Incorrect Aimpoint
“Abort, abort, abort. Request immediate reattack 1,000 meters south. We are under fire and need effects ASAP.”
I heard those words while pulling six Gs in an F/A-18 Super Hornet, 800 feet above the ground and moving at 500 knots. I had been lining up a simulated enemy target between two buildings when the Joint Terminal Attack Controller, or JTAC, called off the run.
I was in the right town, but I had acquired the wrong buildings.
No lives were at stake that day. It was a training flight. But the lesson was immediate: execution does not matter if the aimpoint is wrong. I could fly the profile correctly, manage the aircraft well, and still fail the mission. Having gained new information from the aborted run, I needed to reacquire the correct target and reengage.
Companies make the same mistake. They hit the metrics they have chosen, only to discover that those metrics are not moving them closer to the goal that matters.
The Inflight Debrief
What does a close air support exercise have to do with a microcap business? More than it might seem.
Every attack, every quarter, we should be looking for ways to get better. The Red Queen effect is real in biology and especially real in the world of small business: an organism or an organization needs to constantly adapt and improve just to survive. Standing still is falling behind.
On the ground, after the flight, we can run a precise debrief, separating signal from noise and studying the details. In business, that may look like an annual review, a board strategy session, or a full operating review. But when we are still flying – mid-quarter, mid-year, or mid-plan – we need a faster version of that discipline.
Before any attack, we need to be clear about where the target is in relation to where we are. In business, that means aligning KPIs with operational goals, and operational goals with strategic goals. The SMARTER framework for goal setting can be useful for setting KPIs, but it should come only after the executive team and board have had a frank conversation about what phase of the “Plant, Grow, Harvest” cycle the company is in. Only then can we define operational goals that align with the strategic thesis and build KPIs that measure real progress. Communication, data, and systems are all required to do this effectively. Shore has the resources to synthesize all three.
Change on the Fly
In my flying example, I put the aircraft on a trajectory to employ on the wrong target. The “KPI” I was tracking was 1,000 meters off. Businesses can do the same thing. They may not realize they have the wrong KPIs until midway through a quarter or year, when the metrics are being met, but the company is not getting any closer to its operational goal.
Say the operational goal is to improve EBITDA margin. The company decides to track two KPIs: improving NPS by 7 points and increasing revenue by 15% by year-end. By mid-year, the team conducts a debrief and sees that both KPIs are on track, but EBITDA margin has barely moved.
That is the moment for an in-flight debrief. The first question is whether EBITDA margin is simply lagging the metrics. Answering that requires judgment and a careful analysis of the relationship between the KPIs and EBITDA margin. But if the assessment shows that the KPIs are not driving the company toward the operational goal, then it is time to change course mid-flight.
The Next Attack
Once we realize we are pointed at the wrong target, we have two choices: revise the KPIs or change the operational goal. In most cases, the answer is the former. The operational goal, improved EBITDA margin, rarely changes mid-year. What changes is our understanding of which levers move it.
NPS and revenue growth may be reasonable indicators, but if they are climbing while margin is flat, and our data and judgment support a change, then they are not the right KPIs for this specific operational goal. Maybe the real drivers are gross margin per customer, labor productivity, or utilization.
The answer is not to keep diving at the same target because the team has already committed to it. Avoid the sunk cost fallacy. Abort the run, reacquire the target, and reengage with better information before the next attack.
The audit is simple. List your top three operational goals. Then list the KPIs your team is managing toward. For each one, ask whether the line of sight is clear.
If a KPI does not point directly at the goal, do not keep flying the same profile. Abort the run. Reacquire the target. Re-engage before the next quarter is gone.