What is your R-number?

My reflections on metrics that help you detect the problem before it becomes too late to fix

Over the past three months we’ve seen politicians presenting statistical charts in prime time. Who would have thought that? We have become familiar with a wide variety of corona metrics and been taught concepts like exponential growth, rate of transmission and predictive modelling that are usually limited to statistics courses at universities.

In particular one corona metric has seemed to stand out from the crowd. It is the so-called R-number, which has been at the core of how prime ministers and governors have explained their corona-strategy to the people. The R stands for reproduction and is the number of people one infected person will pass the virus on to, on average. Keep the number below 1, and the outbreak is under control. Allow it to rise above 1, and you will soon face a big problem.

When I first heard about the R-number a few months ago it made me think of the famous canary intervention, pioneered by the Scottish physiologist John Scott Haldane about 100 years ago to save the lives of coal mine workers. In those days many workers died from carbon monoxide poisoning caused by firedamp and coal dust explosions in the mines. The poison gasses had no smell and would therefore build to deadly levels without the coal mine workers noticing.

Haldane’s idea was to equip workers with canaries when entering the mines. The anatomy of canaries is quite unique in the sense that it allows them to get a double dose of oxygen, one when they inhale and another when they exhale. That’s why John Scott Haldane believed they were the perfect early detectors of carbon monoxide in the mines. For every time humans would inhale a dose of toxic gasses canaries would get a double dose, fall of its perch and that would be a signal for the coal mine workers to evacuate. The canary intervention saved many lives.

I guess you could say that the R-number is designed to do the same job for us as canaries did for the coal mine workers: detect the danger early so we can change our behaviour before it is too late. Because there is a time delay between the reproduction number rising, people being hospitalised and some dying the R-number enables us to be on the front foot and change before the problem spins completely out of control.

I believe every business should have its own R-number. Think about it this way; within organisations there is also a time delay between cause and effect. Your outcomes in April are not the consequence of something you did in April. In some businesses the time delay is days, in other businesses, depending on its size and complexity, it can be months and even years before your underlying performance impacts your results.

Let’s say you run a restaurant and you’ve identified the metric “time from order to delivery” as a key driver of customer satisfaction which again drives profitability. If “time from order to delivery” starts to drops off it might not show up in your customer satisfaction score straight away but over time it will, and at that point the damage has probably already happened because your customers had enough and have decided to go eat somewhere else.

However, having identified “time from order to delivery” as a key metric is what allows you to detect and fix the problem before it pops up on your financial statement. That’s exactly what a good R-number does, it helps you confront the need for change before it become obvious.

Having spent time with many leaders in many different industries I think that businesses are generally too focused on outcomes and not paying enough attention to the metrics that actually drive the outcomes, and as a consequence they become too reactive. For example, about 10 years ago Starbucks almost went out of business because the management team had become obsessed with the company’s stock price and especially how many new stores it opened during a quarter. It completely overlooked that one of the key underlying metrics had started to drop off. Many customers who use to come in twice a day had stopped coming in for their afternoon treats. Starbucks didn’t take notice, and when the problem became obvious and the stock price dropped 42% in one year it was almost too late to change.

So here is the question we should all consider: What is the R-number in your business?

What is your R-number?

My reflections on metrics that help you detect the problem before it becomes too late to fix

Over the past three months we’ve seen politicians presenting statistical charts in prime time. Who would have thought that? We have become familiar with a wide variety of corona metrics and been taught concepts like exponential growth, rate of transmission and predictive modelling that are usually limited to statistics courses at universities.

In particular one corona metric has seemed to stand out from the crowd. It is the so-called R-number, which has been at the core of how prime ministers and governors have explained their corona-strategy to the people. The R stands for reproduction and is the number of people one infected person will pass the virus on to, on average. Keep the number below 1, and the outbreak is under control. Allow it to rise above 1, and you will soon face a big problem.

When I first heard about the R-number a few months ago it made me think of the famous canary intervention, pioneered by the Scottish physiologist John Scott Haldane about 100 years ago to save the lives of coal mine workers. In those days many workers died from carbon monoxide poisoning caused by firedamp and coal dust explosions in the mines. The poison gasses had no smell and would therefore build to deadly levels without the coal mine workers noticing.

Haldane’s idea was to equip workers with canaries when entering the mines. The anatomy of canaries is quite unique in the sense that it allows them to get a double dose of oxygen, one when they inhale and another when they exhale. That’s why John Scott Haldane believed they were the perfect early detectors of carbon monoxide in the mines. For every time humans would inhale a dose of toxic gasses canaries would get a double dose, fall of its perch and that would be a signal for the coal mine workers to evacuate. The canary intervention saved many lives.

I guess you could say that the R-number is designed to do the same job for us as canaries did for the coal mine workers: detect the danger early so we can change our behaviour before it is too late. Because there is a time delay between the reproduction number rising, people being hospitalised and some dying the R-number enables us to be on the front foot and change before the problem spins completely out of control.

I believe every business should have its own R-number. Think about it this way; within organisations there is also a time delay between cause and effect. Your outcomes in April are not the consequence of something you did in April. In some businesses the time delay is days, in other businesses, depending on its size and complexity, it can be months and even years before your underlying performance impacts your results.

Let’s say you run a restaurant and you’ve identified the metric “time from order to delivery” as a key driver of customer satisfaction which again drives profitability. If “time from order to delivery” starts to drops off it might not show up in your customer satisfaction score straight away but over time it will, and at that point the damage has probably already happened because your customers had enough and have decided to go eat somewhere else.

However, having identified “time from order to delivery” as a key metric is what allows you to detect and fix the problem before it pops up on your financial statement. That’s exactly what a good R-number does, it helps you confront the need for change before it become obvious.

Having spent time with many leaders in many different industries I think that businesses are generally too focused on outcomes and not paying enough attention to the metrics that actually drive the outcomes, and as a consequence they become too reactive. For example, about 10 years ago Starbucks almost went out of business because the management team had become obsessed with the company’s stock price and especially how many new stores it opened during a quarter. It completely overlooked that one of the key underlying metrics had started to drop off. Many customers who use to come in twice a day had stopped coming in for their afternoon treats. Starbucks didn’t take notice, and when the problem became obvious and the stock price dropped 42% in one year it was almost too late to change.

So here is the question we should all consider: What is the R-number in your business?

What the world's most successful sprint coach can teach companies about recruitment

A few years back when doing the research for my book "The Gold Mine Effect" I travelled to Kingston, Jamaica to meet Stephen Francis, the world's most successful sprint coach over the past 15 years.

Stephen Francis, the founder of MVP Track & Field Club, has excelled a finding and developing talent that most other people have overlooked. As he told me: ‘I love to work with people who are hungry for a second chance.

I love to prove that people made a mistake. That other stuff bores me. I stay clear of those I call “can’t miss” athletes as a mat- ter of principle. Instead I look for those with the greatest development potential.”

According to Stephen Francis, one of the great misconceptions about talent identification arises from our conviction that current high performance automatically equals a great potential and that current average performance equals low potential. Current performance can certainly be a good indicator of potential but this is not always the case.

What is important to him is not performance in itself, but what caused it and the story that lies behind it. Because of this, one of the key areas Francis looks at when trying to assess talent is training history. This is based on the idea that if you know an athlete’s past, you’ll have a greater chance of evaluating the possibilities for future.

Looking beyond the obvious result is a key principle when spotting talent in a business environment too. Don’t judge potential using numbers alone. Dig below the surface to learn how the numbers were achieved or what stood in the way that might have prevented them from being better. Was a manager successful more because of favourable market conditions than because they were a competent decision-maker? Did a sales person deliver good numbers because he had an amazing product that sold itself or because he systematically worked on building a strong pipeline?

As Stephen Francis puts it: ‘It’s not about the performance – it’s about the story behind the performance.‘

Why successful companies so often hesitate to change until it is too late

If a frog is placed in boiling water, it will jump out to save its life.

But if placed in cold water that is slowly heated, the frog won’t perceive the danger and eventually it will be cooked to death.

The boiling frog problem is a great metaphor for why successful companies often don’t see the danger before it is too late, because they don’t notice gradual changes in their environment. One customer is leaving, and the reaction is “don’t worry, it is just one and they will come back when they realize they need us”.

An unconventional competitor entering the market place, but… “not a serious threat, they are still small and their profits are not anywhere close to ours.” One day it all blows up and at the time it feels like a big shock to everyone, but in reality it started a long time ago with slowly slipping standards. This is the principle of gradualism; incremental changes over time tends to go unnoticed.

The boiling frog highlights one of the biggest challenges in successful organisations where profits : How do you detect early signals that the market is changing? How do you confront problems before they become obvious?