Scaling Businesses and Personal Growth: My Annual Review Process

Many of you are familiar with the course I teach on scaling operations. However, it’s becoming increasingly apparent that the principles we associate with scaling operations are also applicable to the broader concept of personal growth. In this article, I aim to explore a somewhat uncharted territory for this newsletter by discussing how these operational scaling concepts may be applied to our own personal development journey. 

Let me begin with a few clarifications: I don’t intend to impose my methods on anyone, but over the years, I’ve shared the techniques I incorporate into my annual review with many of my students and toward the end of this year, I received multiple emails from alumni requesting that I share the process more formally. So my goal is not to be prescriptive but rather to modestly offer an outline and an example of my own approach, hoping it will be useful.

This will be a long and very personal post. I’ll start with the “business” process, move on to the personal process, and lastly, share the philosophical foundations that influenced it. It’s fairly modular, so feel free to jump in and read whichever part interests you most, or you find most helpful.

Identifying Core Processes

The idea originates from a couple of key principles I frequently emphasize in my discussions with firms: the critical need for careful consideration in adopting new processes and the timing of their introduction. Expanding on this, I’ve created a technique for pinpointing what I call ‘core processes.’ Let’s first outline this approach for firms, then we can transfer it to personal context. 

The technique has four steps:

1. Defining the Business Model: First, clarify what your business stands for. This involves articulating your value proposition, which answers questions like: What does my business offer? What problems does it solve for customers? This could range from offering competitive pricing and enhancing product quality to providing peace of mind through reliable services, etc. 

2. Creating a Process Map: Once the business model is clear, develop a comprehensive map of all the processes within the firm. This map goes beyond just formal processes or standard operating procedures (SOPs). It includes everything the business does, such as procurement, hiring, sales, customer service, and more. The idea is to have a bird’s-eye view of all activities, not just the high-profile or formalized ones.

3. Analyzing Money Flow and Frequency: After mapping out the processes, the focus shifts to understanding where money flows within these processes and identifying those with a high frequency or velocity. This means looking at which processes are most common, which handle the most transactions, or where the bulk of the business’s finances are channeled.

4. Identifying Areas of Leverage: This is a crucial concept. In a business context, leverage refers to processes or areas where small changes or adjustments can lead to disproportionately large benefits or improvements. For example, a minor change in the procurement process might significantly reduce costs, or a small tweak in customer service protocol could dramatically improve customer satisfaction and loyalty. This concept of leverage is pivotal as it helps businesses focus their efforts and resources on areas that offer the most potential for improvement and growth. 

The method results in a set of “core processes,” which is where a firm needs to invest in improving, standardizing, and identifying metrics to ensure high quality and consistency. 

High-Level Annual Review 

Now, let’s delve into how this method can be applied on a personal level. 

I start by thoroughly reflecting on the previous year, which involves reviewing my key activities and accomplishments over the past twelve months. 

In particular, I assess which goals were not met (I’ll explain the goal-setting process later) and reflect on key aspects of each unmet goal: What were the primary outcomes? What strategies were successful, and which ones were not? I also identify the main challenges and hurdles I faced in these areas. My goals typically span various categories, including teaching and research, my service to organizations, particularly the M&T program, my investments, and my firm involvement. 

I summarize the review of the past year with a simple question: “What were the pivotal lessons and experiences of the past year?” This involves a two-fold reflection:

1. Enjoyment and Aspirations: Identifying activities that brought joy and fulfillment, which I aim to increase in the coming year, contrasted with those that were less enjoyable, which I intend to minimize or avoid.

2. Achievements and Disappointments: Contemplating the most significant achievements (understanding what I’m most proud of), while also recognizing areas where I faced disappointment.

This may sound somber, but in this endeavor, my objective is to deeply engage with the full spectrum of my experiences, acknowledging both the hardships and the modest successes. Drawing from Heidegger's philosophy (more on that later), true mastery in our pursuits demands not just enduring failure, but embracing it as an integral part of our existence. It's about understanding that our growth and the quest for meaning are deeply rooted in how we confront and integrate these challenges. 

Examples of these “lows” could be: a paper that was rejected, an alumni activity that failed miserably, a hurtful comment in the teaching evaluations that struck me as unfair, but as always, has a grain of truth. 

The wins on the other hand, include this newsletter (the most interesting conversations I’ve had during the last three years were by far discussions which started by someone reading my newsletter and emailing me about it), several interesting research projects which resulted in significant progress and interesting results, and family. When I look back, the family vacation is always one of the high points, whether it’s hiking, skiing, or just city dwelling and museum visits. Lastly, teaching: Last year, and for the first time, my scaling course became a full-credit course for all groups, from UG to Exec MBA. That was a proud moment after a long process of content development and iteration. 

This process provides a high-level overview of the previous year, setting the stage for a deeper analysis.

Annual Review: Determining Evaluation Criteria

The next step (which resembles the first step from the business process) is defining my primary success criteria and the core values guiding my decision-making process. Over time, I’ve identified four key criteria that matter to me most:

Influence: Evaluating the extent of my impact in academic circles and practical applications. This is about gauging how my work influences these spheres’ behavior, thoughts, or practices. As both an educator and a researcher, I believe in the importance of what I do and would like it to propagate and have others use the tools I teach or develop. Influence is sort of a proxy for this. 

Capability Building: A forward-looking perspective which involves assessing whether my current activities which may not create immediate value have the potential to be valuable in the future. It’s about developing skills or capabilities that I believe will be crucial in the coming years. As an educator and researcher, I prioritize continuously acquiring new capabilities to stay ahead and adapt to future challenges. It can be technical skills (exploring deep learning or how to code in Solidity), improving my health (running more frequently), or learning more about a domain I know little about. 

Financial Return: Assessing the financial benefits of my endeavors. This aspect examines the tangible economic rewards of my activities.

Cost and Time Assessment: Understanding the costs associated with my activities and evaluating financial costs and the time, effort, and resources I invest.

By considering these criteria, I strive to balance immediate rewards with long-term growth, ensuring that my professional journey remains both fulfilling and strategically sound.

Some ask why “fun” is not a criterion. While I seek to enjoy the things I do, I don’t do things just for fun. For example, if skiing didn’t involve being outdoors and spending quality time with the family while also exercising and creating mental clarity, I probably wouldn’t do it. 

Note that your criteria may be different. They should be very different. Identifying the correct criteria for you is probably the most important step in this entire process. 

Annual Review: Activity Mapping And Evaluation

In this next step, I list all the activities I’ve engaged in throughout the past year. I look at my calendar, my to-do lists, and any other resource (which I usually write by hand) to find everything I need. 

I usually group them into categories: teaching, research projects, managing M&T (broadly leadership), community service (editorial boards, committees), advisory, investment, and family/health. 

And for each activity, I assess its performance against the aforementioned criteria, but instead of assigning a numerical score, I categorize the results into five levels: highest, high, medium, low, and lowest. Along with these assessments, I include detailed comments, which provide insights into why each activity received its particular rating. I write extensive notes, spanning several pages, about each category and each activity.

Here is what the process looks like for three different activities: 

Admissions is the most important activity as an M&T Director. This is about expanding the top of the funnel of our application pool. 

So as shown in the table above, I rate my teaching activities with a fairly high financial return (this is the basis of my work at Wharton) while also considering their influence across the different student groups. For instance, my engagement with MBA and executive students typically has the highest impact. This is due to the direct application of what they learn in their professional environments. In contrast, while impactful, undergraduate teaching may not have immediate influence but a more long-term impact since their minds are still mostly in a formative stage. However, the cost associated with these activities is significant, considering the time and effort required for tasks like office hours, exams, and grading. 

In my annual review, I also scrutinize my angel investing activities. This involves a detailed analysis of each firm I’m involved with. I assess their potential impact and examine the new projects they undertake. With some firms, I’m in constant work with the founders, meeting and speaking with them often, reviewing presentations, and visiting them when needed. These firms rank highest in terms of influence. With others, it’s merely a financial investment, so I’m less active. 

Regarding my research projects, while I’m proud of all of them and I don’t want to single any of them out, an example of a project that is heavier on capability building than influence at this point is a project I’ve co-authored with Ken Moon and Xufei Liu where we developed methods using deep learning to identify and then nudge inexperienced fighter pilots toward improving their skills. The project involves sensor data that is very detailed, and dealing with it requires developing a whole new set of tools. Learning first and then developing; this is what capability building is. I started as a researcher doing modeling work, transitioned into more empirical work, and now I’m adding machine learning to my toolset. This is what I consider constant capability building. 

I won’t delve into the entire process, but I can say it’s a rigorous and introspective exercise. I apply my rating system to every aspect of my professional and personal life. This includes a holistic view of my work, considering long-term financial and influential impacts. I use slightly different criteria for personal activities, which focus more on physical and mental health. 

Annual Review: Identifying Core Activities 

The ultimate goal of this thorough analysis is to identify my core activities —usually the six to eight activities that have scored highest at least in one criterion (influence, financial return, and capability building).

These activities vary in nature and scope. For instance, they can include teaching specific courses, engaging in specific research projects—especially those that are important to my Ph.D. students—or roles like being an M&T director (the core activity within that is Admissions and everything related to that), or working with firms on specific activities that I find particularly fulfilling and which align closely with my research interests.

Once I’ve identified these core activities, I assign a specific metric to each one, which is tailored to the activity and designed to be measurable and verifiable by the end of the year. These metrics provide a clear and objective way to assess whether I have achieved the intended value or impact in each of these activities. By setting these benchmarks, I can effectively monitor my progress and ensure that my efforts are aligned with my goals and values throughout the year.

Setting and tracking these metrics is relatively straightforward for certain activities, such as teaching or guiding PhD students. However, other activities require more frequent reviews and possibly refining the processes around them. 

This review also prompts me to identify any core activities that currently lack specific, measurable criteria or activities that don’t exist but that I would like to add as a way of achieving a specific goal. In these cases, I take the time to establish clear objectives that need to be achieved, ensuring that every core activity, be it an ongoing project or a new endeavor, has a defined goal and a way to assess its result at the end of the year. Part of this is building accountability into the process. This methodical approach not only keeps me aligned with my priorities but also helps me continuously refine my focus and efforts. 

For example, A few years ago, I embarked on a new endeavor that has since become a core activity: writing a newsletter. This initiative stemmed from an earlier project where Marty Lariviere and I blogged about operations management in “The Operations Room.” However, we ceased writing when I undertook a new role.

Determined to return to writing, I explored various formats, including podcasts and radio shows, but none materialized as planned. Recognizing the need for a structured approach, I enrolled in a Write of Passage course to refine my writing skills and establish a consistent process. This course proved to be a turning point. I have published an article every Monday for the past three years, driven by the discipline and strategies I learned from the course. David Perell, who runs the program, played a crucial role in shaping my writing process and motivating me to maintain this discipline.

Launching this newsletter was a significant step and it wasn’t just about creating content; it was about establishing a connection with an audience and maintaining regular engagement. The commitment and effort have been substantial, but the influence and reach have been immensely rewarding. I now have a large, engaged audience, and my goal is to publish and actively engage with my readers. To ensure the continued success of this activity, I regularly review and adjust my metrics, focusing on the effectiveness and impact of my writing. This newsletter started as a new activity and has grown into a key component of my professional life. It has impacted the way I teach, consume information and research, and influence different audiences. 

Another activity I engage in every year is thinking about what new content or courses I should teach. Teaching effectiveness isn’t just about evaluation scores; it’s also about the reach and influence I have – how many people I engage with and how effectively I can introduce them to new ideas or perspectives. For instance, when considering introducing a new course, I evaluate its potential to expand my influence. Will it allow me to connect with and impact a broader audience? If the answer is yes, I’m more inclined to pursue it. This is an energizing and fulfilling process for me.

This review process is integral to my overall strategy for maintaining focus and ensuring progress throughout the year. Each of these core activities, along with their specific metrics, is added to my priority list. This list serves as a monthly checkpoint, allowing me to regularly evaluate my progress and contributions toward each goal. 

The final step of this process is identifying the activities that didn’t score high or that have high costs or time commitments with low returns, which are either scaled back or eliminated. 

For example, one aspect I’ve gradually moved away from is giving short, 20-minute talks to executive audiences. First, I find them challenging in terms of engagement and influence; the potential to make a meaningful impact in such a brief span is extremely low, practically the lowest in my range of activities. I realized these talks offered lower financial returns. The preparation required is disproportionately high, almost akin to preparing for a full day of teaching. As a result, I’ve set a personal guideline: I now only accept speaking invitations if they are for sessions of at least three hours. Occasionally, I make an exception for 90-minute talks, but only for audiences I’ve previously engaged with and where the format is more of a talk than a teaching session.

Through this approach, I’ve effectively trimmed activities that didn’t meet my criteria for impact and satisfaction. This strategy helps me focus my time and efforts on more opportunities that offer a greater chance for meaningful engagement and influence. In refining my processes, I strive to maintain a balance between structure and flexibility. This balance ensures I have enough room to explore new opportunities while maintaining a clear life evaluation framework. Central to this approach is understanding how to measure the impact and value of my activities, particularly in areas like teaching. 

The Foundations of this Method

Now that I’ve outlined the process, let’s get back to  the origins. The method is influenced by Clay Christensen’s How Will You Measure Your Life? with the Heideggerian philosophy and is an interplay of ideas about self-definition, purpose, and action.

Clay Christensen’s Perspective: In How Will You Measure Your Life? Christensen explores how principles of business and management can be applied to personal life. He emphasizes the importance of creating a strategy for your life, like how a business creates a strategy for success. The book encourages readers to define what success means to them in various aspects of life, such as career, relationships, and personal well-being. It’s about consciously deciding what metrics or standards you will use to gauge your life’s success and fulfillment.

Heideggerian Perspective: Martin Heidegger, a German philosopher, often focused on the concept of ‘being’ and how individuals exist in the world. A key aspect of his philosophy is the idea that “you are what you do,” implying that our actions and choices are integral to our being and identity. In this view, self-definition is achieved through contemplation or intention, action, and engagement with the world.

The main foundations of this process are:

Defining Success Through Action: Both perspectives emphasize the importance of action in defining oneself and one’s life. Christensen suggests that how you measure your life will shape your actions, while Heidegger posits that your being is inherently tied to your actions. Therefore, the way one chooses to measure one’s life (as per Christensen) is manifested in what they do (as per Heidegger).

Intentionality in Living: Christensen’s call for a strategic approach to life aligns with Heidegger’s emphasis on living authentically, which involves making conscious choices about one’s actions. Both views suggest that a fulfilling life is not one that simply happens to you but one that you actively shape through your decisions and actions.

Reflection and Adaptation: Both Christensen and Heidegger recognize the fluidity of life. As circumstances change, so might your definition of success or the actions you take. This dynamic process requires continuous reflection and adaptation, aligning your actions (Heidegger) with your evolving definition of success (Christensen).

The method acknowledges that the way you choose to measure your life will inevitably be reflected in your actions, and these actions, in turn, define who you are. It’s a cycle of defining, acting, and redefining, guided by ongoing reflection and intentionality.

Final Thoughts

The review process is methodical and unhurried. I don’t rush it into a single day; instead, I review my calendar and what I’ve accomplished, and noting any missed opportunities. This slow, deliberate approach allows for more profound insights and a better understanding of where I stand and where I’m headed.

I highly recommend this reflective practice to others and am always open to discussing it further. It’s a process that can be adapted and tailored to fit different needs and goals, offering a meaningful way to evaluate one’s journey and make more informed decisions moving forward.

Well, folks, we’ve journeyed through the valleys of operational strategies and climbed the mountains of personal growth, all within the confines of this surprisingly lengthy newsletter. If you’ve made it this far without nodding off or questioning your life choices, congratulations, and thank you! 

I promise my next exploration won’t require a packed lunch and a compass. Until then, keep scaling those personal and professional heights – just maybe in slightly shorter increments.