Not what you do but how you do it

Hiroshi Mikitani

CEO, Rakuten Inc.

It’s Not What You Do, It’s The Way That You Do It

It’s Not What You Do, It’s The Way That You Do It

June 13, 2013

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Business leaders often talk about the need for better metrics. Measurement is a critical factor in success since it keeps disparate players on a single track moving forward. Measurement allows you to see, in stark terms, how you are really doing. I’m a big fan of measurement, because numbers do not lie.
But when it comes to measurement, it’s important to understand what you are measuring and why. A focus on metrics that fails to give you what you need to improve is useless. It’s a lot of number crunching for not much benefit. For that reason, I recently spoke to the assembled staff at Rakuten at our weekly meeting about the one of the critical factors of success here: the KPI.
KPI, as many in business will know, stands for Key Performance Indicator. We at Rakuten use the KPI system all the time – but also in ways that are unique to our culture.
We measure results. KPIs can be set for individuals, teams, divisions or the company as a whole. We might set a sales goal for a country or a profitability goal for a particular product. I believe strongly in setting specific big, even seemingly outrageous goals for large groups in our company. I have been inspired many times by the speech of U.S. President John F. Kennedy when he committed to putting a man on the moon within the decade. It was a big goal and a specific one. As such, it was a beautifully designed KPI and I believe it drove the ultimate success of the U.S. space program. If JFK had said: Just try very hard to someday get to the moon would that have been as effective? I think not. Great KPIs are stretch goals, and at the same time, they are clear. You either make it or you don’t.
We measure actions. This is a twist we apply at Rakuten. For many companies, only the results matter. How you get that performance is your own concern. But digging deeper, I think that action KPIs in addition to performance are very important for Rakuten. We do this because there are some situations in which the action itself is positive and should be recognized as an achievement. An engineer’s KPI might be the number of new services we launch but for the sales team, it might be how much face-to-face contact we have with clients. Action KPIs are often processes we undertake that differentiate us from the competition. In this way, they serve our long term goals.
Success today is surely a numbers game. Metrics are the key to smart businesses processes, since they keep us honest and impartial in our judgment. But consider what you measure. Consider actions as well as results. The action KPIs may be just as important to your ultimate success.
Photo: Shutterstock
My book: Marketplace 3.0