When you run a business, it can feel like there are a thousand tasks at a time.
You're trying to increase your sales, but you're stuck in the vortex of endless meetings and other people telling you what to do.
The problem is that each team member has their own priorities. It may feel like you're trying to row the boat forward, but everyone is paddling in a different direction.
There is so much movement, but you end up in the same place a year later.
Can you refer to it?
So how can you get the whole company on the same page and row in the same direction?
The best way to do this is to choose a single Priority. From there you have to create one Critical number to measure your progress against it.
In 2005, Noah Kagan was one of the first employees on Facebook.
He constantly brought new ideas to Mark Zuckerberg. One day he came up with a few ideas. They were all ideas to increase the company's sales.
How did Zuck react to his ideas?
He got up and wrote on a whiteboard:GROWTH.”
He didn't want to have an idea unless it had something to do with Facebook's growth.
His only priority was growth.
His critical number for measuring growth was that Total number of Facebook users.
Again, he said No to everything that did not cause the number of Facebook users to increase.
Let's imagine a scenario where he listened and instead focused on sales.
He gets his team to find advertisers and focus on monetizing the existing user base. You could have been profitable much earlier.
But at what cost?
At that time he was fighting rivals like Myspace, Friendster and Google's Orkut. If he had spent resources on generating revenue, it would be with costs the growth of Facebook.
Perhaps one of these networks would have had more users than Facebook and ultimately dominated the social landscape.
By focusing on growth, everything else has taken care of itself.
That is the power of the critical number.
Source: What happens after you were shot down by Mark Zuckerberg?
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Years ago, I kept getting burned out because I was running affiliate marketing campaigns.
I would make a campaign profitable and then do anything to scale it. I would extend it to multiple sources of traffic and to multiple countries.
The creative would burn out.
An offer would die and I would have to replace it.
I worked 10 times harder, but my profits didn't increase 10 times. The only thing that was 10x was my stress and fear.
It was only when I started to think seriously that I realized that I could make more money with less.
If 80% of your performance comes from 20% of your efforts, what happens if we do the 80/20?
64% of your performance comes from 4% of your efforts.
So I limited this campaign to a single source of traffic and focused on the top three countries.
I had fewer offers to manage. We created a lot more creatives so that we were never burned out. I had the space to test my landing pages.
In the end, I made a lot more money by doing less. I focused on the sources of traffic and the countries with the greatest leverage.
I believe in the dominance over diversity. People who diversify do so out of fear and spread their resources too thinly.
Being a leader means doing two things well:
- You have to set the vision – Don't just say what the goal is. Paint a vivid picture and get a buy-in from everyone.
- You have to be an editor – Be ruthless when it comes to saying no. To achieve something great, many good ideas have to be sacrificed.
Netflix and the critical number
In 2013, Netflix's chief content officer said, "The goal is to make HBO faster than HBO can become us."
Let me share a context with you.
HBO was known as the gold standard for quality programming. They had met shows like Sex and the City, The Sopranos and The Wire.
It wasn't just great shows – They were cultural icons.
At that time, Netflix licensed everything from other providers. These dinosaurs had no idea how valuable their shows were.
Netflix was sitting on a ticking time bomb.
There would be a day when these networks would stop License your shows and create your own streaming platforms.
Netflix also realized that license fees would become more expensive every year.
The main differentiator in the streaming platforms would be high quality original content.
Netflix is committed to creating high quality original content.
The critical number was then set to create at least 5 new shows a year.
We are currently in the middle of the streaming wars with players like Apple, Amazon Prime, Hulu, HBO and Disney Plus.
One of the most popular series on Netflix is The Office. However, it does not belong to Netflix. In a few months, The Office will be available exclusively for NBC's new streaming platform.
Netflix anticipated this years ago and is prepared. You have a series by the creator of the office in which Steve Carrell plays the leading role. You won't lose as many subscribers because you attacked the issue years in advance.
What if Netflix didn't make the original content a priority? The competitors would have withdrawn their entire content and we would only stream films from the B list.
What makes a large critical number
If I asked you to choose a critical number for your business, chances are it is money related.
Your gut feeling is to track your company's sales or profits.
Tracking your company's sales or profits doesn't do anything.
A good example is losing weight. Everyone has the instinct to track their weight, but that's one Delay indicator. It is far more productive to pursue an activity that affects weight loss.
Imagine your critical number is 1200 calories a day. As long as you reach 1200 calories a day, you will lose weight.
Think about what activities are generating revenue rather than just tracking sales.
Let's look at some other criteria.
1. It is the leading domino
Imagine you have a row of dominoes in a row.
The lead domino is the first one you move. If you take care of it, everything fits together.
Mark Zuckerberg's critical figure turned around early on growth.
A few years later, he noticed that more and more active Facebook users were becoming mobile.
This was a threat since Facebook wasn't ready for cellphones. He turned the company to focus on mobile devices.
Over the next few years, he developed the Facebook mobile app, created the Facebook Messenger app, bought Instagram, bought a cell phone, etc.
What if he didn't focus on mobile devices? Facebook may have been overthrown by another social network.
Facebook is now set for mobile phones.
Your next "threat" is privacy. You've dealt with a lot of issues from the Cambridge Analytics scandal and the Russian political scandal.
They are now focusing their efforts on privacy.
2. Pay attention to Vanity Metrics
Have you ever heard of the term "Vanity Metric?”
It's a metric that looks good, but doesn't indicate how well your company is doing.
A good example is your number of employees. Talking about how many full-time employees you have can become a tail-frond competition.
But is that a solid indicator of how well your company is doing?
What if your company was more productive with 10 employees instead of more than 25 employees?
This difference in salary, benefits and office space could instead be realized as a profit or reinvested in the company.
(Or you could survive something like COVID-19 without firing people.)
Suppose you are tall on YouTube and decide that your critical number is the number of YouTube followers you have.
You set that as your goal. Then, focus on creating more clickbait content and working together.
You reach your goal! You have 5 million followers! However, your commitment is terrible.
I've seen a lot of channels that have millions of followers but only get 1% of their views on average. (For example: a 2 million channel that receives an average of 20,000 views per video).
YouTube punished them permanently!
3. Set a deadline
Critical figures need deadlines. I suggest setting them at either annual or quarterly levels.
Setting deadlines creates urgency and gives you time to reflect on relevance. It gives you a tight feedback loop.
Photo by Miguel Á. Padriñán from Pexels.
4. Set a single number
I said critically number.
I didn't say critical numbers.
You are welcome to track multiple metrics, but the critical number is special.
It is the number you are obsessed with. This is the number you have weekly meetings on. It is the number by which the entire company gathers.
That is the difference between a critical number and a simple “KPI”.
5. It fixes weaknesses
Every company has a “Boogeyman”. Every company has a weakness that could destroy it. Many companies set critical numbers to address the company's greatest weaknesses.
Facebook's weakness was mobile. They poured everything into the cell phone.
Netflix's biggest weakness was the original programming. They poured everything into the original programming.
Either attack your biggest weaknesses or your competitors do it for you.
Examples of critical numbers
I will give you some examples of critical numbers.
1. Lose weight
Suppose you want to lose weight. The critical number is not Track your weight weekly.
What activity or number can to lead to lose weight?
I learned that abs are made in the kitchen. Your diet is the 80/20 of weight loss.
My critical number = total amount of calories I have eaten weekly. As long as it was under 12,000, I would lose weight.
So I focused on controlling my calories. As a result, I have lost weight.
2. The growth of a software company
Tobias Lütke is the founder of Shopify and a supporter of critical numbers (he calls it a compass metric).
There were a lot of candidates for their critical numbers, but they ended up at the CMRR.
Fixed monthly recurring earnings.
In his own words
3. Critical campaign numbers
Therefore, the majority of readers are likely to launch campaigns. You are not dealing with "growth" or customer service.
What is a good critical number other than just tracking your daily earnings?
I can share two ideas with you.
I'm sure you've heard of the 10,000 hour rule. You need to spend 10,000 hours to become an expert in one area.
A much better rule is the 10,000 experiment rule.
An important number that I have followed is the number of split tests that I do every day. It was a way to make sure I kept experimenting.
It was easy for me to fall into the trap of low-level activities like networking. By blaming myself for doing split tests, I made sure that I would always improve my campaigns.
Let's say you're trying to get into e-commerce. If so, nothing is more important than testing different products.
Set a critical number that measures how often you launch new products. They make sure you start campaigns instead of wasting time watching YouTube videos.
Photo by Miguel Á. Padriñán from Pexels.
Tracking the critical number
Planning is fun. The execution is not so much fun.
See how many people have New Year's resolutions set to break them within a few weeks.
You shouldn’t just set the critical number, but you have to keep an overview.
1. Track it.
Don't feel like it.
Don't feel like it.
I know it's tempting to find software to automate all this shit.
You won't do that.
You create a Google spreadsheet.
2. Call it up weekly
You should have weekly company meetings on Friday. During this meeting it is a good time to address the critical number.
Where are you versus your goal this week?
What worked and what didn't? What measures is the entire company taking to move the needle on this number?
3. Evaluate whether the number is still relevant
It is the end of the quarter.
Has the critical number reached its goal?
If you've tripled your YouTube subscriber count but you're still broke, it may be a good time to change your strategy.
Other ideas for your critical number:
- Net promoter score – How likely would you recommend this product / service to a friend or colleague?
- Number of days without an accident – In 1987 a new CEO came to Alcoa. The aluminum company of America. The CEO came on stage and mentioned his targeted occupational safety.
No profits or earnings.
By focusing on occupational safety, Alcoa's profits would reach a record high.
- Oura sleep score – I had an energy problem all day. I realized that the main domino would be my sleep. I tracked the critical number with my Oura ring and my sleep score. As long as my sleep score stayed above 80 every day, I would have energy.
- Attention – It seems that we all lose a little bit of ability to concentrate every year. I messed around with monitoring my phone's screen time and the number of minutes I spend meditating each week.
Simplify and prioritize
There is always this temptation More.
I realized that it is more important to do that correct Things and focus on them, then try everything 10 times.
The easiest way to do this is to focus on the critical number.
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