Synchronizing Organizational Decisions

How metrics trees foster harmonized decisions and drive sustained impact

One of the most insidious problems in most data driven organizations has nothing to do with data technologies. It’s also not financial. It’s purely organizational.

Imagine two organizations (let’s call them A and B) selling a B2B SaaS product that helps companies manage projects. Both organizations conduct an annual planning meeting where they decide that their objective for the year is to reduce churn/increase retention.

The impact of churn reduction is huge as you can see below.

Org A approaches the goal in a traditional way:

“Our goal is to reduce churn by 50%. Everyone brainstorm ideas on what we can do to achieve this objective by the end of the year” There’s breakout groups and every team comes up with ideas: new product features, identifying potential churning customers and giving them discounts, etc.

Org B approaches the goal differently:

“We have built a metrics tree that focuses on churn and determined three key input metrics that impact retention:

1. Rate of new ticket creation in our software

2. Rate of tickets that are transitioned into new stages

3. Rate of tickets that are closed

What can we do to drive these key input metrics? What other input metrics can we discover?”

They also breakout intro different teams but the discussions focus on these 3 input metrics.

Which organization is more aligned?

It should be pretty clear the efforts of the first organization are at best scattered. Different departments pursuing different initiatives without knowing what will work. They might be taking an “experimental” approach and try different things, get lucky and claim a success but more often than not, they won’t move the needle.

By contrast, the second organization’s efforts are synchronized and harmonized in the same direction and the impact is unmistakable. Everyone is clear what to work on and no efforts are wasted. And with a weekly business review (WBR) focused entirely on that tree it’s far more likely for them to achieve the objective of cutting churn in half.

Not only are their efforts more aligned but the quality of ideas is also better. For example they won’t bother with new features but instead might create a playbook that shows how their best clients manage key projects using their software.

Unfortunately disharmony and misalignment is the status quo in many organizations. That’s the reason why I keep working on these new methodologies (like metric trees, dashboard trees, etc.)

Let me know if you found this issue useful.

Until next time.