There are as many variations of this notion as you can get your hands on. Terminology is also abundant and often confusing. You may have heard of dashboards, key performance indicators (KPIs), smart numbers, etc. Here, we’re taking the simplified approach Gino Wickman describes it in his book TRACTION. “It’s a handful of numbers that can tell you at a glance how your business is doing.” For simplicity and clarity, we call these numbers ‘Measurables.’
Reality is that most businesses do not use a Scorecard. Those who have one make lots of mistakes when defining and using it. These mistakes prevent the Leadership Team from getting the needed benefits.
Here are the top seven mistakes:
- Too Many Measurables. We only have a limited ability to absorb information. Tracking too many numbers ends up creating less knowledge, rather than more. The principle is always ‘Less is More.’ Here is the fix: Start with 3-5 Measurables. Over several weeks, see whether they give you enough of a “pulse” for the business. Only add new ones if needed, but do not exceed 15 Measurables.
- Measurables Not Predictive. Measurables that reflect results are often the first Measurables that come to mind. Examples are: Closed Sales or # New Clients or Weekly Expenses . This is because we’re used to P&L-type numbers. Problem is: they only give us a rear view mirror image of the business. Nothing we can do can affect them, since they are all in the past. We need numbers that allow us to predict future results, and act on them. Here is the fix: Define Measurables that reflect past activities with clear consequences on future results. For example, the number of past sales meetings always impacts closed sales. We know this based on our experience with closing ratio. Thus, track how many sales meetings happened during the week.
- Not Tracked Weekly. Have you seen businesses implementing great tools with much effort and then ignore them? Or use them only occasionally or irregularly? A Scorecard is useful only when it regularly tells us how the business is doing. It is useful only when it gives us an immediate opportunity to act when things get off track. Looking at the numbers once a quarter or month is way too seldom. This is especially true for entrepreneurial businesses that need to move fast. Here is the fix: Create a weekly context in which the Measurables are reported and reviewed. A weekly cycle gives you enough time to act to prevent derailments. Yet, the period is not too long to be too late for proactive action.
- No One Accountable. Tracking a Measurable means nothing if no one is responsible for that number. When the number is off track, someone must be held accountable for it. Then, the same must be focusing on correcting it. Here is the fix: Assign a member of the Leadership Team for each Measurable in your Scorecard.
- Too Many Accountable. Have you ever seen a manager assigning two people responsible for the same number? (“Yeah, they will cooperate to ensure that it reaches its weekly target.“) As soon as the number gets off track, A will point to B, who will now point to A. The result: no one is accountable. Accountability is a singular assignment! Here is the fix: Always make one and only one person accountable for each Measurable in your Scorecard.
- Measurables Too Complex. Some managers find it hard to keep only a few Measurables. So they get clever by defining a complex one. (“Yeah, this is just those 8 numbers that we need to see together!“). Simplicity is keeping things simple, not hiding complexity. Here is the fix: each Scorecard measurable must be one and only one single number. Period. Once again: “Less Is More!“
- No Weekly Goals. Reporting numbers on a weekly basis is great, but how do we know whether we’re doing well or not? Have you ever seen managers leaving that decision to their whim? Or, worst, just ignoring it in the hope “they will know when they see it?” Have you done it? That is, avoiding having a hard weekly goal to compare the reported number against? These tendencies only call for lack of accountability, and in the end poor performance. Here is the fix: always have a weekly target for each one of your Scorecard Measurables. If the number did not hit the target, hold the accountable person to task. Then solve whatever issues may have prevented hitting the target.
- Learn more about EOS Scorecards. They belong to the approach we take to help your business execute towards your vision. Here is a series of 3 short videos.
- Get professional help. Turn your organization into a well-oiled execution machine by tracking the right measurables. Do it the right way: better, faster, easier.
- Learn more about Scorecards and Measurables. Chapter 5 of Gino Wickman’s book TRACTION focuses exactly on this topic.