How did it go with last week’s back-of-the-napkin exercise? If you’re not sure what I’m referencing, you can catch-up here.

But here’s the quick summary: I invited business owners to look at their offers (services/products) as assets. I invited employees to view the various roles of their careers in the same light. In other words, in much the same way as you would the holdings of an investment portfolio. 

With today’s missive, I’m continuing to draw a parallel between investing in the stock market and managing your business or career. Though with a focus on performance. Hence, the title. 

It’s one that may seem obvious. But in practice, how often do you keep the, “it’s relative” part in mind? Regardless of the type of performance you’re measuring – stock market, business, career, or something else. 

While you noodle on that…

Four Layers of Performance

There are three pathways to wealth: own a business; invest in the stock market; own income-producing real estate. 

Whether you do all three, a combination of two, or just one, the point is to make money. To find yourself in a position where the value in the future is larger than the initial investment. Though sometimes that isn’t the case – sometimes the value in the future is less than the initial investment. 

Up or down, the difference is referred to as your return on investment (ROI). Calculating it is easy when it’s fairly straightforward – few assets and not a lot of inflows and outflows. The exercise becomes more complicated the more assets held in the portfolio and the more inflows/outflows you have.

When you evaluate a portfolio, you look at the individual assets and the portfolio as a whole. Part of this evaluation, with regards to stocks, is looking at how the size (large/mid-cap/small), style (value/growth), and sector complement each other.

When you evaluate a portfolio, you often reference an external benchmark. The more common ones – the ones you hear about during the nightly news – are the Dow Jones Industrial Average, S&P 500,  and Nasdaq. Less common, but perhaps more useful are indices like the Russell 2000 and Wilshire 5000. And this is just on the stock/equity side. There are others for the stock market, as well as for the bond market.

When you evaluate a portfolio, you are also (hopefully) gauging your performance relative to your goals. Or, your internal benchmark. 

When you evaluate a portfolio, you are also affirming the level of risk (risk of what you may lose, as well as the opportunity cost) with which you’re comfortable. Also, an internal benchmark.

Any chance you’re beginning to see why I’m using the evaluation of your investment portfolio to frame a discussion around doing the same for your business or career? Even though it can become complicated for many reasons.

It’s because you’d benefit from applying these same four layers of evaluation to your business or career.

Sure, it’s not a perfect overlay. But, that’s not the point. 

The point is to encourage you to adopt a new (?) viewpoint when it comes to how you manage your business or career.

Business owners: How often do you review the performance of your offers vis-a-vis how much money they are contributing to your total revenue? 

How often do you assess whether they are individually profitable, breaking-even, or losing money? 

How often do you evaluate each offer in the context of your other offers; in other words, do your individual offers make sense when you look at the ecosystem of all your offers? 

Do you calculate how much time it takes for you to create, deliver, and maintain said offers? 

Do you ask if you’re having fun?

Non-business owners: How often do you take a step back to look at the various positions you’ve held – either within your current company and/or across several? Yes, you have your CV and LinkedIn profile. But that is typically a listing of what you’ve done and accomplished. This format doesn’t usually invite the sort of perspective shift I’m suggesting.

How often do you draw a pie and note your experience and skills as different sections of that pie chart? 

How often do you chart the growth of your base and total compensation (and maybe even your benefits)? How often do you evaluate if this compensation profile is helping you reach your life and financial goals? 

How often do you reference the chart to identify opportunities where you may be playing it too safe or too risky when it comes to your career overall?

How often do you ask if your pie chart is making room for the lifestyle you most want?

Performance Measures More Than Numbers

When I used to manage money, one of the things that frustrated me were the clients who were only interested in whether their portfolio was up or down. I didn’t then and I don’t now dismiss the importance of numbers. They do, indeed, matter. A lot!

But I believe in using numbers to help you (and me) measure more than just the numbers. Because, numbers are a form of feedback about: 

  • The decisions and choices you’ve made and need to make
  • Your expectations
  • Your habits 
  • Your systems and structures
  • What’s working and what needs improvement
  • Where are you being proactive and strategic
  • Where are you being passive and reactive
  • Where are you being complacent

Not only am I a huge advocate for measuring performance, I suggest doing it quarterly. Most importantly, though, is remembering that an important truth about performance: it’s personal and it is relative

It is useful to have external benchmarks (stock or bond indices; other people’s businesses; other people’s careers) as reference points. They can influence what you strive for. But the true “test” of how well you’re performing – how well you’re meeting your ROI – will always rest in whether or not you’re hitting your own internal benchmarks. 

What are yours?

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