Scorecards are a semi-standard structured type of report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions (by Wikipedia), and looks like this:
The problem I find in that type of scorecard is that there is no relation between the company strategy and the performed tactic activities, which are (if the scorecard is properly design) each one of the measured metrics.
On the other hand, it’s not impossible to see either the cause and consequence relationship between the actions or how those actions allow or not to accelerate the company’s throughput (Flow of money within the organization).
Let me show you my recommendation based on Meta Analytics.
The above is what I call a Flow Scorecards. Flow Scorecards are a type of Scorecard that allow you to see a full picture of your business in a systemic way in a blink.
Let’s take a closer look at the Flow Scorecard and how it works. From left to right you have:
- Objective: What the company is trying to accomplish during the current year and a comparison with the previous year.
- Goals: The goals are the two or three main activities used to accomplish the objective.
- Strategy: The strategy is “the how” the company is planning to accomplish the objective.
- Target: The targets are the strategy specific actions, the required steps to move the company from point a A to point B.
- Metrics: Metrics are the sensors that measures how the company activity.
- Operative results: Operative results shows the values that those metrics are taking in the current vs several other periods (last month value, last month percentage variation with the previous month (n-1 vs n-2) and the variation of the same period last year). Without context, data are just numbers. Context is what connect numbers with reality, with human decisions. So in this module we are not just reporting results, but also giving those results context so anybody reading that report, can understand the situation.
- Recommendations: Scorecards are focused on reporting to the Top Management level, so my recommendation is to update it once a month. Is not normal, not even in a startup, that you make strategic decisions every day, otherwise you wont have time to take those strategic decision to the operation, ergo, to real life. So once you updated your scorecard monthly data, every person that analyses the data can leave here their comments that allow to either understand the current information or leave suggestions to be implemented in the future. Remember that the objective of information is decision making and controlling. So the recommendations should allow simplifying those two things.
- Notes: The “Notes” are qualitative pieces of information that gives context to the quantitative data. Before adding a note, ask yourself (and ideally to others) if that information can or cannot be understood without that data.
- Throughput: You will see that between every module of the “Flow Scorecard” it is a metric called throughput. The throughput allow you to see how the money is flowing through the organization from the specific operations activities to accomplishing the company’s objective. So in case of a deviation it will be easy for you to identify where’s the problem in your organization and who is responsible (not guilty, but responsible) of correcting the deviation. So thanks for the throughput you can see the relation between each metric (that measures the operations performance) and the company’s main Objective. In each measure level we can see how much money does each activity brings to the whole company and even find the main restriction in your System (Company), so you can point your budget to solve that particular issue (restriction) that will allow that more money flows through your system (company).
The reporting method you use is really important. In the same way you don’t want to report to the top management with a Dashboard, you should’t report with static type of reports to anyone in the company. The “Flow” approach in this Scorecard, is not just a matter of design, but of understanding your company as a “living system” and how to make decisions that, in a specific moment, will push the entire organization closer to its objective.