Quality improves growth, but growth doesn’t improve quality
Lessons from the week of 6 January
In business, people are easily impressed with big headline numbers — terabytes of data, revenue in the millions of dollars, hundreds of thousands of parcels delivered, tens of thousands of new sign-ups, a 10K follower count on social media, hundreds of employees, 100% year-on-year growth and so on. These kinds of numbers regularly appear in the news (that’s why they’re referred to as “headline”), are sprinkled in company press releases, and unfortunately, as “KPIs” in traditional employee goal-setting processes.
Don’t get me wrong — you can’t run a business well without understanding where your business stands; numbers and reporting can give you that context. Numbers are a universal language — they help others outside our immediate organization digest what we do. Thirdly, they efficiently communicate goals and targets that the team can easily understand and measure themselves against. But here’s the problem with all those headline numbers — they are outputs. They can only describe what has already happened in the past. They aren’t actionable, and they don’t capture a sense of quality (how well we do something or anything).
As a business we must aspire to provide a quality product, service or experience. That’s us Aiming High (Value #1).
But that’s not enough.
The business has to be self-sustainable i.e. profitable or else it’s a charity or subsidy (nothing wrong with charities per se, but that’s not a business model).
That’s still not enough either.
It has to grow large enough to be meaningful to our customers. Our potential customers of need are everywhere in Southeast Asia, not just in one city or one area. The relationship between “quality” and growing Teleport is what I’m focusing on in this note.
I have two stories from last week to illustrate my point.
The first story: The team and I have spent the first week of the year tackling the most unglamorous of problems - how to invoice our cargo customers accurately. For all the grand talk of our digital aspirations, our back-of-house is still manual, with a small reconciliations team valiantly comparing spreadsheets containing 30,000+ line items and 2,800,000+ individual cells to line up our billing to customers. When I tried to compare even a hundred line items myself I cursed and gave up. In that moment I felt the need to get out of my seat and profusely apologize to the reconciliations team for putting them through that ordeal each month, for the last 20 months.
Though I suspect you’ll find strikingly similar issues at many other startups or even established businesses (back-office functions are often invisible and neglected), this is a very poor quality process supporting our largest and most established business line. What’s worse, unpacking this problem has opened the box up to at least another two other major quality problems; (1) how we manage systems-based revenue, and (2) how we set up system rules that conflict against how we operate in reality.
If I had focused on a quality metric instead, for example, the days taken after month-end to invoice a customer, I might have smelled this and put more emphasis on tackling this sooner. Instead, our glossy growth numbers hid this from view. Nothing about our growth has improved a process that was broken to begin with. If we didn’t spot it, something else would have broken first — perhaps earnest, hardworking people would have abruptly resigned out of frustration. Lesson painfully learnt.
My second story: Last week I also spent some time in Bangkok with our new teleport.social partnerships team to discuss local go-to-market plans. The team had prepared a meticulous 47-page presentation discussing the overall roadmap, marketing approach, partnership proposals, media planning and overall budget requests for the year. It was a really good effort, except for one major assumption underpinning the whole plan (and budget request); spend to activate 10,000 brands at a 5% conversion rate (translation: 500 “active” brands). I asked the obvious question, why not spend more time and effort understanding on how to attract 500 happy brands instead of 9,500 indifferent, inactive ones?
10,000 brands is a vanity metric. It does not indicate quality of our product, service or experience. We may also have spent a lot of money chasing this vanity metric. I can understand how some may interpret a large number as a sign of quality along the lines of “they must be good if they have signed up that many local brands” but who are we kidding? Where did this magic 10,000 number come from? Me! Extracted (a bit out of context in my defense) from our annual planning process.
The intent for teleport.social is to enable local brands and micro-entrepreneurs to grow their customer base and sales beyond their home market quickly. So we should focus on what this means; what is quality in this regard? The average sales per active subscriber earned through teleport.social could be one. More earned sales equals more satisfied subscribers, which in turn attracts similar brands to the platform who are willing to pay for our product or service. Quality improves growth in that regard. Let’s see if by doing this we can drive the right kind of growth.
