Too often when things aren't going right in your Business, you tend to focus on where you think the problems lie and come up with a solution in isolation to what's going on elsewhere in the company. It would be like getting a prescription from a doctor without first having a consultation about your symptoms to see what else is going on.
The same applies in business; don't potentially misdiagnose the problem without all the facts. So how can you keep a close eye on all the facts?
What is a Scorecard?
A business scorecard is a symptom-checker of vital signs which enables you to accurately monitor symptoms, make a diagnosis, and correctly and accurately prescribe treatment of how to improve, become healthier, and fitter.
The scorecard essentially shows your company’s vital signs in a handful of metrics and enables you to diagnose two types of pain:
Acute pain, is a short-term, sharp and severe pain.
Chronic pain, is a long-term, persistent and underlying pain, often overlooked.
Losing a big client, missing a big sale, failing to hit revenue goals, being in negative cashflow – are all causes of acute business pain. These are all lagging business indicators from the past, and it’s too late to do anything about them.
Your scorecard works as a symptom-checker to identify the underlying chronic symptoms that may eventually create acute pain, such as:
- Not enough leads
- Not enough regular billing/cash-flow
- Overlooking complaints
Isolated symptoms can be misleading. To fully diagnose a business, you need a handful of measures or symptoms that combine to add context and form a picture of health. These are leading indicators that show what the business currently presents with that enable us to influence the future by changing our activity.
Every function of a company serves a purpose in the business, like all our major limbs and organs serve a distinct purpose in our body.
If you can identify the purpose and outcomes of each function, you can define what a picture of health would look like (in numbers) and can then work to get (or keep) yourself in top form. You can monitor your ongoing health, and highlight when you may be about to become ill and treat it fast (prevention and/or cure).
On their own, each scorecard number may not mean a great deal, yet in the context of all the other numbers you will be able to spot the patterns and trends, and identify issues (no smoke without fire) whilst they are still small issues and not raging infernos on your P&L and management reports (lagging business indicators).
In a utopian world, when monitoring your scorecard, everything will be where you’d EXPECT it to be on a weekly basis. If not, you have an issue to solve. The scorecard is less of a ‘look how good we’re doing’ tool – and more of a tool for helping you to identify potential issues and get better, continually. Using a scorecard regularly will help you:
- Make fewer mistakes
- Find leaks that are costing profit and cash-flow
- Take the guesswork out of decisions
- Be more efficient.
In essence, when you focus on your weekly scorecard, you get to do three things:
- Understand the position you are in
- Make a prediction about the future
- Make a decision and take action quickly
The degree that you identify, treat, and focus on the chronic pain (the root of the symptoms) you will help to avoid the acute pain.
- Download a free chapter of Traction by Gino Wickman.
- Download a free chapter of How to Be a Great Boss to learn how to lead, manage, and create accountability on your team.
- Download the Issues Solving Track™ from the EOS Toolbox to learn how to IDS (Identify, Discuss, and Solve) issues more effectively.