A business scorecard is a symptom-checker of vital signs which enables you to accurately monitor symptoms, make a diagnosis, then to 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 measures and enables you to diagnose two types of pain: 1) Acute; 2) Chronic
Acute pain, is a short term, sharp and severe pain.
Chronic pain, is a longer term, persistent and underlying pain, often overlooked.
Losing a big client, missing a big sale, failing to hit revenue, being in negative cashflow – are all causes of acute business pain. Essentially these are all lagging business indicators from the past of which it’s too late to do anything about.
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/ cashflow, overlooking complaints etc.
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, and if not, you have an issue to solve. The scorecard is less of a ‘look how good we’re doing’ tool – more a tool for helping you to identify potential issues and get better, continually. Using a scorecard regularly will help you to: make fewer mistakes, rapidly find leaks that are costing profit and cashflow, take the guesswork out of decisions, and 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 on tomorrow.
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.
How strong is your company? Check out the Organisational Checkup® of the Entrepreneurial Operating System®. EOS® is a blueprint for building a growth focused company. If you own a business and are feeling frustrated, stuck or unhappy there are a number of steps you can take today.
Dean is the MD of Grow or Die based in the South West, helping Entrepreneurs & Leadership Teams to realise their company’s full potential as a Certified EOS® Implementer in the UK.