The 6th KVI & A Hidden Key to Your Company’s Success
When you think of the great coaches, what are the qualities that come to mind? Of the many possible talents, fundamental is the knowledge of the game, the team and the players, and the vital statistics that lead to success. Even more so, it is the coach’s ability to use this knowledge and these statistics to create the necessary advantage the team needs to win. Your company’s success can be achieved in much the same way. The knowledge of your vital metrics, your KVIs, and the ability to track accordingly is a critical component to reaching your team’s goals. In fact, this is often one of our first questions posed to a potential client: Do you know your key value indicators? What are they currently telling you? The ability to answer to these questions is what will ultimately set your company apart. Knowing the trends compared to targets, and making appropriate corrections, will transition you from a good company to a great one.
As a refresher of the KVIs we focus on, there are 4 that cross industries and speak to overall company health and value. They are:
The Team: This is your management depth, tenure, and experience. Also, it is important to know that your labor skill set is not as plentiful as cash.
Products or Services: This is your scope and menu of offerings. What is your strategy and does it keep to your core focus?
Customers: Your customer type, industry focus, size, churn, concentration and tenure are critical to your operations. Do they increase your bottom line as much or more than the top line?
Technology: Your platform needs to be designed to maximize your operational efficiency and accurately reflect your account process. It must include direct labor tracking, customer communication, efficient accounting, CRM, and quality assurance.
These 4 key value indicators lead to your financial health. Out of this comes the financial statements, often considered the 5th KVI.
Did you know there is a 6th KVI? It is understandable if not. It is the metric most overlooked, often to the detriment of your business. This is because this KVI exists just outside of your business, where it is difficult to grasp and stay on top of. Further, quantifying how it affects your operational and financial performance is challenging. We define the 6th KVI as anything outside of the company that will affect the company. And as imagined, the list of metrics that fit within this KVI is long. Our coach understands this, and the ballclub works accordingly. Looking outside of the organization, they will research innovations in sports medicine, competing scouting techniques, new social engagement channels, or changes to city and state ordinances or tax laws. In business, we include local and regional markets with comparisons to national and global ones. We include government changes at all levels. Uncertainty and threats and their potential influences are also gaged. One now begins to see the scale of this KVI, and understands how it can be overlooked simply due to its overwhelming nature.
We work in environments that are conducive to those very environments. Time is expensive, and the amount required here is substantial. Your research needs to focus on the relevant influences, and what they are doing. Find the pertinent knowledge, and stay fresh with it. Because of this, very few companies track this KVI. Those that do often do so through a Chief of Strategy, a Chief Innovation Officer or even a Chief Knowledge Officer. They are watching for innovations, timing, regulations, deregulations, market movements, and the like. Without such an officer, a commitment and a plan needs to be made. Knowledge research can find this important information, to the level needed, as long as the time is committed to without distraction. Again, it is knowing the influences to your business and finding the up-to-date information. It’s out there. Once you have the data, you can quantify it, and properly apply it in the most beneficial way.
Help does exist in monitoring this KVI. Associations are a great place for current industry, economic, and government news. This is also an excellent opportunity to reach out to a trusted advisor. Similar to associations, advisors live in these industries, however, because an advisor has transactional experience, they are able to speak to the needs and the steps necessary when tracking the 6th KVI. Further, advisors exist outside of your day to day business, thus allowing for unbiased and external guidance as they track this indicator to the benefit of your company.
Assuming that you are aware of the metrics necessary to track the 5 KVIs, it is now time to look at the 6th. The question to ask yourself, how are you identifying the necessary metrics to ensure that the 6th KVI doesn’t sneak up on you? It is ignored at your own detriment. However, like the champion coach would, pay attention to this KVI, and act accordingly. You will then watch as your company benefits from taking this most important step.