This week on The Growth Whispers we’re talking about the magic, and power, and simplicity of traffic lights. Red, Amber and Green as a simple tool to help drive focus for your team and manage, and improve performance. We discuss why the traffic light system works for teams, what’s the best practice for measuring using traffic lights and how can you use it to drive better execution in your team.
Red Yellow Green – Using traffic lights to make your culture of KPI management and goal execution stronger
Episode 44 – The Growth Whisperers
The Growth Whisperers is a weekly podcast hosted by Brad Giles and Kevin Lawrence two advisors to mid-market businesses, one Australian, one Canadian, who each work with CEOs and Leadership Teams across the world with a mission to build enduring, great companies. Each weekly episode covers interesting situations and questions from the world of strategic planning, leadership development, talent and hiring in high growth entrepreneurial companies where real results matter.
Kevin Lawrence 00:12
Hey, welcome to the growth whispers podcast where everything we talk about is about building enduring, great companies, not good companies, not okay companies, not I can’t believe and can’t wait till it’s Friday companies but enduring great companies. I’m Kevin Lawrence. And I’m joined here with Brad Giles, my co-host. Hey, Brad, how are you doing?
Brad Giles 00:36
I’m doing pretty good. And I’ll tell you why. I would always say pretty good. I’ll tell you why I’m doing pretty good today. It’s an interesting situation. The whole of my city has stopped to use a traffic light analogy. The whole of the city is going into lockdown and the red light at the traffic lights has stopped us dead. We’ve had some COVID cases in town. And as we tend to do in Australia, we’ve moved to crush it to use the politicians words. And so yeah, there’s no going outside without a mask. There’s no schools. Yeah, everyone’s hunkered in bunkered in to use the American term, but through that hunkered and bunkered through that on? Yeah, I’m pretty good. I guess, happy for the quick response. And yeah, we’re in the summer here. So doing pretty good. How are you doing?
Kevin Lawrence 01:37
Awesome. You know, I’m really good How to be a little bit of time off. It’s Sunday night here. And in Vancouver, as we’re recording this and some downtime over the weekend. Got to get we can still get out and you know, got out for a drive and things that kind of, you know, energize me. And it’s interesting, you know, all of our airlines stopped flying to the fun sun destinations today. Apparently, we had a little bit of a scandal, where over the Christmas holidays, many politicians in Canada decided to get out of Canada, after they had been telling people that we weren’t allowed to leave and do that, and you know, stay home. And many of them lost their jobs or part of their jobs. So now they’ve kind of locked the system. And actually, you can’t fly it. As of I think, sometime this week. You can’t fly to or from those sun destinations till April because we have school holidays coming up in March. So I think it’s a bit of preventative measure. But yeah, it’s aside from not it’ll people that things are kind of getting back to normal-ish, although, you know, you’re wearing masks everywhere. But people kind of go on about life fairly normal fairly normally. You know, groups not too big. So yeah, it was it’s a very interesting time. And, and we’re in the middle of our rainy season. So getting inspired by some sunshine and summer coming soon.
Brad Giles 02:59
I mean, it’s rule number one, if you are a politician, don’t open up the credibility chasm. Okay, if you’re a politician, like, you know, the journalists will do anything that they can to undermine your credibility, and then looking for stories. We, you know, without naming any names, we’ve seen similar things around the world where politicians are saying, This is what you must do relative to COVID. And the journalists, the fourth estate take great delight in identifying situations where they don’t follow their own.
Kevin Lawrence 03:39
Of course I thought I put I wasn’t the rule. Maybe they were following the wrong rule. I think they may have been following you do as I say, not as I do. You know, I think they might have been thinking that was the rule that they were supposed to do. The other people were supposed to live, I don’t know, look, at the end of the day, we all do things and but when you’re in those kinds of situations, when you make a controversial choice, it’s very apparent, yes. And there’s people waiting for you to do that, so that they can criticize you and swing votes the other direction or you know, just find a way to, in their mind hold you to account.
Brad Giles 04:19
And there is a great, you know, a great lesson in here for listeners who are passionate about building enduring great companies, and that is, if you’re a leader, like do what you say you’re going to do, don’t use any opportunity to look silly, you know, align with your values align, stick to the things that you say you’re going to do. So these should be lessons. These could be lessons for leaders to say, Well, you know, don’t do it that way, which may seem overly obvious. But yeah, when other people get burned, it’s a great opportunity to learn from their mistakes.
Kevin Lawrence 05:01
It is a no brainer. I want to share a quick story I think I’ve shared before on the show, but I worked with a great entrepreneur. He owns something called Joe fortes seafood restaurants in Vancouver. It’s a legendary restaurant in our city. Highly, successful. And, you know, one day we had a meeting at his restaurant, this is going back probably 20 years, bud was an awesome guy is an awesome guy. I haven’t seen him for a while. But you know, really good guy driven entrepreneur, CA by trade, he was a numbers guy, he knew how to manage numbers. But I remember we’re in his restaurant, and he goes to get a bottle of wine for dinner. And he goes to the bartender and asked for a bottle of wine. And then he pulls out his credit card. And he pays for it. And he pays full menu price for it. And I said why, I didn’t understand why are you paying the full retail price of a bottle of wine, which is marked up incredibly in your own restaurant it goes. Because that’s what everybody should do. And it goes in and if I take a bottle of wine out of here, just because I’m the owner is not really important. I’m setting the example of paying for my consumption, I pay for my lunches with my credit card, I pay for the wine when I buy it with my credit card, I can charge it to my operating company or my other company. But still, it’s setting the example of what you want done. So it’s a great thing. And so I guess some lessons for politicians today, Brad, that’s an interesting twist on our show. So but but but in terms of setting an example that’s kind of what our show is about today. It’s about setting examples and knowing when they’re good, mediocre or bad examples. Maybe you want to share more about today’s show, Brad.
Brad Giles 06:50
Yeah, so today, we’re talking about traffic lights. And so how to use traffic lights to make your culture of KPI management and goal execution stronger. How do you get traffic lights to make you execute better make your team execute better? That’s what we’re really talking about. Okay, because yes, everybody, I think everybody listening would know what we mean by traffic lights, and particularly the traffic light system is it you as it’s used in business? So why do we do it? And how do you use it? And what are some of the best practices or examples that we’ve seen around that? And yeah, why should you use a traffic light system rather than just having some numbers up there. So that’s what we’re talking about tonight. interesting subject.
Kevin Lawrence 07:53
It is. And you know, as a numbers person, I love numbers, they tell stories to me, they talk to me, it’s wild, this great relationship with numbers that I found, you know, earlier in my life. But the thing about it is in business, there’s so many, and numbers need context. And we don’t want to spend hours upon hours reviewing numbers, in meetings, or even on the spot we won’t have time to so. And that’s the idea of traffic lighting, or red, yellow, green, which are common colors in our societies, that means something in almost every country in the world, red stop, Amber, be careful, green, proceed or, you know, good. It makes it very easy to have a common language to give context to numbers, or even goals very quickly. And that’s really what we’re looking at. And it’s basically knowing whether you’re winning or losing from five feet away, 10 feet away, or obviously, you know, a few feet away from your screen.
Brad Giles 09:05
And the reason that that’s important is that communication in any area is about the listener, the reason we communicate, right, it’s not about the person who’s speaking or producing the results. The communication is about the listener. And so the listener, in this case, is the people on the team, we want them to understand as clearly as possible to the point that it’s not possible to misunderstand exactly how we’re performing, how we’re tracking and what’s happening. So communication is about the listener. It’s so important, such an important principle.
Kevin Lawrence 09:47
It is and it’s a boat in our from our perspective, whether someone sharing the numbers with us or we’re sharing the numbers with someone else, making it very easily to understand what’s going on with a whole bunch of extra energy. So the first point we’re talking about is is is, you know, what, what is it that we need. And the first thing was, we got to have really clear definitions of what red yellow and green mean, because it’s great to have this, this clear system for doing it, but we got to agree on what it is. so that it can very quickly mean something to us. So, for example, on the roads, sometimes when there’s an amber light, it means get on the gas and race through the light. You know, some people might think that red means you should stop soon, where most people, most people most logical, red means you should already be stopped and you shouldn’t enter that intersection. But in companies in you, and Brad, you and I have some different definitions of red, yellow, red, yellow, green as it comes to two, you know, goals and KPIs. So let’s talk about that.
Brad Giles 10:58
Well, I think that we do have broadly they’re similar. Okay, but we’ve got some
Kevin Lawrence 11:05
conceptually different. Yes,
Brad Giles 11:08
yeah. And what matters the most is not what each of ours are. But everybody in your leadership team has exactly the same definition. Because going back to the car, approaching the traffic lights, I tell you one thing, the policeman who’s standing or woman who’s standing at the side of the road has got a very clear definition, on what red amber and green mean. And if you breach that definition, they will turn on their sirens. So, for me, let’s begin with red. Okay, so red means for me, it means we are unlikely to achieve this priority or KPI, we’re unlikely to achieve this set target on the due date. And it’s become urgent, I urgently need to take action on this. Based on everything I can see, I’m unlikely to achieve this.
Kevin Lawrence 12:03
Yes, and my definition and the one that we use is the same, it’s very likely to fail or if that’s you know, it during, you know, during the time period that we’re, if it’s a goal, for example, during the quarter, it’s likely to very likely to fail not likely to recover. If it’s a KPI, it’s in the danger zone, just like the red line on a two-column order on a car. If you stay in the zone too long, bad things will happen. undesirable things will happen. So, it’s Yeah, no, it’s very, pretty much.
Brad Giles 12:42
What sorry, we’re pretty much on the same page with red for slightly different words. Pretty much. So then let’s move to amber where we don’t agree as much that but it’s pretty cool
Kevin Lawrence 12:58
just double checking. Amber, yellow, whichever color you want to call it. Yes.
Brad Giles 13:03
Yeah. So I would look at a traffic light. So red, Amber green. On the on the road. Now maybe that’s an Australian thing. Maybe that’s a silly business nerd thing. I got no idea. Right. But I would try to encourage. And the reason is that some people, some companies, I’ve seen even use yellow and orange as different definitions. Yes,
Kevin Lawrence 13:24
I have. Right. So I’ve seen that. But that adds another level of complexity. If that works for you. Great. Just make sure everybody understands what it means.
Brad Giles 13:34
So I that’s why I use amber because I’m saying there’s only red, Amber green. So Amber, for me, this is before I even say this, this is predicated on the fact is that we want to have a plan on how we’re going to get there. Probably where if it’s a priority, we’re in a 13-week race during 13 weeks make up a quarter. And we’ve set a due date, which could be the end of the quarter or before. And based on that we’re saying how are we progressing according to the plan that we’ve set. So with all of that, my definition around amber is we are on track to achieve the goal to execute as planned on the due date. We are on track to achieve it, but we haven’t yet completed it.
Kevin Lawrence 14:21
Yeah, and mine is similar. It’s, we’re off track. But we know that if we really hustle we could still get there. But as the current directory, not going to happen, we need to double down our efforts or get some additional, you know, support or resources if we’re going to get there it’s at risk.
Brad Giles 14:43
Yeah, yep. So for me, it’s everything is good. If it’s amber, we are likely to achieve but for you it’s at risk. So then let’s move to green. So for me, green is we have completed it there is effectively no more work. To do like we have completed the priority or the KPI on the due date as planned, no more work to do, as I said, broadly, maybe you got an email to send or something, but broadly, we’ve completed the goal.
Kevin Lawrence 15:14
Yeah. And for me, Green means if it’s in the middle of a period of time, we’re absolutely on the right track. And we will, it’s, you know, it’s healthy, heading in the right direction, and we will achieve it. If it’s at the end of the period, and it’s green, well, then we’ll say, Okay, then it’s accomplished. So when we’re looking back at quarterly goals are historical KPIs. And the green means Excellent. So are good. So yeah, I guess you know, it doesn’t matter either way, yellow are sort of red is trouble. Yellow is, should be okay, green is good. And again, you come up with the fine definitions so that everyone has the same language in your company. And it makes it much, much easier to deal with these things and communicate around these things.
Brad Giles 16:06
And some people have a fourth, a fourth color or a fourth target. Some people might call it a stretch target or a stretch goal. Do you have anything like that that you use or that you see with teams? Or what’s your perspective.
Kevin Lawrence 16:26
We got a couple, we got like three shades of green in some companies. We got light green, like, oh, especially at the end of the period, we’re so close, like we’re almost there. So people end up some companies that just naturally comes out, we’ll do a light green, almost there, where green would be there. And then a dark green or a dark green means we overdid it. Some companies would do a blue when they’ve overdone it. But we basically we’ve ended up with a couple of shades of green based on the level of achievement. It’s kind of like, it’s like in the game of horseshoes. You know, when you’re close, you still might get some points, depending on the culture, and depending on how the company works.
Brad Giles 17:11
Yeah, a little bit more binary, I guess. And for me, that comes back to this setting of goals. Did you or did you not sell 100 widgets? If you sold 99? Well, you know, maybe what’s the lesson we can learn on that? And yeah, that’s good. It’s 99. But we didn’t make budget effectively. And so for me, there is a fourth one. And that is the stretch goal, which is blue. And yeah, it could be a stretch goal. And we don’t necessarily set a goal. But what we would say is that we’ve done this, we plan to sell like green would have been 100. And we actually did 150 or 120. So we did such I so significantly more than you know that we just want to acknowledge and kind of celebrate the fact that we did it. So we don’t see blue very often on my plans. But you know, it is something there is a bit of a an acknowledgment when we really really everyone says yeah, like that was just amazing. Yep. Awesome, is the most important thing with all of that is that the leadership team has the same definition. And everyone’s talking the same language.
Kevin Lawrence 18:25
Yeah, and you know, and it goes back to a story I heard that reinforces from the CEO of Ford, up until a few years ago, a spectacular CEO, he came from Boeing before that. And in their weekly meetings, he got tired of people reporting out on their divisions and departments, in terms of how they were doing and saying, Yeah, we’re good, we’re on track, and at the end of the period, they would fail. And so he got them to start presenting 300 charts every week. Now, the only way you can go through 300 charts in a weekly meeting is one if they’re consistent, but two if you had a color coding system, and he took something very much like red, yellow, and green. And if something was bad, it would be colored red, and you’d have to call out what it was, why it was and the solution, you know, and then green meant it was good, and you could proceed. So they get advanced to these things, but 300 points, or 300 charts to get through and keep the executives from giving you the blah, blah, blah, right to the facts and but you need a simple system like that, like red, yellow, green, if you’re going to get through them and get the impact of
Brad Giles 19:39
that. You know, the problem with that is, is it’s very hard to have that level of depth in a mid market company. If you but you don’t
Kevin Lawrence 19:52
need it. You don’t need that much in a mid market company.
Brad Giles 19:54
No, but that’s kind of what I’m saying. We don’t need that much. Okay. But I don’t want people to come with an excuse. Okay, so it’s like I sort of say to people, when you say excuses, it’s like, I go tone deaf, kind of like the, yeah, the wife or husband who’s been and so much they only hear certain things. And so it’s like, I go tone deaf, when you say excuses. Here’s what we just want to say, What color is it? And what’s your plan because you are responsible for it. That’s the ending
Kevin Lawrence 20:32
training people, which is kind of gets you under a second point, which already talked on a bit, but it’s a simple language to talk about greatness and achievement. You know, because a lot of times leaders want to tell you stories. And sometimes they have a beautiful intent. Sometimes they’re trying to distract you from the truth. Yeah, right. They don’t want the truth to be seen. And when you start to boil thing down things down into numbers, and measurable goals, it gets a heck of a lot simpler. So number one we’ve talked about is what is red, yellow, green to you and coming up with your definitions. And if you want to have, you know, a light green, a dark green or a blue, then that’s your Go ahead. But try and keep it as simple as damn possible to Why didn’t you know you need them the benefit? Or is it just a simple language, and it drives focus, and we kind of talked about two before number one. But the third thing that we have kind of on our list today is that it enables you as you know, the example of Ford, is to spend less time reviewing and hearing all the blah, blah, blah, and the stories even if the stories are good. Sometimes they’re not needed. And it’s not the best use of your time, you need a quick pulse of what’s going on. And you’ve probably got very important things to discuss unless one of them is in critical states or critical shape. And maybe you need some additional help or the team needs to work on that a
Brad Giles 22:01
bit. Well, I just mentioned responsibility, it comes back to trust, Alan Mulally trusted the people who were reported to him that they had the decisions in hand. And we can absolutely translate that back. When you’re at your weekly meetings, and you’re talking about, you’re talking about the status of a KPI or priority. Are you getting a micromanaging? Are you getting the person to tell you every single nuance of the problem? Or are you getting them to say, currently, it’s, let’s just say red, because we both agree on that, currently, it’s red. And this is what I’m going to do about it. Because that’s what Alon was getting his people to do. So if it’s currently red, and you’re doing about it, you are you have passed the baton of responsibility or accountability over to the other person. And it’s a need to know basis, but you’re also holding that person accountable. By virtue of that they’ve got to say, the color and their, their anticipated actions.
Kevin Lawrence 23:09
Yeah, and then and allows them to do one of my favorite things in business, what great leaders do is get people to self manage, right, you don’t want to walk around, you know, cracking a whip, or telling people how to do their job all the time. And, and getting people to self manage is the most empowering thing you can do. And it makes them feel good too. Because they are so clear on what great looks like I think everyone should have and we’ll get to this later. But they need to have their, you know, smart goals and clear KPIs. And then they can go and do their thing. You know, as long as they’ve set those with their manager, they’re good to go. And, and that builds great. That’s how you build great leaders is letting them be empowered and lead themselves.
Brad Giles 23:53
And you know, the key around that is how when you get this right, how long are you talking about it? So you’re doing an update? Let’s say we’ve got Person A and they’re on their third report in the weekly meeting. So they’re talking, let’s say about one of their priorities. I need to do this. Now. How long are you talking about it? Because I’ve seen teams complain, look, we never have enough time for the weekly meeting. And why is that?
Kevin Lawrence 24:23
Because your KPI update is not good where it should be Click, click, click, it’s just numbers, numbers, numbers and there’s then there’s the question or comment and
Brad Giles 24:35
at the root of that, as I said, is that you you’ve got to trust the person to own it, and let them fail if they need to. But if it’s on red, and this is what I’m doing about it we can move forward.
Kevin Lawrence 24:48
It’s quick it is. But it’s something that the leaders need to get in place because most companies aren’t amazing at this. Most companies. You know the report is confusing. There’s way too many numbers in way too many spreadsheets. And it’s very hard to get a pulse on what’s actually happening.
Brad Giles 25:10
And that really moves to a point number four, which is through that, if it’s a status update, what we’re trying to do is drive peer accountability and tension positive tension within the team. Because that means that we can have a team that really self managers, they’re reporting on a status and what the solution is, rather than the job of the manager is to make all of the decisions, the job of the manager is to solve all of the problems and then to beat people over the head metaphorically, when they don’t do what they are told, which no one loves that environment, not anyone on the either side of that equation. So that comes down to, you’ve got to give me the color, and you got to give me the solution. And in that pure accountability, we want to see others speaking up as well.
Kevin Lawrence 26:09
Yes, and that’s when the manager can sit back and let the team just review and doesn’t have to be actively managing and pushing and asking questions. It makes it very simple. And I believe it creates a healthier, high performing environment, again, because you’re giving a lot of autonomy, based on what those goals are set as and giving people the opportunity to to to manage themselves versus being micromanaged. It’s just the kind of environment I like to be in. And I’m sure you do as well, not so it’s awesome. So, you know, in order to do this, effectively, there’s a few catches and a few glitches that people get into. And that is, the first thing is you got to be smart about it. And we got to have a little cheese, a little Canadian cheese in every show here. But you got to be smart about it, which is really smart goals and starting with the end in mind. And unfortunately, when it comes to objectives, you usually they’re squishy is squishy cheese. Right. And it’s not really clear what the goal is. And interestingly, we ran a quarterly strap planning session last week for an awesome company that we work with. And, you know, one of the things we prompt people with is to come up with the number one outcome from their goals. And you would think you just got to should say just have a SMART goal. I don’t know why human beings have a hard time setting SMART goals and smart is Specific, Measurable, Attainable, realistic, and time bound.
Brad Giles 27:54
I heard that there’s 21 different versions are acronyms around smart. But we know what it means. Like, I’m pretty much on the same page. But specific, measurable, actionable
Kevin Lawrence 28:04
result a measurement. Yes. Results are in a time bound. Yes, as if it’s the measurable is the measurable piece like can the finance team, give us a score on the goal. And it’s exceptionally hard to get people to do that, you know, we have a lot of things, we’re going to improve this process, you know, we’re going to, you know, drive more sales, we’re going to increase employee and get all those things are beautiful concepts, but they’re not goals. A goal has a measuring point 10. And that’s its work, it takes a sometimes a discipline, mind and some work to be able to find that. But when you have really, really measurable goals, it’s easier to do red, yellow, and green because where people fall into even and this is the second is if people even if it is measurable. People try to show the regular green on the activity versus the outcome. You know, and it’d be like in the sport of baseball activity would be like swinging the bat, or outcome is actually hitting the ball, the ball or activity is like getting on base. And outcome is going around the bases and getting a home run. So activities are great. But this is a game of outcomes. Sport is about outcomes. So we need to be we have to because we’re trying to measure the outcomes. The outcomes have to be very, very clear in the goals and that’s work.
Brad Giles 29:39
So what we might see what I might typically see in a quarterly planning session is someone would say yeah, we need to hire a sales person. Okay. So they think that might be smart, but we’ve got to take it to the next level and that would be okay, so we’ve got to hire and onboard a salesperson by Let’s say the 31st of March whatever day they nominate, I’m not dictating to them, I’m getting them to tell me what it’s going to be. So if that’s the case, that is a result as we go through. And then once we’ve got that, and what I always say to people is, how will we know when we’ve crossed the finish line? How will we know? Because hiring a salesperson, okay, does that mean that we’ve, we’ve got someone to apply for an advert that we’ve signed a contract that we’ve had an interview that they’re on board? Like, where are we? How do we know exactly when we pass that finish line? Hence, that’s why we say hire and onboard in that example, so we got to know when we cross the finish line. And then as we’re going along, what is the plan that you built? What is the 13? week plan around that? So on week four now? Yeah, how are you going to execute that? So that you’re saying, in the meeting on week four, by this point, I was supposed to have had three interviews, and I’ve had three interviews. So therefore, I’m on track to achieve it at the due date. But you can’t do that, unless you’ve got smart goals, it all begins is at the beginning.
Kevin Lawrence 31:14
And even though SMART goals, you know, I would typically add a player salesperson and onboard them. Because I also I don’t want to hire any I only we only want an A player doesn’t count the other pieces when we get into software projects and things like that. Oh, is get the RP implemented, that ain’t a SMART goal. That’s a dumb goal. Because the RP is supposed to have an ROI or return on investment, it’s supposed to do something for the business, it’s implement the E RP, simplify all the reporting, such that we can close our year end, by the second day of the month, we can eliminate five roles in the finance team, literally a net five reduction, finance cost goes from finance people cost goes from point 5% of revenue 2.4. Now, you know, I’m making a bit of a laundry list, we’d pick one. But the point is, implementation is not actually that smart of a goal. Because you know, it might be an initial stage, but you’re supposed to get some benefit out of these decisions. And often we want to measure getting the benefit of it, not just the Hey, it’s plugged in and working.
Brad Giles 32:31
Because then otherwise, you get to the end of the quarter, and you feel terrible. Because as a team, you’ve executed poorly, although you’ve got a lot of activity, but you haven’t achieved the overall results that you want. And the whole business momentum suffers. So focus on the results, not the activity, and ignore the excuses.
Kevin Lawrence 32:54
Yep, exactly. And when you make things measurable, that is you don’t need to make excuses. It’s just either it’s done or it’s not. And, and the thing about this stuff, Brad, and the reason why it’s so important to we’re trying to get the last 10% done almost all the value like in software implementations. I mean, the pain comes in the whole project, if you get it wrong. Yeah, the pain comes out of the first 10%, which is not planning well or getting buy in. But the value to the business isn’t the last 10. And if you don’t have measures to help you push for that last 10%, you normally don’t get all the value out of these projects. And again, that’s why, you know, I would rather see someone show up and say, Sorry, you know, we’re ending up amber or red. But you know, we’re going to take the next couple months and get all the way to green, then to, you know, have almost a vanity score of green, and only get 90% of the outcome we want. So pushing for those outcomes is critical, critical piece on those goals. And that that takes time. And even to this day companies I’ve worked with for years, we still have to do quality control on those goals, because for whatever reason, they end up being squishy and not smart.
Brad Giles 34:10
It’s this. It’s the same for me. And one of the traps, I guess that you would see as well is teams who like to celebrate green, and I’m standing there at the front of the room. And I’m kind of like that’s not really green like the hooting and hollering. To use. You know, an American American. Yep. All ornateness celebrating the fact that Yeah, we’ve got 78% green this quarter, we did better than last quarter. And it’s like this is not winning. Like he doesn’t win by turning things green.
Kevin Lawrence 34:51
you don’t win by accomplishing 67% of a goal. That’s not a win.
Brad Giles 34:57
Well, they it’s what happens is even if we can push them to create SMART goals, they, they play with it at the end, they’re a bit like, Oh, well, you know, we couldn’t do that or the goalposts change or something happened. So I think we’ll probably call that green. Okay. Is the salesperson sitting in the seat working?
Kevin Lawrence 35:25
Exactly. And that’s why having that clear measure anything is the tension, the tension is healthy. That’s how you improve performance. It’s how you grow leaders is tension is healthy, and you don’t need to go and beat them over the head with it and insult them. And my question is, okay, great. And, you know, I often get people to rate themselves. So what was your performance this quarter on a scale of zero to 10? Or I will say, red, Amber, green, Amber using your word, but or do that? And then it’s okay, great. How are you going to be better or more effective next quarter. And it’s like a flywheel every quarter, we self evaluate. And then we try and do better. And most of the people get better and better because they learn something every time. No, there’s a few along the way that don’t. But hey, as a leader, it makes it very easy to separate those that perform from those that just maybe talk about it
Brad Giles 36:29
in a way that that amber is quite catchy, you may find yourself using it more often. But to the point. Yeah, I think that as teams execute, it’s just about focusing relentlessly on getting to that next point. So we’ve spoken about priorities. Yeah, digging into those priorities, making sure that we’re measuring the results, not the activity. And that’s what many mediocre teams are doing measuring the activity, not the results. So then we move on. So we’ve spoken about priorities. But what about KPIs? Okay, so broadly, I would say that KPIs are working in the business and priorities, or okrs, something like that are working on the business. Okay. KPIs, working in the business priorities working on the business, a lot of the time today, we’ve been speaking about priorities, which is working on the business. But what about KPIs? Because KPIs should have a color as well? How is it different?
Kevin Lawrence 37:43
In my world, it’s the same. So if you can imagine like, the different strata of the ocean, right is green would be up with a surface, you know, and that’s healthy, yellow or Amber, it’s sunk a little bit lower, and red is noticeably lower. Right? It’s just, it’s just a different band of performance. And let’s say that your, your sales conversion was supposed to be 30%. And so, you know, 30% plus would be green. And we might say that 25 to 30% is Amber, or yellow, and under 25%, or 24.999, and less would be red. That’s all that it is. And depending on how that KPI is flowing in the owners, there’s a version of a chart that I just love that, you know, shows last year’s numbers, maybe the year before in a line chart, the goal for this year, and then the actual, but it just, you know, it goes through those zones of red, yellow, green, depending on the level of achievement, I know that that’s the way that we see it and use it. And again, you need to have one version that you use for your goals and KPIs in your company. But yeah, Brad, what is it in your world?
Brad Giles 39:02
It’s the same look, it’s absolutely the same. And, I would say even the planning should be the same, right? Not in my world best practice would be, we’d begin the quarter we begin the 13 week race, each person has got their one or two KPIs, which is working in the business. And then they’ve got their three to five priorities and that can cascade leadership, team member executive, to departments, so forth, so forth. But we can then look at those KPIs and then say, well, what’s your third aim weight plan? Let me pick a really hard one. Imagine that we’re doing an employee Net Promoter Score every quarter, okay? And someone is accountable for that on the leadership team. And so that is about the happiness of employees in our company that that measure. So last quarter, these individuals have had a 30, a score of 30, on the NPS, the happiness of the people in the company, then that is their job to basically build up and maintain that above an acceptable level. So then they might say, so my goal, in terms of my KPIs for next quarter is to take it to 35. But the most important thing is, this is my plan to do that over the next 13 weeks. So I’m going to have these three meetings, I’m going to do this other survey, we’re going to book out the, I don’t know the holiday party, whatever it might be. But these are the things I’m going to do, I’m going to run the START STOP KEEP, to be able to improve that these are the active things I’m going to do so exactly the same as priorities for KPIs, we measure it, we plan around it, and we build it the same.
Kevin Lawrence 40:54
Yeah, perfect. And again, the whole idea is just to make it really simple for people to know when they’re on track, in deep trouble, and maybe somewhere in between, so you can more easily communicate and the team can self manage through these issues. And there’s no surprises. And at the end of the day, in every high performing team that we help to build every single one, everyone has to know their marching orders and to be able to understand how they’re doing. And for the rest of the team. We don’t want to spend forever and hours synchronizing. And when you do it with red, yellow, green, it’s really easy. And it’s really quick.
Brad Giles 41:35
The important thing, I guess, that we’ve touched on is we want to know the measurable, we want to color the measurable everyone the same. And then we want the whole team to know it simultaneously. And we want an element of pure accountability that stems from that. So the way that we advocate that is through dashboards. Okay. Yeah. So it could be a big screen in the office, it could be, you know, a kind of a board on the website that you look at, in during the media blitz some way where we’ve got all of our KPIs and priorities together. And so that’s our plan next week is to talk about dashboards, and how you can use dashboards in your business most effectively.
Kevin Lawrence 42:33
Yeah, and we’ll dig into that deeply. So if we go back and review what we’re talking about here today, Brad, we’re really saying is red, yellow, green is an easy way to communicate around the quality of execution, and achievement in the business, it creates a common language, come up with your own definitions we share with you if you and that’s point number one was point number two, is these traffic lights, as we said, helps communication I think one or two should have been the other way around it because I keep going to one first or two first.
Brad Giles 43:03
All right, let’s re record the episode.
Kevin Lawrence 43:05
Yeah, exactly. Let’s do it again good luck with that. So um, and then three, you just spend less time reviewing and more time working on important stuff and moving the business ahead. Number four, it creates peer accountability and enables self-management, which is the best thing that we can do for our people. But you got to be smart about it. And he got to have smart goals with a clear outcome or a clear finish line that we’re gonna cross and as we shared in that part of the show, is it you don’t want people to get excited about measuring activity, its outcomes, we’re measuring the result. Again, if we’re playing football, or soccer is not the number of attempts that you made to score a goal or to get points, it’s the scoring of the points. And then and same with KPIs. You need to have really smart KPIs. And those KPIs always should be stretched a little bit a little to make it better and better. Next week, we’ll talk about dashboards. So that’s the show today, red, yellow, green or red, Amber green traffic lights to make it easier to manage and measure performance. So you want to wrap this up there, Brad?
Brad Giles 44:22
Yeah, sure. So thanks for listening. Good show. Good chat today. As always, every week we released these podcasts on how to build an enduring great business. My name is Brad Giles, joined as always, by with Kevin Lawrence, you can reach me at evolution partners.com.au and Kevin at Lawrenceandco.com. Thanks very much for joining us on traffic lights today. Enjoy your week. We’d love to chat to you again next week. Take care.
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