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Scorecards Aren’t Just For Baseball

Scorecards Aren’t Just For Baseball

How to establish a clear path for your business' future

Business Improvement: Scorecards Aren’t Just For Baseball

John Holobinko, Managing Director, Business Reimagined, LLC

Quick, answer this: How is your business doing?

This simple question can have a multitude of answers.  It is likely that your simple answer to anyone you don’t know very well is “Great!”.  Or, if you might not be doing that well and you are answering to someone whom you know well, you might answer “Just so-so”. 

But what if I asked you to prove it?  I know, a little brash.  But follow along for a moment.  Can you give me five key measurables of your business that will show me exactly how you are doing today and what your business performance will be in the immediate future?  If your answer is no, ask yourself why and then read on.

Too often we get caught up in the day to day operations of our business, to the point where we don’t know exactly where we stand.  For example, we may be growing sales, but we don’t know if every sale is profitable and how profitable.  We may have growing or shrinking inventory but we don’t know how much of that inventory has been sitting around, tying up capital.  Or, we don’t know which projects have costs that have come in above estimate or below estimate.  These are just a few examples.

Now, imagine that I gave you a challenge:  I want you to navigate to a predetermined location.  It seems simple enough.  You would begin by plotting a course from where you are today to the target location.  You would likely look at alternative paths to get there, then choose the best one to get you there the easiest way.  Quite straightforward.

But, what if before I gave you the destination, I took you somewhere blindfolded so that you had no idea where you were starting from.  How would you know which path to take, how long it would take, or if it were even possible to get to the destination???

In our businesses, we are working very hard and putting in long hours day after day, but often we don’t have a good idea of where we are today.  And because we don’t have a clear idea of where we are, it is very difficult to determine how to navigate the best path to the future.  As a result, thinking about the future, setting a path for the business, is very difficult and doesn't get much of our focus.

This is where a business scorecard comes in.  It is a simple, one page report that summarizes the key performance criteria of your business, which you put together religiously the same day of each month.  In essence, your scorecard tells you precisely where you are today.  (Criteria may differ widely by business type.  Some examples include: monthly $ quote values, monthly $ bookings, monthly % margin, monthly $m product returns.  The list can vary. It may take a couple of months to hone your scorecard to match your business.) Your scorecard can include five key criteria or fifteen key criteria.  But there is one paramount rule:  If it is on the scorecard, it is measurable and actionable.  Each month, you review the scorecard. If you have key employees, they review it along with you.  If any one of your key criteria fall out of an acceptable predetermined range, you jointly discuss ideas to mitigate the problem.  However, you assign ONE person in the company who then owns tracking and leading the task to solve the issue.  When you begin your next month scorecard review, you start by reviewing the previous month’s issues and what progress has been made to bring your problem criteria back to normal.

Posting your scorecard in a visible place is a way to get yourself and your employees more focused on what criteria are key to the business. If you develop a monthly scorecard review cadence, you and your employees will start thinking every day of how to improve your company.  It will become much easier to chart a path to where you want to be, because you will always know exactly where you are.

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