Welcome to CEO Brain Food, a show aimed at providing key insights, fresh perspectives, and proven tools that CEOs can apply to build enterprise value, generate higher profits and develop the talent needed to succeed in their businesses. In this episode of CEO Brain Food, Michael continues his discussion about the critical number and highlights its importance in driving growth within organizations. Michael talks about the factors that influence and drive positive actions towards the critical number. He also breaks down the process of developing KPIs, distinguishes between accountability and responsibility, and shares his thoughts on priorities, forecasting and measuring. Finally, Michael speaks to the importance of setting goals that are smart, realistic, and in the best interests of the organization.
01:09 – Introducing today’s topic: Driving Growth with KPIs
01:33 – Reinforcing the importance of tracking your critical number
02:28 – Defining the critical number
07:12 – Michael invites listeners to take a moment to reflect on their critical number
07:44 – The factors that influence and drive positive action towards your critical number
11:24 – The importance of financial literacy
13:21 – The Weekly Huddle
15:18 – Sharing the profits
17:54 – The importance of execution
20:13 – Developing KPIs
20:58 – Michael articulates the difference between accountability and responsibility
23:36 – The value in forecasting critical numbers in advance
25:02 – Michael provides examples of leading indicator concepts
26:25 – KPIs, priorities, forecasting and measuring
29:38 – The Five Scoreboards
32:13 – The importance of setting goals that will make organizations stronger
33:27 – Michael teases the topic of the next episode of CEO Brain Food
33:38 – Where to find Michael’s Functional Team Scorecard
TWEETABLE QUOTES
“The critical number provides a focus on what’s most important. And, in fact, it’s the determining factor critical to the company’s success.” (03:35)
“The driver is a number that directly influences the critical number.” (10:55)
“You want your people to be engaged in forecasting the number. You want them to really own that number.” (12:05)
“You want to be sharing with the employees the profit that they help you create, but only after a threshold level of profit is made.” (15:18)
“The critical number is what you want to achieve. The drivers are how it’s going to be achieved.” (17:17)
“When we’re developing the KPIs, first we want to identify the problem to be solved or we want to identify an opportunity that we’re going to leverage.” (20:13)
“Accountability cannot be delegated, but responsibility can.” (20:54)
“What gets measured gets done.” (30:16)
“The critical number provides us a learning opportunity that becomes part of our everyday process of running the business. Everyone in the company should know the critical number.” (33:08)
RESOURCE LINKS
Four Characteristics of a Strong Critical Number
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