What is a Scorecard? It’s five to 15 activity-based leading indicators, tracked weekly, that predict your business’s monthly and quarterly results. 

Weekly activities “make the news.” Lagging indicators like revenue and profit “report the news”; they’re things that have already happened, or not, as a result of weekly activities.

Instructions: Put “Scoreboard Improvement Guide” on your Issues List. Then, when you’ve solved the “urgent and important” issues on your Issues List, prioritize this Guide. Set your timer for 30 minutes. Aim to make three Scorecard improvements, which could include:

• Add a metric
• Delete a metric
• Revise a metric 

This guide has nine sections:

1. Scorecard Is a Vacation Machine: What numbers would you need to see so you could stay on an island beach another day or week? That’s your Scorecard.
2. What Every Company Wants: Cover these five bases while keeping it simple, and you’ll do a better job strengthening your performance measurement than the vast majority of businesses.
3. What about the Visionary and Integrator/Second in Command? Here’s what winning means for them.
4. Deep Dive Questions: These will help you uncover industry-specific Measurables beyond the “What Every Company Wants” basics.
5. Does Everything Have to Have a Number? No.
6. Does Everything Have to Be a Leading Indicator? No. 
7. Rocks and Scorecard: A couple of wisdom pearls that will open this up for you.
8. Processes and Scorecard: Improving one improves the other.
9. Examples from Pinnacle: A chart helpfully copied from the book Pinnacle: Five Principles that Take Your Business to the Top of the Mountain, by Steve Preda and Gregory Cleary.

Scorecard Is A Vacation Machine

Imagine you’re on a tropical island. Blue skies, crystal-clear water. White sand, soft as talcum powder. You’re relaxing in a lounge chair with a drink in your hand. The kind with an umbrella in it.

A server comes out with another frosty drink and a sheet of paper. Cell phone reception’s terrible, the Internet’s down, and the hotel’s all out of carrier pigeons. You can’t reach the office. But the numbers on that sheet of paper free you up to stay on that island, in that chair, drinking that frosty drink, another day. Or another week.

What numbers and indicators would you need to see on that sheet of paper? That’s your Scorecard.

What Every Company Wants

Every company wants to: 

1. Get new customers
2. Get orders from existing customers
3. Make sure customers are happy
4. Serve those customers profitably
5. Have cash 

Keep it simple in your early work with Scorecard and just be sure you’ve got these bases covered. 

1. Get New Customers

2. Get Orders from Existing Customers

3. Make Sure Customers are Happy

4. Serve Those Customers Profitably

5. Have Cash

Visionary & Integrator/Second in Command

Visionary

Integrator/ Second in Command (2IC)

Deep-Dive Questions

These will help you uncover industry-specific metrics beyond the “What Every Company Wants” basics.

1. What makes for a great week in our business?
2. What makes for a bad week in our business?
3. What’s the magic this team creates?
4. Who is our real customer and what do they need from us?
5. What’s The ONE Thing you do that drives value for internal customers?
6. What’s The ONE Thing  you do that drives value for external customers?
7. Which steps in our process should we measure?

Quick-win item: The Scorecard needs an owner. Someone who’s passionate about measurement, persistent about gathering data, and punctual in having it ready before the Level 10 Meeting. Who would that be?

Does Everything Have to Have a Number?

No. Red-Yellow-Green is perfectly acceptable for a feeling-based indicator, like pipeline health. “I feel the pipeline is healthy. We’ve got enough deals close to closing, and the customers in the pipeline pay on time, so if you’re worried about cashflow, I’m feeling Green on pipeline health.”

That said, I recommend you discipline yourself to keep your Scorecard 80 percent numbers, 20 percent non-number indicators.

Does Everything Have to Be a Leading Indicator?

No. Go back to the “vacation machine” definition of Scorecard on the first page. You can absolutely have what I call “comfort measures” on the Scorecard. They may be lagging indicators, but it makes you comfortable to see them. Cash in the bank, for example. Percent of the bank line of credit used, for another.

Again, I recommend you discipline yourself. Keep your Scorecard 80 percent leading indicators, and 20 percent comfort measures.

Rocks and Scorecard

• Rocks are building future capability. They are special projects over and above your day job.
• Scorecard is daily responsibilities. Things that used to be Rocks become your day job.

Processes and Scorecard

Improving one improves the other.

Each time you document a step in one of your Processes, you uncover metrics for your Scorecard.

Each time a Scorecard metric is off track, you should look at your Processes. That’s because failure to hit numbers is most often a symptom of:

1. A poorly documented or not-documented Process.
2. A person skipping steps, which could be a Process issue (the Process is so unwieldy, even a Right Person in the Right Seat would struggle with it) or a People issue (the Process is fine ... it’s a Right Person, Right Seat issue).

Examples from Pinnacle

Source: Pinnacle: Five Principles that Take Your Business to the Top of the Mountain by Steve Preda and Gregory Cleary

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