Are You Keeping Score?

by Jack McGowan

Many of us are die-hard followers of sports statistics. We closely follow and can rattle off last night's scores, won-lost records, RPI rankings, batting averages, goals against averages and a large number of other statistics for numerous teams and players. In fact, with the rise of fantasy leagues, we often don't even care about the result of the actual game, just about the statistics!

Keeping the score and key metrics are critical in any contest. I can't think of a sporting event (or even a TV game show) where the scoreboard isn't prominently displayed at the venue or on the TV screen. Coaches, players, fans and commentators need timely data to make decisions or assessments. How can a football coach call the right play if he doesn't know the current score, time left on the clock and yards needed to make a first down? How does a golfer know whether to go for the green or to lay up if she doesn't know her position on the leader board and the distance from the hole?

If so many of us monitor and appreciate the value of metrics for sporting events, why do so few of us do the same for the key metrics for our businesses? Just like our sports teams, our business teams need to know where we stand on key metrics in order to be successful.

Every company needs to develop and use a scoreboard of appropriate key metrics. Characteristics of an effective system of metrics include:

Simplicity:

Key data must be easy to collect and report and must be easily understood by the people who use it. Mind numbing statistics only understood by MBAs are rarely useful or necessary. Using a baseball example, how many of us really know what the WHIP* means? A few key measures are usually all that is needed to effectively monitor performance.

Relevancy:

Different measures are useful for various functions within a company. In sports, the offense and defense have different key statistics. In business, top management focuses on high-level measures that provide information on total company performance such as sales, profit margins, customer satisfaction, quality, safety, and productivity. While it's important that production floor personnel be aware of the company's big-picture performance, their main focus should be on metrics that monitor their direct work such as units produced, equipment downtime and number of defects.

Timeliness:

Coaches and players need real-time information if they're going to make in-game adjustments that can impact the result of a contest. Similarly, workers need timely data in order to meet deadlines or achieve immediate goals. For example, a company can take action to meet on-time delivery if it tracks required vs. actual production periodically throughout the day. It's too late if this information is only collected weekly. A P&L statement looks at the results of things that happened in the past. Real-time activity or process measures allow you to act now and impact the results that will be reported on the next P&L.

Communication:

Buffalo Bills coach Chan Gailey has said several times that a key to the Bills' success this season will be to get everyone “on the same page.” This requires communicating goals and expectations to the team and letting them know how they're doing. Simple whiteboards that list goals and results, posted at the actual site of the work, are effective communication tools.

Action:

It may seem obvious, but metrics are useless if they do not spur action. Processes and authority to take corrective action need to be in place. The outcome of a game is often changed by “half-time adjustments” made by the coaching staff based on what they learned during the first 30 minutes.

Flexibilty:

It's important to give meaningful thought when developing a system of company metrics, but it's also important to just get started. Experiment with different metrics to determine the ones that measure the key aspects of your business and make changes as needed. A refined system will avoid reaching conclusions such as the one attributed to Yogi Berra that “baseball is ninety percent mental and the other half is physical.”

At many sporting events, fans of the two opposing teams exchange derogatory cheers. The winning team's fans are able to quickly quiet their counterparts by simply chanting “SCOREBOARD.” Will you use your Scoreboard to help your company be a winner?

*Walks plus Hits per Innings Pitched

Jack McGowan, a Project Manager with Insyte Consulting, has over 25 years experience working with early-stage technology and small to medium-sized manufacturing companies.