Dan King - The Scorecard Solution: Measure What Matters and Drive Sustainable Growth

THE SCORECARD SOLUTION

Measure What Matters and Drive Sustainable Growth

DAN E. KING

American Management Association

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Library of Congress Cataloging-in-Publication Data

King, Dan E.

The scorecard solution : measure what matters and drive sustainable growth / Dan E. King.

pages cm

Includes index.

ISBN 978-0-8144-3492-5 (hardcover) ISBN 0-8144-3492-4 (hardcover) ISBN 978-0-8144-3493-2 (ebook) 1. Strategic planning. 2. Decision making. 3. PerformanceMeasurement. 4. Management. I. Title.

HD30.28.K5584 2015

658.4dc23

2014029586

2015 Dan E. King
All rights reserved.
Printed in the United States of America.

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It drives me crazy when I cant get answers. I see erosion in our revenue and no one seems to be able to explain what is happening to cause it. All I get are opinions and guesswork. How can I address the problem when I dont even know where or what it is?

Do you share this frustration? A CEO made this comment to me during my research for this book. She wasnt the only person who said something similar. What I learned through multiple interviews with executives is that business leaders live in fear of two problems: (1) not being told the truth about the health of the enterprise and (2) having to make major, strategic decisions with too little information.

Unfortunately, the causes of these problems are usually baked into the system.

Even the most approachable leaders have subordinates who are reluctant to disclose looming performance deviations or organizational weakness. Wed like to believe that the messenger never gets shot, but there are plenty of messengers in companies across the land who would rather not test that premise.

As a result, a leader receives sanitized information. This is a dangerous scenario for a decision maker. Without comprehensive and current data about the organizations capabilities, the leader is forced to make investment decisions and allocate resources based on partial facts.

In addition to not having the facts, leaders may be unaware of their own mindset, which can add to the dilemma. During my work with CEOs and senior leadership teams, Ive found that they have a bias toward the belief that all is good. They want to believe that their organization is rock solid and delivering the best possible results, given market conditions. Many leaders also are prone to maintaining the status quo. Because they are somewhat in the dark regarding the health of the enterprise, there is no urgency to address weaknesses they dont see, particularly if the weaknesses have not yet shown up in the numbers. Why fix what isnt broken? That becomes the mantra. If current performance of the business is acceptable, why rock the boat? After all, change is tough on an organization, right? Why be bold for the future and risk your present success?

The reality is that present success is not self-sustaining. Without preventive maintenance, something is always breaking.

The Scorecard Solution will solve these problems by giving you a practical tool for maintaining a crystal-clear and constant view of your business that will enable better decision making. That tool, the Organizational Prowess Scorecard, delivers the unvarnished, unemotional facts about what is really happening in areas of the company you cant see every day. It has three major components:

1. Strategy Planningwhat are we going to work on?

2. Execution Frameworkhow do we get it done?

3. Talentwho will do the work?

In my experience these components all need to be in top form for a company to thrive. If you have, for instance, a bad plan, youll squander opportunities. If you have a good plan, but arent able to execute it within an acceptable time frame, youll lose ground competitively. And if you have too many B players in mission-critical roles, key goals will be missed.

Each component is broken down into measurable subcomponents that are assessed and given a numerical score, which, when tallied, will show you how youre doing in a subcomponent, a major component and, most important, overall.

The Organizational Prowess (O.P.) Scorecard is built on a scale from 10 to 100 and reflects four levels of organizational competence. From best to worst, they are:

Agile: 80100 pointsYour company has an enviable speed to market, a culture of innovation, and exceeds financial targets.

Resilient: 6079 pointsYour company typically achieves the revenue target but overachievement is elusive. Existing capabilities make stretch goals impossible to attain.

Vulnerable: 3059 pointsYour company regularly misses financial targets, suffers talent erosion, and has minimal innovation.

Lagging: 1029 pointsYour company has a passionless culture and doesnt innovate. Without changing, its survival is in doubt.

The characteristics of these four categories of organizational health are explored in depth in . The point to remember for now is this: The truth unveiled by the scorecard translates into great power for a leader. Simply knowing where the business resides on the Organizational Prowess scale will give you the confidence to act. Youll also know what to act on and how to prioritize your actions.