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My grandmother lives on a farm in Virgina and she always says
“There is no fertilizer like the owner’s footprint in the fields.”
Regular inspection makes for fertile ground
My grandparents had a nice business raising cattle. The market for free-range beef drove growth in their business and they cleared more fields and shifted resources to produce the feed they needed for the larger herd over the winter.
The business soon required more work than two people could handle and they decided to hire permanent help to support the daily operations of the farm, maintain the fields and tend to the hay and corn production required for the winter.
The spring and summer went well with crops planted on time and the cattle remaining healthy under new management. Revenues were up and my grandparents thought they were getting what they expected.
They went to Florida.
Returning in March they noticed the herd seemed smaller. Inspecting the numbers, revenue was flat but revenue per head was down. When pressed, the farm manager said the cattle were not keeping weight like they had in the summer. Inspecting further, my grandparents found that the management team had only turned the hay field twice, instead of the three turns they used to achieve. Also, the professional crew had not used proper fertilizer reducing the yield in the corn crop. To make it through the winter feed was rationed and the cattle had lost weight. To meet revenue targets, the one well understood metric for the business, the number of cattle sold per month had been increased.
This was not sustainable. The need for more granular metrics was obvious.
My grandparents assumed that by inspecting revenue they could expect the other measurable aspects of the business to be managed properly. They did not think to set targets for turns of the hay fields, corn yields and total volume of feed projected based on weekly growth. They did not set targets for herd size or average weight per head and did not measure this key driver of revenue sustainability at regular times throughout the year.
In our world of technology start-ups someone once said
“You get what you inspect, not what you expect.”
As your business scales, farming your data can drive significant value. Set goals and measure success against the data that flows out of daily operations. A culture where metrics are transparent and everyone is empowered to take action based on the data is a culture that scales. When this works each team member leaves fertilizing footprints in the fields and, as a founder, you may get what you expect without being inspector and chief.
Defining the data to measure can be difficult, but there is a lot of guidance available. This piece from Josh on cohort analysis is great as is the SaaS metrics PDF published by Bessemer. No matter what your business, a data driven management approach can help you succeed. If you have specific metrics that you use to manage your business or other resources you feel are good sources of guidance I would love to discuss best practices in the comments.