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Empower Scale with Feedback Loops
Building a start-up from the ground up involves a lot of uncertainty. There is uncertainty as to whether customers will buy what you are…
Building a start-up from the ground up involves a lot of uncertainty. There is uncertainty as to whether customers will buy what you are selling, what product features to prioritize, what market segment to target, what person to hire, and the list just goes on and on. It is with each successive decision that businesses are built, but how do you know if you have made the right decision? And, if you didn’t what can you do about it?
This uncertainty is why feedback loops are so important. With each Company that I have advised or invested in, I have always repeated the familiar discussion on the importance of feedback loops. It is in the effective usage of feedback loops that a business can move fast and efficiently. To be clear, this does not mean mistake free.
What are Feedback Loops?
Feedback loops are in everything from nature to business, natural and man-made. At its simplest, it is a cycle of action, result, leading back to action. It is the result of the action that then dictates the subsequent action.
The effectiveness in the feedback loops lies on several factors:
- Measurement — For the results of an action to lead to any definitive insight, there must be a clear, definable and measurable outcomes collected.
- Evaluation — Data for the sake of data has no usefulness until you evaluate and analyze. This gives you the cause-and-effect linkages, “if I do X, then I expect Y to happen. But the data shows X led to Z”. This gives us evaluated results that provide the information we need to adjust future actions.
- Loop Length — Time is money as the saying goes and the more time that passes while waiting for feedback, the more costs you may be incurring. Shortening the loop length enables you to move faster and more efficiently as the feedback
Apply Feedback Loops
There is a long list of ways in which feedback loops can be applied into a business, let’s just take a look at a few.
· Sales / Customers / Users — It is important to constantly understand how the market is reacting to your product or service or even how a prospective market could react. It is these types of feedback loops (customer centric) that can help build and improve your products and services based on the needs of your target market which should result in improved customer experience and increased retention.
The type and source of feedback that you are sourcing will vary based upon the specifics of your product or service as well as with the objective. You may gather feedback from customer service complaints or maybe from NPS surveys or maybe you do social media listening or so on and so on.
Seeking a new market, you may launch customer surveys and aggregate secondary information. This would be gathered feedback. You would then carefully evaluate that feedback in order to create insights you can act upon in regard to whether and how to enter that market.
· Employee Engagement — Human capital is a critical competitive factor for businesses. Successfully implementing feedback loops internally can drive improved engagement, employee retention and performance which will have direct impact on the overall business outcomes.
The most recognizable employee feedback loops are the annual performance reviews that many companies implement. But there is much more room to expand upon this. The ability to create feedback loops that demonstrate to individual team members how their actions are directly impacting the success of the company can promote greater accountability, engagement, and feelings of pride in work. There are a number of software tools that are enabling companies to create and track performance goals, KPIs and OKRs in ways that shorten the feedback loops and provide actionable information for managers.
There are several additional ways in which to deploy feedback loops internally. These can lead to pathways to improve workplace processes, improve inter-departmental communication, and align an organization in unity towards its mission. Areas in which there are actions have results, which enable feedback loops targeting constant improvement.
Feedback loops are in every part of the organization. In DevOps, loops can drive improvements to enable an organization to ship code faster and better than before and align it directly with customer needs/wants. Marketing is looking for feedback to ensure the market is reacting to its messaging. Sales is looking to demonstrate revenue results. Management is sitting at the top looking for results from the team.
This is not a set it and forget it exercise. As with many learnings, it needs to be progressive as the linkages of cause and effect are not static and may shift and evolve over time as will company goals. With the effective deployment of feedback loops, you can enable your organization to act faster, efficiently and effectively.