The Magical Importance of a Dashboard
My venture partner David Hehman and I have noticed that all of our best performing companies have dashboards that they share with us. It’s critically important that the CEO of a company, it’s senior employees and primary investors understand what is going on with the business. The best way to do that is to have a dashboard that shows clearly the Key Performance Indicators (KPI’s). Tracking those KPI’s will show you early signs of progress or trouble. Numbers that are tracked tend to seemingly magically be the ones that improve, so picking the right KPI’s is very important.
The key is just to start, don’t put it off. I’ve seen founders get daunted about getting a dashboard going and there is no reason to. Just create a Google Doc Spreadsheet and on the first row, put in today’s date and on the column next to it fill in the traffic, or sales, or posts or whatever metric you consider important. If the next few columns are obvious as to what they should be, then fill those in too. There you have dashboard. Total elapsed time, 5 minutes. Google docs allow you to share that sheet with others, so do so with your senior management team and primary investors. Now you’re up to 6 minutes. Each day, you fill in a new row. Takes a few minutes and suddenly you’re riveted on the primary drivers of your business. And when you as a founder are riveted on the numbies, guess what – soon your entire team is as well. Start each meeting by reviewing the numbers, it is the reality that everyone should be facing.
Our Dashboard at LoveToKnow
LoveToKnow is over a decade old, but I still start every day with looking at the numbers. I get my numbers from two sources, Google analytics for traffic and Google docs where we track the revenue sources for each site each day. I use Google Analytics to track the traffic of each of our sites as well as the primary categories within each site. About once a week I’ll look at every channel within our sites, about 80 overall. If I have questions, I’ll do a quick screen grab (I use SnagIt – and highly recommend) and then annotate it or highlight it, then fire off an email asking a question or pointing out an observation. If anything I tend to over-react and if I see troubling trends I tend to wait a day or two now to confirm rather than sound the alarm. But I think that everyone at LTK knows I’m watching our two primary business metrics of revenue and traffic very, very closely.
There are important things that you can’t put easily into a dashboard like product quality and employee performance, but over time, these both will show up in the numbers. The trends are going to head south unless you have great product quality and motivated capable employees.
Also, don’t confuse a dashboard with analytics. Analytics have their place, where you can dive into the black hole and pull out interesting observations about your business and how to make it better. I’m all for analytics, though they can also be a time waster and divert you from nailing the big picture. A dashboard should be simple enough that everyone involved has no doubt how to read it. It also needs to be simple enough that everyone can zoom in on the few key metrics. I’ve seen companies get carried away with KPI’s and the problem is that if there are too many, suddenly nobody really cares anymore. Kind of like complicated comp plans, they just don’t work because the average person can’t figure them out. They roll their eyes and figure it’s just random if they hit a bonus. Think KISS (Keep It Simple Stupid)!!
As I explain in my upcoming book, called The Startup J Curve, intellectual honesty is a very critical ingredient of startup success. The reason is that it allows you to save critical time and time is money. Without intellectual honesty and without dashboards that encourage it, David and I see companies drift. They think they are doing stuff but none of it is tied back to reality so they just float along haplessly. Then suddenly, we are having a conversation with them and we realize that really nothing much has happened in the past 3 months. We just shake our heads because no startup has 3 months to waste. That’s when we realize that this company is in serious danger of heading for a zero. A commitment to a decent dashboard would have saved 2 of those 3 months and then you have 2 extra months to figure it out. Critical.
Just Do It
If you don’t yet have a dashboard yet for your startup, stop whatever it is that you are doing and take 5 minutes to begin one today. Just start. You can make it better tomorrow, and the next day. Make it simple, share it widely and start each day with it. Before you know it, the metrics will start getting better and you will be headed for startup success. That’s the way it works and, yes, it’s kind of magic!