Setting company strategy with data

ARR walk 

Break down the metrics you care about like the number of critical actions, revenue, etc into smaller data sets that are easy to understand.  You may be basing your performance on how your revenue grows and how often. This doesn’t always give you all the information on how your business is performing as revenue can grow even when other parts fail like having high churn trends so it’s important to break your metrics down into a better understanding.

Critical company metrics 

The most important type of metric could very well be ARR walks and similar metrics as they allow you understand your growth by monitoring the growth of your most important metric but there are other financial metrics you should also understand like metrics on:

• Capital efficiency
• Gross margin
• Number of customers and users
• Revenue growth year over year
• Customer satisfaction/NPS/churn

Setting the strategy

Having a deeper understanding of your company makes it easier to develop a winning strategy especially as you’re looking to grow your business. The ARR walk helps you understand exactly HOW to grow your business for example, if you struggle with a churn number that is uncomfortable, you can shore up the issues that affect NPS and customer satisfaction and so on. You can also decide not to use the ARR walk and similar growth related metrics like in a situation where you have capital efficiency issues, investing in making the cost of your infrastructure to make it more efficient may not be the best idea. Understanding the key drivers in your business influence these kind of decisions which is why it is important to have the data you need to create a good strategy.

Focus 

Pick a few major undertakings and focus on them for that year such as focusing on your growth related drivers if it is among the things that are important to your business. Remember to not only focus on growth drivers and give other areas like efficiency and quality metrics some attention as well so it doesn’t all go downhill. The best thing is to not try doing everything at once. Instead make a list of what you want to do and cut down the list to have only things with a common theme, then alternating between themes every other quarter of the year.

Understand your focus areas 

After getting your focus area, the next step is to fully understand this area. Take the initiative to better understand different aspects of your business on a deeper level. Some of your employees may have a special understanding of your business from previous experience and tapping into their knowledge can help the company understand your focus area even more if it is their area of expertise.

You can now create a great strategy when you have a clear understanding of which metrics to drive and how to do it.