, consistent, never ending deposit style of growth than we are extravagancy, the massive, miraculous things that we've never done before but we just read about.
Alex Judd:That's not to say you can't establish stretch goals or things like that and even incentivize for those stretch goals. But let's remember and communicate that what we're really valuing here is consistent improving and learning and growth. And even the idea that it's like when you establish a budget for your personal finance, you're saying, we're going to start paying attention to data for the first time. That's essentially what you're saying. And what's the expectation that you should have whenever you first establish a budget as a married couple looking at your finances?
Alex Judd:Like, we're probably going to miss this for a couple months, and hopefully, thank God, have some margin to be able to do this. But in missing it for a couple months, we're going to get narrowed in on what it should be and what actions it takes to get there. And so even setting those expectations of like, hey, we're not setting this aim right now of like, we have to hit this this month, otherwise this entire project is a failure. Rather, now we actually have the benchmark so finally the learning can begin. Anything else you want to add on that front before we move to action six?
Matt Aiken:And this is the power of the third fundamental of the 12 Fundamentals for Healthy Growth is a leadership team. When you're starting on this journey, you want to make sure you've got buy in from the leadership team, not only on this is what we're measuring, also this is the target we're setting because we've all got to link arms, get aligned and really say, Yes, this is part of the health and growth of the business. And they're going to be the ones They're the ones who are leading the vision on the front lines. In bigger businesses, they're leading their teams and help making sure they're linked arms around what we're doing and where we're going. So would say when you set a target, make sure you get buy in from that leadership team.
Alex Judd:Really excellent. Okay, let's move on to action six.
Matt Aiken:Yeah, so this is really the Now we've got data, we've got some vision, what we wanna do. Do you know what's the worst, Alex, is making a plan and doing it once. Spend all this time creating this stuff and giving each other ownership. Then what? You look at it one time and you go, well, that didn't tell me what I needed to know.
Matt Aiken:What should I do now? So the sixth action is determine a rhythm to update and review the data or the dashboard, ideally in an existing meeting. I don't know about you, but I don't need another meeting on my calendar right now. And so we're really just saying, Okay, hey, is there a place right now where we meet weekly or monthly where we can pull this data forward and have a conversation that amplifies vision, where are we going, and creates alignment? And here, pro tip, make sure your team shows up to that meeting having updated the data, verified that it's accurate, and they have a story to tell around it.
Matt Aiken:Going back to our very first episode, right? We've got to proactively bridge the knowing doing gap. And in order to proactively bridge, a bridge is not something you set down, walk over and then pick up, right? You've got to set the bridge so you can go back and forth over it repeatedly over and over and over again. So have that rhythm and don't skip it.
Matt Aiken:Alex, you talked about like, Hey, I'm a strategic thinker. I probably am on that knowing side. You might be a little bit more on that doing side. Depending on your propensity, it might be easy to skip it. Oh, the data hasn't changed a whole lot.
Matt Aiken:We shouldn't talk about it. But no, you and your team commit, link arms saying, Hey, we're gonna try this over a series of weeks or months. And then we're going to set an end to say, okay, hey, is this collecting and reviewing this data getting us where we want to go? Wisdom comes from evaluated experience.
Alex Judd:That's right. And there's actually, I think, a subaction embedded in what you just talked about with that action in that you said the word dashboard a couple times. For me, I can speak from my experience here and what I've observed in other business owners. Just allowing this data to live in a stale, black and white spreadsheet is a really great way to make sure you never do anything with it, right? For me, data becomes compelling whenever it's contextualized in a dashboard that shows trends and trajectory, because then it's wild how if you put a compelling dashboard that makes it visual, and that's the action item here, make it visual in front of people, it's really cool.
Alex Judd:People almost can't help but stop talking about what it says and what we should do as a result. And it's really, really compelling. You can just throw up a good dashboard and be like, what are y'all thoughts on this? And man, you'll be blown away at how your team jumps in and starts to pull apart what the data says. So I think dashboarding is a discipline.
Alex Judd:It's a skill. It's one that I don't have, but it was something that I had learned that just because I don't have that skill does not mean our team shouldn't have dashboards. It just means that we need to contract higher, figure out ways to have dashboards. That's what we've done, right? And so that's what I would encourage people to do is find people that have that skill or find ways to develop that skill in people.
Alex Judd:And that's very, very doable.
Matt Aiken:This is a big blocker for people because progress versus perfection, right?
Alex Judd:Yeah.
Matt Aiken:We all want a beautiful looking dashboard and it is a skill. I mean, went to school and took classes on this and there are some technical aspects to how do you visualize the data in a manner that's actually helpful or how do you shift it around and make it flexible. I make this recommendation knowing that you've got to be careful, but there are some great AI tools out there that will help you get started and help you keep track of things. I have a person on my team that I've started to say, Hey, let's load this data into ChatGPT, making sure it's private, making sure it's clear, making sure the data is not getting out into the wild, but saying like, Hey, let's load it in there. Let's start asking it for trends and questions and then let's ask it to visualize it for us.
Matt Aiken:Trust for Verified, but there are just so many great tools to overcome this perfectionism that so many of us have. What are we trying to do? We're trying to get 1% better every single dashboard review. So if you are doing the dashboard route, hey, what's something that we could improve on this dashboard? What's working, broken, missing, confusing about the dashboard?
Matt Aiken:And just making one improvement every meeting could really help you get from where you are today, which is with nothing, to where you need to go. But like we talked about, great data is better than good data, good data is better than no data, no data is better than bad data. When you're doing visualization, make sure you're not visualizing it in a manner that turns it into something that's unhelpful for the team.
Alex Judd:That's so good. We do a recurring team training with a business down in Austin, Texas. And the last time I was there, they had 29 members of the team. But then they said, Alex, you haven't met the thirtieth member of our team yet. We want to introduce you to the thirtieth member of our team.
Alex Judd:And I said, oh, who's that? And they said, his name is ChatGPT. I was like, that's awesome. And they're like, we consult him for a lot of the things we do now. I was wow, that's actually kind of smart to think about ChatGPT as a thirtieth member of the team, who you really don't have to pay much health care costs for.
Alex Judd:So it's really fantastic in that regard. Matt, thanks for the homework that you put into these episodes. I think this is going be really helpful for people. So any final words of encouragement or challenge that you give to people before we close out?
Matt Aiken:Yeah. Get started. Let's be people that are committed to trying things over a course of time and making improvements. If success leaves clues, let me tell you, the greatest businesses in the world do this. So if you're sitting there going, Nah, not for me.
Matt Aiken:Matt, these steps sound too elementary. It's like, Hey, let's give it a try because success leaves clues and this really is going to be a culture shift that does align with your desire for your people to own and manage the business and accept it with it not being fully dependent on you. This is a huge step towards getting there.
Alex Judd:Matt, so good. Thanks for your time today and we'll talk soon. Well, there you have it. Thanks so much for joining us for this episode. If you want any of the information or resources that we mentioned, that's all in the show notes.
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Alex Judd:Remember, my strength is not for me. Your strength is not for you. Our strength is for service. Let's go. Let's go.
Alex Judd:Let's go.
