There’s one single decision you can make that will revolutionize your the day-to-day execution and 10x your odds of winning big in business.
It’s the decision to measure the right thing.
Entrepreneurs have this weird tendency to magically improve whatever it is they’re really tracking, paying attention to, or measuring.
It’s weird because it isn’t even deliberate. You measure stuff, and it gets better. It just happens.
To understand why this effect is so powerful – and how to use it to get more performance out of yourself – you have to wrap your head around this thing psychologists call “Proximal Goal Setting”.
Here’s the deal: When the goal you’re working toward is a years long project that requires requires luck, timing and connections on top of the requisite “hard work” and entrepreneurial hustle… you still need to feel like you’re making day-to-day progress.
Without a sense of day-to-day forward motion… you’ll lose the momentum and sense of “getting there” that keeps you motivated and focused!
Enter “proximal goals”:
Proximal goals work via the gamification of your small, incremental action steps that move you toward your big, long term and far-away vision. They dramatically improve your focus and effectiveness because when entrepreneurs feel that day-to-day momentum, the feeling feeds their get-shit-done engine.
Simply put, When you feel like you’re winning, it’s effortless to stay motivated.
(This gamification of the day-to-day is a central thesis of what we do here at Commit Action, but there is a deeper significance all entrepreneurs should consider in how they track their day to day activity. For more info on the brain science we use, check out our free course that breaks down precisely why a tiny fraction of superhuman entrepreneurs succeed so much easier, faster and more often.)
Gamification is the magic of Measurement
Gamification is about creating a genuine experience of “winning or losing” in a scenario that’d otherwise be lacking it. Measurement itself is what creates that experience.
Measurement is a feedback loop that tells you that if you’re doing the right thing, or the wrong thing. And it serves as a powerful motivator.
Consider something like the Apple Watch: It takes your ambiguous long term fitness goal (lose weight, get in better shape etc) and serves up a micro, measured proximal goal for each day… to close your rings.
Closing your rings feels good because it’s quantified. It’s bounded. It’s doable in the short term of today. There’s a clear, immediate piece of information telling you if you’re “winning” or if you’re “losing”.
Human brains LOVE any challenge that is instantly clear that you’re winning or losing.
(This is why video games are so fun: Instant feedback. Your competency is continually and instantly measured and reflected back to you by the scoring system of the game.)
Here’s why humans crave this measurement and gamification:
For any major goal including things like weight loss and especially entrepreneurial success—in the day-to-day moments—it’s actually impossible to tell if you are moving in the right direction.
It’s impossible to know if you’re winning.Right here and now, you simply cannot tell if what you worked on this afternoon made a difference.
You have to rely on a proxy for success, instead. That’s what the Apple Watch “closing your rings” represents: It’s a short term proxy for the long term healthy goal you are ultimately aiming for.
Human psychology is set up for us to thrive with measurement. We love clocking our competency. We love discrete, winnable challenges. That’s why we get a kick out of “closing our rings”.
Measurement works because it feels amazing to have a day where you experience both starting and finishing something.
When the thing you’re paying attention to in the present moment seems to be moving and improving, that experience—and the dopamine and serotonin it creates—kicks off a virtuous cycle where you get more and more excited to take action.
This is why what you choose to measure—as an entrepreneur—will determine what truly improves in your business.
So what is it that you are paying attention to?
There are several mental levels that question can be answered.
Obviously as an entrepreneur, you want “success”. Wealth, Freedom and perhaps Impact. Or fame.
(Let’s face it: Status and recognition is a powerful motivator for many people.)
The problem is that day-to-day, it’s impossible to know if the thing you’re working on right now—like this afternoon—is genuinely moving you towards those goals.
Take a quick look at your to-do list today and see if I’m right:
What is it that you can accomplish today that will give you direct feedback of the experience of Wealth, Freedom or any of that stuff?
This is why you have to measure something else as a proxy of those things you really want. As an entrepreneur you must develop a thesis that looks like this:
“Doing X is going to move me toward the success I really want. If I track it and improve it, I am likely to get what it is that I’m ultimately seeking.”
Hence the question: What is it that you are paying attention to?
On the literal level, it could be the actual dashboards you pay attention to in your business. What do they say?
Sales? Churn? Traffic? Conversion rates?
When we scratch a little deeper into entrepreneurial psychology, we can think about what you as a business owner are paying attention to:
Where is it that you’re most focused on, in your business?
I’ve worked with entrepreneurs who monitor the health of their business—and really their own mental state—by tracking the company’s checking account balance.
Low balance = anxious.
Lots of money = happy.
(You can see how troubling this would be in any business that requires capital investment and long term planning!)
Meanwhile, startup founders pay a lot of attention to cash runway. (How many months they have left, with the money that’s in the bank.)
Digital Marketers pay a lot of attention to revenue, but not always profits. That’s why a lot of “seven figure launch” gurus are secretly barely making ends meet.
A lot of people new to entrepreneurship in the last few years are paying attention to social recognition more than anything to do with their actual business. They’re concerned with likes, re-tweets and attention. It’s easy to measure and it feels good when you make progress. It’s also a substitute for actual success and real impact because it’s a lot easier to obtain.
The worst thing you can pay attention to:
One of the things we like to call out in our clients at Commit Action is paying attention to how many hours you’re spending at your desk.
This has to be the worst proxy for entrepreneurial success. Ever.
Case in point: Bill Gates isn’t worth 800,000 times more than you because he worked 800,000 more hours than you did.
Entrepreneurship has always been a game of leverage. And it always will be. Hustle and handwork is important, but if you’re not working smarter then you might as well just be working in a regular nine-to-five job.
Whatever you measure, you’ll get more of:
If the time you’re spending at your desk is the only day-to-day “proxy” you have for how well you’re doing… then you’re going to find yourself (unconsciously) spending more and more time at that desk.
Does it help? Is that what you want? Are you measuring the right thing here?
If you’re obsessed with your company’s checking account balance, you’re going to say no to opportunities to invest in growth that pay long term dividends… And that could be shortsighted because the proxy you’ve chosen is in conflict with your actual long term goal of bottom-line growth.
Whatever you measure is going to—deeply and powerfully—influence your behavior. Your unconscious preferences, your sense of discomfort with certain decisions, what keeps you up at night… all of that will be driven by what you’re focusing on.
So, the question remains:
What SHOULD you be paying attention to?
You don’t read my writing because you believe in easy answers and simple bullet-point five step formulas.
The truth about measurement is that it is different for every business model. And I don’t necessarily think there’s a definitive answer. Most entrepreneurs have to measure a lot of different things in order to ultimately win.
I can tell you some things I suspect matter (deeply) and are worthy of considering paying attention to:
... is the total net revenue per customer (after subtracting the cost of delivering your goods or service to the customer). It bakes in a basic top-of-the-P&L profitability calculation. Entrepreneurs who pay attention (and optimize) their customer LTV tend to have very, very sexy businesses that are a lot of fun to run.
... is another good one. This is what you have to spend – including your time, your staff’s pay for their time, your media expenses etc – to turn a stranger into a customer.
If you can get a really healthy ratio in the delta between your CAC and your LTV, you’re going to find that people will be throwing money at your business. You’ll end up in the enviable position where you don’t even need investor money, because you can just borrow it and pay it back effortlessly.
Here’s another good one that there isn’t an acronym for:
... How consistent is your ability to acquire customers? How regularly are strangers finding out about your business and deciding to give you their money? This is sort of about the the size of your market. It’s also about how often you collide with your prospects.
To throw you a curve ball, here’s a weird one that I focused on measuring for years… and it became the backbone of my whole career:
I built my Shrink for Entrepreneurs business as a thought leader. I wrote about the intersection of psychology and business for long enough (and consistently enough) that it started bringing me hordes of clients. For the longest time, I measured my daily output of words of new material. If I wasn’t writing anything, I knew I wasn’t moving in the right long term direction. 500 words a day was a huge win that paid me compounding interest.
There are all sorts of things you can be paying attention to. And my point with that last one is, depending on your business, there are some very useful proximal goals that are actually quite far from the obvious metrics like “number of customers paying money”.
What’s important is asking the question.
Realizing that you are going to unconsciously measure SOMETHING is the key here. Because all entrepreneurs need those game-ified short feedback loops to feel good about taking action.
Most entrepreneurs should be playing a dozen different kinds of proximal-goal games with themselves, across their customer acquisition channels, their customer service “departments”, their product design, networking and more. Not to mention their personal life, their health and relationships to others.
If you only walk away from this article with one insight, let it be this: Find out what you’re already unconsciously measuring on a day-to-day. And think it through. Consider changing it. And if you want help installing a powerful cornerstone ritual of measurement into your life and business (among other productivity supercharging tactics!) check out the Commit Action coaching service!
At the end of the day, there’s just one thing you need to know about the psychology of measurement: Whatever you’re measuring is what you’re going to get more of.