Post #4 in a multi-part series from the excellent book Traction by Gino Wickman
Formulate & Manage Your Data:
This enables you to see business trends in your data. Everybody in the business should have a meaningful and measurable number. Activity based numbers to measure on a routine basis.
Creating a scorecard
Get your management team together for a couple of hours. Pretend you are on a desert island with no phone or email. Decide what numbers you would need to see to know what is going on. Weekly sales activity/customer satisfaction/profit and loss/accounts payable/etc.
You want 5 to 15 numbers. Closer to 5 is better. Keep it simple.
- In left column list who is accountable for each function. This is the person who delivers the weekly number. 1 person each.
- Define the expected goal for each week for each number. Should be tied to your annual goal number
- Put next week’s date in the first date column.
- Decide who is accountable for collecting the number and decide the method for collecting the number
- Use it. Review every week to make sure you are on track. Look for patterns and trends.
Rules of Thumb:
- Make sure they are weekly ACTIVITY based numbers. Not a P&L. It’s items that predict the P&L.
- i.e…. New revenue sales instead of sales. Number of leads generated. Number of proposals. Etc.
- Needs to be a proactive tool to find things in advance. Finding problems before they happen.
- Redflag categories that are off track.
The process of defining, measuring, and accountability will evolve over first several months.
What gets measured gets done. Track high level numbers down to the source. Everyone has a number. Even the receptionist (2=2 rings good, 3 rings bad).
Numbers cut through the murkiness of reporting between managers and subordinates. Creates the basis for comparison and unemotional dialogue. Numbers create accountability. Nothing is clearer than a number.
Accountable people appreciate numbers. Right people in the right seats like numbers. Right people want to win. When a person has a number and they believe that they can achieve it, they are excited and accountable.
Repeatedly setting high goals, without buy-in is dumb. Especially in multiple months.
Nordstroms even puts sales/hour on people’s paychecks.
What gets watched improves. Numbers create competition, and create results. It doesn’t always have to be competition with others. When you have the right people in the right seats it improves teamwork. The right people will want to have competition against themselves.
The important thing is to set the goals as a team. Not just top down. When the people are involved in the process of creating the goals and measurables, they will take ownership.