As organizational advisors, we regularly help entrepreneurs achieve growth and improve the scalability of their organization. Because we want to share our knowledge about effective growth, we started this article series about the 6 focus areas for effective growth among scaleups. In addition, we draw on our experience in helping entrepreneurs and our own experience with the growth of Summiteers. In this article, we will elaborate on the focus area: 'The Cockpit'. We talk about the ability to measure growth plans with Dolf L'Ortye, one of the founders of Summiteers.

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The 6 focus areas for effective growth

In the previous articles of this series, we told you:

• how to make a plan for growth as a scaleup;
• how to improve your core processes and quickly transfer them to new people;
• how your organizational structure and consultation structure can change as you grow;
• how the roles of founders and employees are changing in a growing scaleup.

In this article, we'll further discuss how measuring growth and how finding, formulating and measuring the right Key Performance Indicators help you keep a grip on the organization. After all, how can you make the right decisions if you don't have the right information?

Management teams regularly wonder if they're doing the right things and making the right decisions. “As a board of directors, you're actually sitting in a cockpit where you're constantly looking at a dashboard,” says Dolf. “Are you going in the right direction, are you going fast enough, are you looking in the rearview mirror enough to learn from the past few months? Then you need management information and (financial) data to make good decisions.” This way, you can see if you may be doing too much acquisition and not enough recruiting (or vice versa). This allows you to reduce your marketing budgets on time or make sure you set the right priorities in product development. “This Cockpit is sometimes complex,” emphasises L'Ortye. “One indicator is related to the other. That's why we say: try to focus on two or three big buttons. Turn those around and leave the rest for what it is. Not everything has to change. It doesn't have to be perfect - that's not possible either.”

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Don't lose yourself in KPIs

There are endless tools available for dashboarding, and the scope of what you can measure is also endless. There is therefore a great tendency that you suddenly want to measure all kinds of things that actually require a disproportionate amount of work. Or that the focus will mainly be on how you get insights and not on how insights can be translated into action, reflection and improvement. We see that companies quickly lose themselves in dashboarding, collecting data and measuring KPIs, while it should primarily be a supportive tool to check whether you are achieving the most important goals and possibly being able to adjust them. “In essence, the most important thing for a relatively young, scaling company is to choose the right KPIs,” says Dolf. “Namely, the KPIs associated with the growth challenge you have at that moment.”

Suppose you have too few sales people, you may have a tendency to immediately want to provide insight into the entire recruitment funnel. You not only set a KPI on how many new colleagues have been added per week, but also how many were approached, how many we spoke to about them, and so on. The question is: if you start measuring that immediately, what does that bring you? What does it contribute to the goal? Sometimes it's useful to do because you can get a better idea of where the problem is, but we recommend setting a KPI on the goal you want to achieve first. If it turns out that a KPI is substandard after a while, it is the signal to delve deeper into this problem and define KPIs accordingly, especially to clarify where the problem lies. Deploying more KPIs is then a means of clarifying exactly which button to turn, instead of the opposite: formulating a lot of KPIs and not knowing exactly why you are looking at them. As a result, you lose too much valuable time retrieving and interpreting all kinds of data. “Sometimes we see that conversations are too much about the question 'how should we interpret this data', instead of 'and what are we going to do about it? '” adds Dolf.

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Tips for setting up KPIs

Initially, focus on the three most important goals you want to achieve at the moment and use KPIs to measure progress. In our article 'The Plan', we already described how to find the largest buttons to turn.

We then recommend that you first set the basic KPIs and from there make improvements based on your measurements every time. To keep improving KPIs, we recommend doing this with a PDCA cycle: Plan, Do, Check, Act. You repeat these four phases over and over again.

1. Plan

In this phase, you identify the goals you have and consider how you can measure whether you are also achieving these goals. Next, you'll think about (re)formulating your KPIs. What information do you really need from your organization? Keep in mind that the formulation of KPIs can be qualitative as well as numerical. Employee satisfaction expressed in a number, for example, provides management with less relevant information than when you ask employees what they would like to improve about the organization.

2.3 Do

In this phase, you implement the plans made and measure the impact on the set KPIs.

3. Check

You then check whether the KPIs you set up have also been met. When you check the KPIs and they're substandard, you're trying to understand the insight. Let's say, for example, the occupancy rate falls. So why is that? Do we have too little work? Is there a vacation period? Do we have new people we're onboarding? Are we too busy with internal activities? Then ask yourself if these KPIs also helped you achieve the underlying goal. Are they perhaps being pursued in such a way that they do not actually contribute to the underlying goals?

These insights can sometimes lead to additional data questions, the need for different or differently formulated KPIs, or the creation of sub-KPIs to find out exactly where the problem lies.

4. Act

Next, it's about what you're going to do with these insights. Will it be enough to look at the measurements again next month because there were explainable exceptions, or is it necessary to take targeted actions to make adjustments? What actions are those? You then implement these concrete actions and changes and start a new cycle.

In this way, measuring KPIs is therefore an iterative improvement process, where you initially do not measure more than necessary.

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What should my dashboard look like?

Only when you know exactly what you want to measure is it useful to consider what kind of tooling is appropriate. The question is: do you need a dashboard? “I would also make the statement again: unless there is no other option, try to make use of what is already there,” says Dolf. “Of course, it may be that a KPI is really so important that you need to set up a process to measure it, but often the financial KPIs can be removed directly from the accounts. You can get satisfaction KPIs from the conversations you have with people.” So above all, make it functional and make sure that the process of measuring does not cause unproductive distractions. A number of Excel summaries that come on the table every two weeks are often more than sufficient. Here is a good indication: are you losing the overview and the dashboard no longer helps? Make an iteration of the system. In this way, the tooling grows organically with the size and complexity of your scaleup.

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Which KPIs are important for scaleups?

Many scaleups wonder: what things do I really need to measure? What should be in my top five? According to Dolf, it is difficult to give an unambiguous answer to this: “That depends very much on what situation the company is in. You have scaleups that have just attracted a lot of funding, where they are not supposed to turn cash flow positively at all. If costs may exceed turnover in a certain phase, it is pointless to set a KPI to cash flow neutral or cash flow positive,” says Dolf. “For other companies that need to maintain inventory, it is again more important to measure the lead time of inventory. By measuring the lead time of products, for example, you can see when products are left in the warehouse for too long. If these products also produce relatively little, it's sometimes better to put money into products that are gone faster.” That is why it is first good to find out what applies to your company. We prefer to discuss this by organization.

So there is no “one size fits all” approach that we can recommend in this article, but there is one type of KPI that is always relevant for growth for scaleups, namely all KPIs related to employee satisfaction, retention and recruitment. Are employees happy? Do you get a lot of applicants relatively easily? “After all, these are very good indicators that tell you whether you've got the right 'vibe'. That is really crucial. After all, you always have to make sure you get enough people on board to actually scale,” says Dolf. That is why it never hurts to carefully zoom in on the funnel of recruitment, onboarding, satisfaction, turnover and development of people.

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You get what you measure

We believe in the saying that you get what you measure. If you're going to measure from margin maximization, that translates to what you're talking about with your employees. There can be a downside to this, because people, systems or companies will logically come up with something to achieve the KPI. This does not always mean that these KPIs are being pursued in the right way.

Many consulting firms measure numerically, for example 'the occupancy rate per employee'. For example, a consultant must be able to write 75% of the working time for a customer. “We chose not to talk to our people about margin and being declarable, but to make it much easier,” says Dolf. “Does anyone have enough to do? Not how much exactly, but: do our colleagues have work that suits their development phase or could they use more of a challenge? Do they still have enough space next door to do what they want? We do not focus on exact percentages by measuring productive hours, but in this case we opt for a qualitatively formulated KPI. For example, when consultants, due to a numerical KPI, tend to find all kinds of extra hours with the customer that are not necessarily necessary, we completely miss the underlying goal, which is to help our customers properly. It doesn't make us happy, it doesn't make our consultants happier, it doesn't make our customers happier, so at the bottom of the line, you've got the wrong KPI.”

Because Summiteers strives for the internal slogan “doing fun things with fun people”, the formulation of our KPIs must logically also be in line with that. That is why we primarily measure the satisfaction and performance of our colleagues at Summiteers with qualitatively formulated KPIs. We often test these KPIs intuitively and by asking the right questions during conversations with employees. To support our findings, we conduct an annual “Great Place to Work” survey, which in turn comes out at a decent percentage.

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Want to know more about the challenges of effective growth?

In our next article, we will discuss the last area of focus for effective growth: 'The change'. In this edition, you can read more about what to look for when you get started with realizing growth plans, why change projects often unintentionally receive little priority in the organization and how to get people involved in the realization of growth plans.

The six-part model that this article series is based on results from the scale-up organization scan developed by Summiteers. The scale-up organization scan helps companies to zoom out, quickly identify possible pain points and reveal any noise between founders and the organization. If you want to exchange views on your challenges to grow effectively or explore whether the organization scan is interesting for you, please contact Paul or Casper.

Of course, you can also get in touch with us via LinkedIn and our website.