Building the Flywheel: Metrics to Validate Strategy

Previous posts in this series:

1. Customer Focused Strategy to Execution

2. Using Customer & Market Insights to Develop Strategy

3. Translating Strategy to Product & Culture

Today is the 4th installment of my series on Customer Driven Strategy, where I will focus on how metrics and KPIs can validate and refine your strategy and create a culture of continuous learning.

Too often strategies are built and then forgotten about. In yesterday’s post I discussed methods to ensure your strategy permeates your product roadmap and team culture. This ensures that your customers and strategy become a core part of how and why you operate. However, customers and markets evolve and there are always things that are simply unknowable when it comes to developing your strategy. If you wait until you have perfect certainty to define your strategy, you’ll never get off the ground.

Using the right combination of leading and lagging metrics help refine and evolve your strategy as you test it. Lagging indicators are obviously important as they measure how well your strategy is performing. KPIs that measure how fast a market is growing relative to expectations, sales of new products, Net Promoter Score (NPS), and financial performance metrics are all good indicators that tell you how well your strategy has done on a historical basis. While useful, by the time you are able to measure these any change in strategy may be too late.

This is where finding the right leading indicators - and staying completely honest with yourself on what they are telling you - is so important. In his classic book “The Lean Startup” Eric Ries describes Leap of Faith Assumptions (LOFAs) as unproven beliefs that are critical to a strategy’s success, and allow rapid refinement or course correction if not proven true.

I believe that LOFAs can be an enormous advantage for business scaling and growth when used appropriately. However, I have seen a lot of instances where LOFAs have been used in name only and organizations haven’t truly wanted to learn and adapt and thus don’t commit to testing and validating these assumptions. However, when you commit to honestly testing these assumptions and being unemotional in evaluating the test results your strategy continues to become more validated and refined and you are able to react and pivot as needed extremely quickly.

Defining these LOFAs and the relevant tests - and the tests should always have quantitative results to eliminate confirmation bias - is actually quite difficult. Setting up the right processes and creating the right mindset and culture in the team is critical to ensuring that they are implemented and used appropriately. However, when they are I’ve seen them create exceptional growth and create a culture of continuous learning. Using data and tests to validate and continue improving your strategy is also a great way to create company wide buy-in and commitment to this strategy.

Strategies for Accelerating Revenue Growth and Profitability 💡 - Watch Video

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