Your Business Is Full of Data, But Only a Few Metrics Really Matter
Forget the whole dashboard, just find the few dials that tell you what’s going on
I was on a flight from Salt Lake City to Dallas when I noticed the man sitting next to me was looking at an intriguing app.
I asked him about it. He showed me how the app was able to show us our exact altitude above sea level, the direction of the plane, and our current location.
I had to know more about what he did for a living. After all, what kind of passenger has that type of app on their phone?
He told me that he was a pilot instructor for the U-2 spy plane. I didn’t know it then, but the U-2 spy plane is incredible. Flying at an altitude of 70,000 feet, you’re virtually flying a satellite. Pilots have to wear a spacesuit, and after a 12-hour flight in a cramped cockpit, they’re forced to do the most challenging landing imaginable on the airplane’s bicycle-like wheel orientation — involving a high-speed car chase and walkie-talkie communication.
Because of the efficiency of the craft, the U.S. government has had a U-2 Spyplane in air 24/7 for the past 57 years.
Because of my master’s degree in instructional psychology, I was dying to know more about how to train someone to fly a plane at the edge of space.
How Do You Manage the Data From All Meters, Dials, and Instruments Telling You What to Do?
This was by far the most enlightening question that I posed to the astronaut/pilot.
I always feel a little overwhelmed when I look into a cockpit and see the many dials, knobs, meters, and radars. How do they keep track of all that information?
The pilot told me that he would teach his students a “scanning method.” That you only had to pay attention to five things.
In the U-2, there’s one meter right in front of you that’s the most important. If that meter shows that something is wrong, you need to act quickly.
Then, there are two meters to either side that give you information critical to the flight.
He taught his pilots to continually scan back and forth over the five dials throughout the flight. Since the most critical dial was in the center, pilots naturally spend twice the time looking at that dial than the others.
Entrepreneurial mastermind Dan Sullivan had a similar discussion with an airline pilot in the 70s, back when you could walk right up into the cockpit and talk to the pilot. He asked the same question.
“During a normal flight, when everything goes according to plan, how many of the dials do you have to consult?”
“Probably five,” he replied.
“Then what are all of the other ones for?” I asked.
“Well,” he said, “if one of the main five dials isn’t right, there are back-up dials that tell me what’s wrong so I can take corrective action.”
Only five dials matter.
All of the other meters and dials are there to support those five dials.
Sitting in the Entrepreneurial Cockpit
What’s cool about the principle of the five dials is that it applies just as much to your business as it does to a pilot on the U-2 Spyplane.
Dan Sullivan teaches this principle at Strategic Coach workshops.
You’re the pilot, and you sit in the cockpit of your business.
The more aware you are as an entrepreneur, the more you measure and report.
As time goes on, you learn Pearson’s Law through your experience: “ When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates.”
When you try to pay attention to everything, you end up accomplishing close to nothing.
Whether you’re just starting or have a thriving business, the Five Dial principle will help you hone in on the things that matter most.
I recommend one key metric for each of the following areas: Time Management, Service Management, Marketing, Finance, and Production.
In Michael Masterson’s book “Ready. Fire. Aim.,” he categorizes four stages of entrepreneurial growth.
At each of those four stages of growth, you’ll face unique problems, challenges, and opportunities. Therefore, I recommend that your five dials need to be unique to your current stage of growth. The following are some rough and imperfect recommendations for how to continue:
Stage 1: Infancy (from $0 to $1 Million in revenue)
According to Masterson, your single, overriding, all-encompassing, sole priority is to sell your product.
Product development, management, accounting, technology, and customer service are all significant, but they come after your sole purpose of selling.
In the “Infancy” stage, your five critical dials will focus around selling.
Stage 2: Childhood (from $1 Million to $10 Million in revenue)
To reach the second stage, you will need to transition from being a business that sells one product to being a business that can create, test, and grow new products as fast as possible.
To thrive at this stage, you’ll need to adjust your five dials accordingly. Focus on developing, testing, and selling new products.
Stage 3: Adolescence (from $10 Million to $50 Million in revenue)
Stage 3 is the realm of the MBA. Your challenge at this stage is to transition into a corporate organization. The trick here is scaling. Selling an increasing number of employees on the vision and mission of the company and creating the processes and procedures to help them ensure success.
At this stage of growth, your five dials should increasingly focus on people management. Your dials will still revolve around the following: Time Management, Service Management, Marketing, Finance, and Production. However, the metrics will be centered around developing your people, and not your products.
Stage 4: Adulthood ($50 Million in revenue and beyond)
Finally, you’ve built what Dan Sullivan has coined a Self-Managing Company. It’s time for you to adapt your role again: working more like an investor than a CEO.
If you own or co-own multiple businesses, you’ll want to limit the information you receive to one or two key metrics from each. You’ll be operating mostly as a coach and a mentor to the people you hire.
When your key metrics show that your company is hemorrhaging, you’ll be able to dive deeper into the numbers behind your five dials, help your employees diagnose the problem, and encourage them to find a solution on their own — offering additional guidance and expertise when needed.