Guest: Rick Kimball, a coach at CEO Coaching International. Rick’s 35-year career included working as a top investment banker with Morgan Stanley and Goldman Sachs, co-founding his own venture capital fund, and leading and advising fast-growth startups.
Quick Background: Fast-growing companies that maintain their growth aren’t lucky. They’re methodical. Their CEOs identify the metrics that drive long-term sustainable growth. They track, measure, and manage consistent progress toward targets. And they use inspiring storytelling to get key stakeholders invested in that march to BIG.
On today’s show, Rick Kimball explains how to zero in on the numbers that matter the most and best practices for keeping your vision, systems, and people in sync.
Rick Kimball on Finding the Key Metrics
1. Go back to basics.
In the Dot-Com era, many companies made growth potential priority number one. They even invented new metrics that justified their sky-high expectations, like number of “eyeballs,” visits to a website, number of users or app downloads. These figures drove up their valuations on Wall Street but didn’t translate into consistent revenue. Why? Because many of those CEOs never took the critical next step of building a sustainable business model around their metrics to monetize the attention they were getting.
And then the bubble burst.
As Mark Twain famously put it, “History doesn’t repeat itself, but it often rhymes.” Today, the end of cheap money has forced many companies — especially tech firms — to refocus on traditional KPIs that will keep them in the black today while providing a sound foundation for future growth. In this environment, CEOs need to ask themselves: Am I borrowing against a future I can’t deliver? Or am I planning, measuring, tracking, and growing toward BIG?
“In the early 2000s, we were very disciplined in the investment of our fund,” Rick Kimball remembers. “We were applying traditional business metrics: revenue multiples, EBITDA multiples, discounted cash flow analysis. The traditional corporate finance metrics. Companies that just were not meeting the bill, we ended up passing on. So you roll forward to today, and it’s a vastly more sober environment than it was in 2000. And companies are back to looking at traditional metrics about the financials and the here and now. What’s really important is to have metrics that are representative of the business that you’re currently running and not misleading either investors or even the management team as to the real health and progress of the business.”
2. Establish your goals and leading activities.
When we ask our CEO coaching clients, “What do you want?” we’re not looking for pie-in-sky fantasies. We’re coaching CEOs to see an achievable goal, and then work backwards to establish the steps that will get them there. Those goals and those steps have to be concrete. And, more often than not, they start with generating cash.
“The first thing to do is to establish what your goals are,” Rick says. “Figuring out where do you want to go. Typically, that’s measured by revenues. So there’s a revenue metric, a one-year, three-year, five-year revenue goal. But revenues are outputs, or lagging indicators, of your performance. And so what’s important is to identify what are the specific and measurable leading activities that will result in achieving your goals. We spend time with management teams to map out the steps that lead up to the sale of their product or service. What you want to be doing is measuring the activity at each of these levels of the sales process, making sure that you’re measuring what you are putting into your funnel.”
Rick Kimball recommends focusing on as few metrics as possible so you’re managing what’s actually driving growth. You might even hold key leaders or teams responsible for just one metric that works in tandem with other KPIs managed in other parts of the company. With that level of specificity and focus, it will be easy for the CEO to see who’s buying in and putting in the work, who needs to be coached up, and who needs to be coached out.
3. Streamline best practices and develop KPIs.
When Rick Kimball was running the healthcare investment banking division at Goldman Sachs, one leading activity was the number of face-to-face meetings bankers had with clients. Rick figured out that it usually took five meetings to establish a relationship that would lead to a client entrusting Rick’s team with an IPO or the sale of the company.
To develop KPIs around those meetings that he could track, measure, and manage, Rick integrated a new CRM system into the company’s email and calendar servers. That way, every time a banker or their assistant scheduled a meeting, it was automatically logged in the CRM system. Then, Rick told his bankers, “You ought to take notes because you’re going to find it useful for yourself to go back to those notes and review them. But I don’t care about the notes as much as I care about tracking face-to-face meetings. I really didn’t need them to put a whole lot of data into the system. I simply needed the face-to-face meetings to be tracked.”
Finally, Rick zeroed in on a BIG inefficiency: the average presentation that bankers were making to clients was 77 pages long. That slowed down the number of meetings, which slowed down the speed at which Rick’s team was converting those meetings into revenue.
“We went from 77 pages to 27 pages,” Rick says. “And what we were able to do is essentially take all the time and resources that went into creating those presentations and just get out and see more clients. As we started to publish the meeting velocity of different bankers so people understood what the bar was, we saw that the number of meetings per banker went up three-to-four fold. So a dramatic change in the behavior of the bankers just being out with the clients a lot more, with a lot shorter presentations. And with that, the business skyrocketed. It really was that straightforward.”
4. Develop your story.
“Human beings communicate best with stories,” Rick says. “And human beings really attach to ideas best when put in a narrative structure. It’s so important for a company to develop their story, to tell their narrative that explains what they do, but most importantly, paints a vision for where they’re going that causes the investor, or the stakeholder, or the customer or employee, to say, ‘Wow, I see where this company’s going. That’s so exciting. That’s so powerful and differentiated.'”
In this age of cancel culture and 24/7 media, the quality and consistency of your company’s story is more important than ever. If it’s been a couple of years, now might be a good time to reevaluate your company’s core identity. Reconnect with what inspires you about your business so that you can, in turn, inspire your team to Make BIG Happen.
“You’re trying to weave a narrative that has an ‘aha moment’ that relates to the future performance of the business,” Rick says. “To the extent that you can do that effectively, you essentially create more value in your story. Any company is well advised to think about their purpose and have that be an essential part of their story. And that it has to be grounded in the reality of the business and the environment that we’re in.”
1. BIG is real. Your dream company will never materialize if you can’t plan, measure, and manage its progress towards specific targets.
2. Achieve organizational alignment around two or three KPIs that are most critical to growth.
3. Rewrite your story to honor your past while also getting key stakeholders excited about the future.
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average EBITDA CAGR of 53.5% during their time as a client, more than three times the U.S. average, and a revenue CAGR of 26.2%, nearly twice the U.S. average.