Keep Score to Win in Business
Get a group of businessmen together and the discussion invariably turns to sports. It doesn’t matter what season it is-baseball, basketball, football, hockey, soccer, etc.-someone can invariably rattle off statistics about every player and every game. While many of these businessmen (and women) can tell you the stats of their favorite team, few can recite important statistics about their own company.
Runs, Hits and Errors
To run a business effectively, you have to keep score. Most companies know who their top salespeople are, but few understand what makes them the best. What are the equivalent of runs, hits and errors? Is the business measuring not just EBITDA, but also:
- Marketing effectiveness (cost per new customer, lost revenue due to marketing mistakes)
- Sales effectiveness (average sale, repeat sales, etc.)
- Purchasing errors (incorrect quantities or items)
- Order errors (incorrect quantities or items)
- Invoicing errors (incorrect quantities, items, taxes, etc.)
- Payment errors (misapplied payments)
- Missed commitments (late deliveries)
- Credits and adjustments for errors
- Delays and defects (errors) cost a typical business $25 to $40 out of every $100 spent. Find and fix those mistakes and the profit falls straight to the bottom line.
Invisible Measurements
Some businesses are so focused on home runs that they overlook other important metrics. In baseball, the Oakland A’s found that a walk is as good as a hit, Michael Lewis wrote in MoneyBall. By using existing and overlooked statistics like walks, the A’s were able to find and field excellent teams for a fraction of the cost of most franchises. They found that the gut feel of old-time scouts wasn’t nearly as useful as a handful of good statistics.
Invariably, the business owners and managers who have an encyclopedic knowledge of sports statistics often rely on their gut feel to make business decisions. Like old-time scouts, they’re missing an important source of information-existing measurements of success and error. Are there important statistics going unmeasured? Probably.
In football, everyone seems to love the last minute Hail Mary pass that wins the game. In the world of IT and software development, it was no different. The programmers who fiddled around most of the time and then worked heroic hours at the end to deliver an unfinished and buggy product garnered most of the attention. The programmers who worked steadily during normal working hours and delivered quality enhancements on time were often overlooked when it came time for bonuses.
If a business wants consistent performance, it needs to reward consistent performance. If a business rewards fire fighting and last-minute heroics, it will get more crises to handle. Businesses get what they reward. How effective is the reward system? Is it rewarding and reinforcing the right behaviors (on time, with quality) or the wrong behaviors (the Hail Mary passes).
What about turnover? Losing the best and the brightest or the lowest and the slowest?
What about hiring? Hiring the right kind of people? Do they stay long enough to return the investment?
How to Cut 10 Strokes Off Your Golf Score
Many executives and employees play golf. Ask any of them what it would take to cut 10 strokes off their game and they’ll probably snort and say that they’d have to quit working and practice full time. They often spend hours at the driving range and only minutes on the putting, chipping or pitching greens. A long, arching drive that lands in the fairway is a thing of beauty. A missed short putt is a thing of horror.
Prevailing wisdom says that 80 percent of shots lost to par are within 100 yards of the green. To dramatically improve a golf game, golfers have to start keeping track of not just the score, but shots lost to par. It’s up to the individual golfer to decide whether he or she loses shots to par to the drive, the irons, chipping or putting.
Keeping track of this information for a couple of rounds will reveal where to focus practice for immediate improvement. Do this for a couple of rounds and you’ll quickly discover that distance and accuracy of iron play, chipping or putting is key. Then you can adjust your practice routine to compensate.
In the same way, if businesses want to improve, they not only have to measure all of the good things that happen, but the bad things as well.
If You Want to Win in Business, You’ve Got to Keep Score
- Most businesses measure far too many things and rarely take time to improve them.
- Stop measuring anything that can’t be used to improve performance (how many hot dogs are sold at a game). Too many measurements dilute the improvement focus.
- Start measuring anything that can be used to improve performance. What are the hidden or overlooked measures that truly predict performance and customer satisfaction?
- Start using measurements to improve performance. Start with the worst first. Performance problems aren’t spread over the business like butter on bread; they cluster in a few key areas. Find and fix them. Employees can tell which measurements are getting the attention. Unused measurements are easily ignored.
- Continue to adapt and improve the score, and use the results to improve.
- If you want to win the great game of business, you’ve got to keep score and focus to improve the score. Otherwise, you’ll always be a duffer, not a pro.
This is a well thought out article that I have bookmarked for future reading. Have a fun.
This is without question the greatest article I’ve read on this topic. Excellent work. Keep up the good writing!
This is the first time I checked out your blog, and honestly, compared to your other posts, “Keep Score to Win in Business | YELLOWPAGESLOANS.COM” is much more well-written!
Keep up the good work. Regards, Elmer Mckinney
“Understanding your own metabolism is key to success,” says LaValle, author of The Metabolic Code Diet. Hoodia Source
Great post and great content as always, thanks for this post. I’m going to share this post.
Undeniably believe that which you said. Your favourite reason seemed to be at the net the simplest factor to consider of. I say to you, I certainly get irked even as other people consider worries that they just do not know about. You managed to hit the nail upon the highest and also defined out the entire thing without having side effect , other people can take a signal. Will probably be back to get more. Thank you
Very good blog post. If there were more writers like you I’d have more websites to go to when I do go online. LOL.
I just like it!…
Amazing article. I desire you up-to-date your blog significantly more often, I just cannot seem to be to acquire adequate of your blog. I preserved your blog in my bookmarks. Would it be feasible to do a guest post sometime?…
pregancy is quite critical and also requires more of your time so that you can monitor your health progress-
sometimes i play so much java games that i loss track of time,,
finance is really critical when it comes to the future of businesses and trade. i also took finance during my college days,.
I want to hear about the greed of commerical banking system. The fees, the penalties, the rise of payday loan, check cashing, title loan and tax advance place which now perform transaction which was the business of the bank. why are there more of these businesses than banks in our neighborhood?? The commerical banking system has failed the community with their greed and helped create many of the consumers they called subprime. Underwriters not qualifying loans, correctly, appraisiers over estimated property. I know banks couldnt have done this alone. Im just frustrated because I dont think we are angry enough about their participation in this mess. Why are we bankruptcy the country to support a system that has done nothing but fleece their customers every chance they get. where did Bank of America get the money to pay their last dividend to shareholders? The TARP????
The Notebook is of course one of Nick Sparks best tear jearker novel. Nick is really very talented guy*
Excellent report and easy to fully understand explanation. How do I go about getting permission to post component of the page in my upcoming newsletter? Giving proper credit to you the article author and hyperlink to the site would not be a problem.
laminate floorings provide a cheaper and easier way to setup a good flooring..
the clock radios that we have at home are made by General Electric and they are really sturdy;;
picking a good domain name is enssential for ranking good on search engines**
its really very nice and fantastic post, thanks for sharing this with us.
Extremely good content. If there were more writers like you I’d have more blogs to visit when I do go online. Hahaha.
This is possibly the highest quality article I’ve read on this topic. Excellent writing. Continue the detailed writing!