What’s Your Business’ Big Number?

This one comes from way back in 2009, but Paul Graham’s advice is as solid as ever — and contains useful tips for long-time business owners well.

He begins by reminding us that “it’s better to make a few people really happy than to make a lot of people semi-happy.” and then shares 13 things every startup should know. My favorite? You make what you measure:

Merely measuring something has an uncanny tendency to improve it. If you want to make your user numbers go up, put a big piece of paper on your wall and every day plot the number of users. You’ll be delighted when it goes up and disappointed when it goes down. Pretty soon you’ll start noticing what makes the number go up, and you’ll start to do more of that. Corollary: be careful what you measure.

Though most firms don’t put a big piece of paper on the wall, that billable hour number is the one measure everyone pays attention to.

And what happens when all firms measure is time? Lawyers make more of it.

What if the firm’s “big number on the wall” was something different? How might that firm’s behavior change? What if the “big number” was:

• The number of cases referred/shared among the firm’s lawyers?
• The percentage of clients who stayed clients of the firm for 5 and 10 years?
• The number of “very satisfied” clients derived from a randomly-surveyed sample?

You get the idea. Try measuring something different for a few months and see what happens.

Originally published at www.nonbillablehour.com on June 29, 2013.