In this blog, we are going to learn the importance of numbers.  It is the third component of the EOS, Data.  This component is fulfilled when you have a great scorecard and everyone has a number.

Imagine flying a plane in the fog with no instrument panel.  How crazy and risky!!! Yet how many business owners and managers operate without clear objective measurements to tell them the health of the business.  If you choose the best numbers, you will no longer need to guess and make decisions based on gut instinct and hunches.  A business is an objective system that can be tested and measured and produce regular activity based numerical feedback.

We suggest 5 to 15 key leading indicators measured weekly.  Examples of candidate numbers would be weekly revenue, cash balance, receivables, payables, various sales activities, customer satisfaction, project status, and product production.  Every business will have a scorecard uniquely suited to their organization.  It is important to note that this scorecard is different from regular financial reports, such as balance sheets and P&L.  These key reports, though critical to understanding business performance, are not the same as a scorecard.  The scorecard numbers need to reflect current activities that can adjusted before a problem gets out of hand.

Each number on the scorecard needs to be assigned to a leader who is responsible for the measurement and reporting as well as the ultimate troubleshooting and changes to keep that number healthy.  These key numbers need to be reviewed weekly by the leadership team.  After recording and reviewing this information for a while, your leadership team will be able to spot trends and potential problems before they become out of control.

A healthy growing business is run objectively, which means that the accountabilities and changes are based on specific measurable activities.  Every team member should own at least one number that reports his or her most important activities.  This is another means of developing a culture of kindness and respect toward people, and rigor and discipline toward objective results reflected in the numbers.  Leaders and managers can then focus on changing processes and attacking problems and not people.  If someone is not doing his or her job, it will be reflected in the key measurable activities