Simplifiy – Adjust – Energize!
It’s easy to track data these days. After all, we are in the information age and we know that successful companies must have a strong data component. Making our decisions based on objective, timely data always works better than running the company on egos, feelings and subjectivity.
So, why is it that tracking the right data seems so elusive? It’s because we have access to too much data. It’s like being in an ice cream shop with 100 flavors and having to decide which five we are going to try first! Because so much information is available, we need to be very selective and choose to track the RIGHT data: the data that will give us the BEST picture of how the business is performing right now.
In the beginning, when setting up a Scorecard for the first time, you use an exercise that extracts all the data you would WANT to see if, say, you were stranded on an island with no connection to the company. Then, we narrow it down to measurables that not only let us know if we are successful today, but can also help us PREDICT if we’ll be successful in the coming months. Finally, we refine the scorecard to the best of these categories, coming up with 5-15 measurables to track on a weekly basis. If you’ve done this, you might feel like your Scorecard is “done.” In reality, in a moving and changing economy and business, your Scorecard will never be done. It’s a living, breathing document that will serve you for the long term. Here’s some ideas to keep it supercharged!
In The Five Dysfunctions of a Team, Patrick Lencioni describes that at the top of the Team Health Pyramid is “Inattention to Results.” He further clarifies that we want to focus our attention on Collective Results. What is your “collective result”? Are you measuring things on your Scorecard that will get you there?
For example: on their 3-Year Picture, one of my clients has a measurable of serving 2000 happy clients. This is their collective result. They know that if they focus on this, the revenue and profit results will follow. Their scorecard measures leading indicators that will get them there. If they can’t see how the scorecard items CLEARLY and SIMPLY get them to 2000 Happy Clients, they hesitate to put that measurable on the Leadership Team Scorecard.
Other clients have fallen into the trap of adding scorecard items that are “nice to know” or just “good” items. They end up measuring too many items; they have too much data, so they get off track. Less important items distract the leadership team’s attention when they could spend their time focused on the real goal. I’ve also seen teams get stuck in the complexity trap of fancy graphics, charts and unnecessary technology. These tactics don’t provide any additional information and often they distract the team from the purpose of the Scorecard, which is to find the red flags in the company “at-a-glance.” Data analytics have a place in your business, but it is outside of the Scorecard. Keep the Scorecard simple. A Scorecard is not meant to give you answers; it is meant to prompt valuable questions.
Consider adjusting WHAT you measure: Entrepreneurial companies, by nature, are treading in new waters, so it’s unlikely that you’ll know exactly what to measure at first. Experimenting with what to measure will get you to your ideal measurables faster. One of my clients was convinced that the ideal leading indicator of profitability was overtime. If they could control employees’ overtime, they’d be profitable. As they refined the scorecard quarter after quarter, they decided to track the amount of callbacks they received from the customer. When they were able to dive into the issues that caused the callbacks, they were able to refine processes and overtime organically lowered. The clients were happier, which increased the amount of renewal contracts in the year. When they had more repeat customers, their efficiency improved and therefore, their profit targets were exceeded. So, at least once per quarter, challenge the Scorecard by asking the Leadership Team, “Is this the BEST thing to measure?” In this client’s case, they decided to stop tracking overtime and continued tracking “callbacks” as the true indicator of positive results.
Consider adjusting the goal: When you first developed your Scorecard, you might have needed to guess at the goal. Now that you’ve gathered data for a while, it could be that your goal is not realistic or your formula changed so that your goal is no longer accurate. One client was measuring leads and had a goal of ten leads per week. Once they started measuring, they were consistently hitting twenty or more per week. To add some pressure to the marketing team, the leadership team increased their goal to 25. As the business grew, they continued to increase the goal. Another client had a goal to get utilization rates to 90%. When the team saw that because of the pressure, mistakes were being made, they moved the goal to 85% and ended up with fewer errors.
Leaders often get bored looking at the same numbers every week. When humans get bored, we like to shake things up, try something new, or get creative. It is dangerous to get fancy with your Scorecard, so to avoid burnout and stay energized about digging into the same measurables week after week, try some of these ideas:
- Have a Scorecard Sergeant – Ask someone from the Leadership Team to take on this role each quarter. Their purpose is to remind the team that the issue is often hidden WITHIN the measurable, it is not the measurable itself. They do this by ensuring that we drop down issues from the Scorecard. Even though the rule is that we ALWAYS drop measurables to the Issues List when goals are not hit, some teams become numb and justify the poor result (“hey, it was a holiday week”), or they make excuses (“I just lost two employees”), and the team does not drop the issue down. The Sergeant reminds everyone what the issue is. I’ve seen clients who are prone to avoiding Scorecard issues do this with success, and a bit of fun! One client had even had the Scorecard Sergeant wear a police hat to the L10 for a few meetings!
- Priority 1! In the Issues Solving section of the L10, make it a point to prioritize the Scorecard measurables as issue numbers 1, 2 or 3. Teams who have taken this approach to mastering the issues hidden in the Scorecard have been able to solve real issues quickly, tend to have strategic level discussions, and get better collective results.
- Add colors. If the number is on track, it appears in green. If the number was not hit, it appears in red. Very quickly, everyone can see where we are and trends are highlighted quickly.
Keep these ideas in mind as you grow your business and your Scorecard will continue to be a strong and valuable tool for finding solutions within your company.
Do you have a Scorecard “a-ha” moment to share? Add your thoughts and experiences to the comments section!