As the year draws to a close and I seek to evaluate how I have done in my business this past year in relation to the goals I set for myself, I am called to share a great sailing term I was reminded of this past fall during the America’s Cup races. The acronym is VMG and it stands for Velocity Made Good. Simply put it is the speed toward the destination or mark, as it is called in sailboat racing.
A race course for sailboats is set up in a way that the marks are directly up wind or downwind, which sailboats can’t sail toward directly safely or efficiently. Thus the skill and strategy comes in the angles sailed toward the marks so that you go as fast as you can for as short a distance as possible. The challenge is that sailing faster generally takes you farther from the mark and sailing a more direct path slows the boat down. Thus the constant paradox of trading speed for distance is what makes VMG the Holy Grail of sailboat racing. This short video produced during the America’s Cup does an excellent job of explaining and demonstrating VMG further if you are interested in learning more.
How then does this sailing term relate to my or your yearend business review you ask? Well, my belief is that just like in sailing most business goals or initiatives have trade offs that have to be considered. It is never just a singular factor that drives results. Other dynamic factors force the concept of trade offs to be considered that require any business leader to play the two or three or even more variables against each other in real-time as they make progress toward the desired outcome.
The following are some concrete examples of VMG at play in business.
1. For my entrepreneurial business, it was the head winds of personal life events, (house move / remodel projects and the sickness / death of a family member) that forced me to slow the focus on the speed of my business.
2. A client chose to speed up their business by shifting the focus on external business development after a prolonged period of inward organizational development. The revenue generation helped to move the company forward even though there is still more organizational development to do.
3. Another client chose to slow the boat down to sail closer toward their goal of developing their own people to gain the skills and share identified best practices they needed to be successful in the long run. The opportunity cost may have been some lost business in the short run but over time there are now more people contributing to help drive new business.
4. A third client realized they could no longer sail directly toward the change they wanted because they were literally getting blown backwards. Instead they had to fall off and get the boat moving again and out of “Irons”. Another sailing term that takes place when the boat loses all forward momentum and therefore steering because it is stuck pointed directly into the wind.
If you are with me now on how the concept of VMG applies to business as it does to sail boat racing, then the question becomes how do you identify and track VMG if it is the Holy Grail measurement of both. The short answer, I believe, lies in these 5 steps:
1. Identify what the mark is – What is the target you are sailing toward? In sailing this is pretty easy to distinguish. In business identifying and agreeing on what the mark is does not come easily.
2. Identify the primary tradeoffs – What are the competing forces at work that need to be balanced? Again in sailing, it is the angle to the mark and the speed of the boat. The key is striking the right balance between the two. In business isolating just two competing forces is challenging.
3. Identify the secondary forces – What additional factors contribute to finding the optimal balance between the two previously identified primary forces? In the sailing video they talk about the steering, sail trim, boat balance and all the other factors lining up to achieve the optimal VMG so you sail the fastest and shortest course possible to the mark. This is just as much of an art in a business as it is on a racing sailboat because there is always much more complexity than just the two primary competing forces at work.
4. Make conscious choices about your VMG decisions along the way – Continually acknowledge the tradeoff you are making as you make it. “We are going to sail a little faster for a little longer distance.”
5. Accept that there is no perfect course to sail – The art is in getting to the mark as efficiently and effectively as you can by balancing the dynamic forces that are continually in play as you make steady progress toward the goal.
So as you reflect on your goal attainment this past year, I encourage you to consider not only whether you or did you not reach the mark, but also ask yourself what was your VMG along the way. More importantly as you set goals for next year, be sure you have your VMG instrumentation ready to go as you start toward your mark in 2014.