Here we are at the end of another tumultuous year, and work inboxes are filling up with the usual exhortations to assess the past year’s KPIs and think ahead to set operationally significant KPIs for the year to come.
This year, I encourage you to step up from the mundane by changing your working definition of KPIs from the ubiquitous key performance indicators to key progress indicators, and see how that raises your perspective and expectations.
What difference does it make?
Maybe like me you have grown weary of a seemingly endless parade of catch phrases designed to sound clever and significant, but carrying little or no real insight. If so, what difference does it make is a well justified question. After all, why bother with this little rephrasing when there is so much real work to do, not to mention non-work life to live?
Let’s take that question seriously.
What difference would it make to you or to your organization to reframe from the conventional key performance indicators that measure attainment of operational targets — a necessary discipline, to be sure — to key progress indicators that measure change for the better?
If you already have a very progressive operational framework, maybe the change would be insignificant. If that is the case, please share so the rest of us can learn from your example!
For most of us, and for most organizations, I suspect it would invite far more profound strategic and tactical thinking about priorities, timeframes, and outcomes. How are we changing for the better poses a different and deeper set of questions than how are we doing against our established (growth, sales, COGS, margin, retention, or other) metrics.
No, really: what difference does it make?
What if that question became the central query in your year-end and year-ahead assessments: what difference does this [fill in the blank: innovation; investment; policy; division; target; whatever] make?
Imagine if all your KPIs were measures of progress away from the status quo and toward strategic impact objectives and aspirations. The evaluation questions might be vexing, and you may not know the answers right away, but that discomfort is a poor excuse for continuing to adhere to standards and norms that have routinely stood in the way of real progress.
You can start with a simple thought exercise — try it alone, if you aren’t ready to spring it on your colleagues. Look at your 2022 and 2023 KPIs and interrogate each one:
How does this accelerate or expand change for the better within our organization?
How does it materially improve the lives of our stakeholders?
How does it raise the standards of our industry?
How does it elevate the wellbeing of the community and world we inhabit?
How does it prevent, reduce, ameliorate, or heal harms that are accepted as business as usual?
Once you identify what does and what doesn’t actually measure progress toward meaningful change, then take a first cut at defining Key Progress Indicators that would provide actionable measures.
How can we define key indicators for making measurably positive change in the year to come, and each year thereafter?
It’s okay if you don’t have all the answers on your initial effort. It’s also okay if you aren’t able to make huge strides in the first year. They key is to focus on effecting change as a consistent, intentional pursuit toward a clear objective.
Do. Or do not. There is no try.
The photo here is sobering as a reminder that in 2022 we are still carrying substantially the same societal ills the protesters in the 1963 March on Washington sought to end. Until and unless we commit to making progress, progress will happen only incrementally, unevenly, erratically, sporadically, reversibly.
We can only expect different outcomes if we hold ourselves accountable to them.
Strategic impact objectives
Reinventure makes binding covenants in our investment documents with each of our portfolio companies that together we and they commit to
- hire, promote, and compensate equitably at all levels (board to hourly labor) as they grow; and source equitably to the extent they are able to do so
- fulfill their own company-specific strategic impact objectives
There is no tradeoff between commercial or financial performance and meeting these commitments. On the contrary, they serve to strengthen the team, their operational focus, and our contribution to their success.
The key here is defining strategic impact objectives. These are the positive impacts which will ultimately define whether the company has fully achieved its potential.
It usually takes a little effort to frame these in quantitative terms that can be tracked and reported on an ongoing basis, and typically the early gains are small. But the discipline of maintaining focus on working consistently toward a clearly articulated strategic objective is energizing. We have repeatedly seen these conversations inspire innovations that catalyze new product or service offerings, new commercial partnerships, new differentiations in the company’s execution of its business model that attract highly motivated talent across all roles and further propel both commercial and impact performance.
Change is a discipline, not an event.
As regular readers know, Reinventure invests exclusively in companies led and controlled by BIPOC and/or female founders, and specifically in companies with their own cogently articulated strategic impact objectives. We invest in those companies when they are at or on the cusp of breakeven and we work with them to help them grow more profitably to create wealth, opportunity, and company-specific strategic impacts.
Our evidence-based strategy* is designed to create progress in racial / social / gender equity, and to generate nonconcessionary financial returns that further drive change. We track performance on wealth and opportunity creation, achievement of company-specific impact measures, and our contribution to both. What we do is all about creating progress, and we work diligently to implement our strategy as effectively as humanly possible. That said, we know the work of change is analog and continuous, not binary or episodic, and we also know that merely repeating what we have done before is insufficient to our purpose.
In Q1 23 we will prepare our annual impact report, in which we assess how we and our portfolio companies have done in service of our strategic impact objectives. I know that will be an illuminating exercise, but it will only be a snapshot.
As I look back over 2022 and peer ahead into 2023, I am eager to use that annual exercise to glean insights from our experience as well as from the growing community of extraordinary peers — fund managers, founders, LPs, activists, and thought leaders who are pursuing a wide variety of change-instigation strategies — how I can better practice and accelerate systemic change.
How might I and my colleagues strengthen our discipline of practicing and accelerating change internally and externally? How might we join forces with you to collectively raise our standards, expectations, and processes for making real progress?
What are your key progress indicators? How are you practicing change as a core discipline? Please contact us to explore how we might support and inspire each other. And as always, please share how you are making change, and let us join in celebrating your progress!
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Image credit: Unseen Histories / Unsplash
(original image taken 28 August 1963; it resides in the collection of the Library of Congress)
*While there’s no such thing as a guarantee in investing and no one can reliably predict the future, Ed’s prior track record delivering 32% IRR to investors provides direct evidence that it is indeed possible to consistently invest for both financial returns and system change. If you are an accredited investor and would like to learn more about investments that can advance social, racial, and gender equity by supporting high-value companies led by people of color and/or women, please contact us to start that conversation.
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