When we want to understand the success of a product launch, we use KPIs — key performance indicators — to figure out what went right and what went wrong. But, what if we want to understand the success of our lives? What indicators do we use?
How do you measure your life? Salary? Amount of time spent with family? Books read?
These are questions I asked myself not too long ago. I know I have an indeterminate, finite amount of time left on this Earth; and my bizarrely structured brain insists on optimizing that time to the best method possible.
When I thought about optimizing it, I first considered the lifeblood of data analysis: KPIs and OKRs.
KPIs, or key performance indicators, are the vital measures for which you determine whether something is a success. For example, if I’m Facebook and I’m trying to determine the success of a new “Facebook Dating” app, I might want to consider sign ups, installs, monthly active users (MAUs), or in-app ad impressions. Really all these measures have their own pros and cons, and it’s up to the user to determine which they want to call “key”.
On the other hand, OKRs (or objectives and key results) are a system in which you create radical goals and then use the data from the results of those goals to determine where to go next. For example, Facebook might make the OKR of getting one million MAUs in six months. During that time they’ve strive to hit that goal, then at the end of six months they’ll circle back and determine how much they actually got, as well as any other effects or lessons that came out of that process.
So, when I first began trying to implement these two processes, I first had to determine what the hell I was measuring in the first place. This meant defining my goals in life in easy, quantifiable terms.
Alright, well… I knew I wanted to stay fit and health in the long term, and run a successful business, and work down my entertainment backlog — just as a few examples. So, now it was time to figure out how to set metrics for all these.
The entertainment backlog is certainly the easiest and most straightforward — you can literally just say “number of movies watched” or “number of games beaten” and call it a day. You might even go for extravagance and say “number of insights gleamed from books”, or something like that. But the end goal translates pretty nicely into a metric regardless of how you slice it.
Business is another fairly easy one, although in this case you’d have to define “success”. Is it in MRR? Or PNL? Or LTV/CAC? Or any of the other ridiculous business acronyms that exist out there?
Well, first I had to dive down on why I wanted to have a successful business in the first place. When I got down to it, I really just wanted the autonomy; to be my own boss, and do what I wanted when I wanted. So, in that case, my goal would be to have a profitable company that gives me enough to live a reasonable life.
Well, let’s markdown a “reasonable life” as roughly 55k/yr in salary (on 55k/yr with your own company is the “emotional equivalent” of 120k/yr in a real job — this is an interesting idea I’ve learned about that I’ll share in a future blog post!). So, 55k divided by 12 is roughly $4,600 a month. So, is my goal to hit 4.6k MMR?
Well, not quite! Recall that revenue is a top line item, which means we still need to incorporate variable costs, as well as any amount saved for taxes/reinvestment. To keep things simple, let’s say that these together amount for roughly 30% of the total revenue. So, the real number we’d be after is 55k * 1.3 = 71.5k, or ~6k MMR.
Alright, well that’s business down. Now we move on to health. This is where things… get tricky.
Firstly, what does “being healthy” mean, anyway? It’s easy to define “healthy” in terms of a business (make more money than you spend), and it’s easy to define “healthy” for a backlog (finish something, damn it!). But what the hell is “being healthy”… you know, in general? Is it getting 8 hours of sleep? Or being on a mediterranean diet? Or walking 8,000 steps a day? Or having a regular meditation practice? Or all of the above? With business, we just had to find the measure… but at the end of the day, MMR and PNL and LTV/CAC all meant the same thing as “make more money than you spend”. But none of these ones have anything to do with each other at all!
Secondly, there’s a lot of factors going into this. For example, what’s my OKR if I choose “diet” as my KPI? Eat 100 green beans by the end of the month? Is that really going to make me more healthy? And what about something like weight lifting — I might be able to bench 200 pounds now, but will I be able to bench 200 pounds when I’m 80? Probably not. That means that the number will naturally go down, which means it doesn’t help all that much as a metric!
In cases like these, we’ll have to mess with our definition of the metrics. In diet, we might want to play a finite game — if we convert all of the things we eat to healthy foods, then we win. Whereas with fitness, we might do a conditional process — understand what’s good for our current condition (such as age), and try to score a high in a relative sense.
So, with these KPIs, they can always be made. More importantly, they can definitely keep you on track for your goals. You really just have to keep in mind how you’ll be able to adequately quantify your metrics, and what system the OKRs will work on. But the power of technical analysis does work, at least in my experience.