“The goal is to turn data into information, and information into insight.” – Carly Fiorina, former executive, president, and chair of Hewlett-Packard Co.
There’s been so much talk about big data this past decade – and yet, unless you can afford the big data software, many of us small and mid-sized companies have lots of data and are just trying to figure out what to do with it! Or, on the opposite side of the spectrum, many entrepreneurs don’t have much data they’ve collected at all. Both sides of the coin are unhelpful.
Here’s what we teach in EOS, the Entrepreneurial Operating System® – choose the 5-15 numbers that are the most important for you to know the pulse of your business and focus in on them on a weekly basis. We call this tool the Scorecard.
One collected over 150 data points in his business and looked at them every day. I can’t imagine how much time it took him to put this information together daily. And he sent it out to all the leadership team – who rarely ever looked at it. It was overwhelming – to everyone but him! He loved it!
Others, whose CFOs looked at our recommended Scorecard and said it was too simple, it was useless to spend time on it. I agree with the simplicity – that’s the beauty of it! It’s not meant to be complicated or over-explanatory.
Scorecard is Like a GPS
I describe it like the GPS on your phone. It’s meant to be a quick glance, then eyes back on the road, back on your business. If you notice something is hinky or weird or off, you pull over, look at the information in the more in-depth formats you have it – your financial statements, your strategic plans, etc. It’s not meant to be the full explanation. It’s meant to be the indicator light on your car dashboard. If something is off, it’s red and says, “pay attention!”
Finding those 5-15 numbers that truly give you a sense of what’s going on in your business to drive revenue, the strength and magic of your people, and the impact of your business is important. Then you will have a tool that helps you in your quicker course corrections to achieving your vision, your mission, your BHAG (big hairy audacious goal)!
Determining the Numbers
Sometimes it takes a while to 1) find the right numbers, and 2) to know how to measure them.
Another client was diligently watching a measurement they had chosen and were very pleased with their growth in that number. Until they realized that while that one number was positive, their profitability was still going down. The correlation they thought was there, simply was not. So, they dropped that number from their Scorecard and started measuring another, more informational number. It gave them a better view into why profitability was down … or up!
And I have had several clients who believe a number will help them determine progress, but they’ve never measured it before (i.e., audience or readership). It took them a while to figure out how to appropriately get “the number” each week, but when they did, it inspired not only the leadership team, but the entire organization on seeing their momentum going up, up, up!
What is your measurable (the words) and your goal (the numbers)? For example, working backwards in their sales cycle, a client realized that it takes 15 warm lead conversations to get five initial prospect meetings, to get two proposal meetings, to get one new client. So now they have definitive goals of how many warm leads are in the pipeline, how many conversations they need to make each week, how many prospect meetings they need to have, how many proposals need to go out in order to get the two new clients per month they’re aiming for. These new clients translate into revenue, cash flow, and profitability of the company.
By focusing on the activities first, they can more quickly tell when something is off (only two warm leads this week or no prospect meetings become red flags) and they can be addressed right then. Before their Scorecard was in place, they didn’t realize until their monthly financial meeting that they were off. And then they had to try to dig into why they didn’t reach their revenue goals.
What are Your Numbers?
Take a few minutes and write down what you think the top five numbers are that you need to know on a weekly basis. Then ask your leadership team to do the same exercise. Then get together and choose the ones that are the most impactful at the leadership team level. What do you truly need to know to ensure you are all rowing together toward achieving your vision?
Don’t make it too complicated. Make sure the numbers are easy to collect on a weekly basis. This is about clarity for decision making, not a chore to spend hours on pulling the numbers together.
I have a client whose company color is blue, so they’ve made all of their positive, growing numbers in their Scorecard blue. They’re rallying cry is Go for the Blue!
This simple tool will give you context, peace of mind, and the nimbleness to course correct right now.
It’s said that rocket ships do hundreds of micro-course corrections between earth and the moon. If they’re a mere few inches while closer to earth, they can be thousands of miles off course to the moon.
So, they pay attention. This Scorecard is simply your course correction indicator tool to help you pay attention as early as possible.
Have fun putting it together!