What if your business could alert you to catastrophic issues that your business was going to face unless you made some type of correction? Items such as cash flow issues, loss of a key customer, a loss of trust with your customers, ineffective use of financial resources, decrease in morale and dedication of employees, loss of mission focus or even poor leadership. What if, similar to a “check engine” light, there was a “check cashflow” light that would turn red?
Consider your car. There are hundreds of systems and specific requirements required to have your car operate in a safe, consistent and reliable manner. These systems are so critical to the success of the car that an area in your car is devoted to tracking all these key performance indicators (KPI’s) through a dashboard. Some car manufacturers are eliminating many gauges and going with lights (often known as idiot lights).
The problem with idiot lights is that instead of being proactive and showing that a system is not performing at an optimum level, it waits until after the problem occurs and then states that a problem has occurred without specific detail. Something as simple as tires being low on air can lead to unsafe driving conditions (blowouts and loss of traction) and early tire-wear (increasing the cost of tires). Most new cars now come with tire pressure sensors that trigger a light on your dashboard if there is a problem.
There is one thing that is 100-percent guaranteed to lead to an immediate breakdown in the system and will instantly cause the engine to shut down (and is 100-percent avoidable). Luckily, we have a gauge that tells us when to refuel and most people know how to use it.
Our car dashboard contains an incredible amount of information from our speed, rate-of-fuel consumption, fuel level, oil pressure, tire pressure, engine temperature, braking system, battery charging system and much more. Anyone of these get out of the normal operating range and we can come to a stop (or if it’s our brakes, we keep going …) unable to reach our destination. The cost of the repair is significantly more than the maintenance in the first place.
Fortunately, we can use a dashboard reporting framework to keep our organizations running efficiently and consistently like our cars. A system of measurements in an easy-to-understand display that tracks information in a way that is easily understood and will allow you to manage the key numbers of your organization.
The biggest challenge, and often the roadblock, when it comes to creating a dashboard reporting framework are the questions around the information provided: Where is the data going to come from? Who is responsible for collecting and compiling it? Who (and how often) updates the dashboard? How do we handle important data that changes less frequently? What platform, software, app, spreadsheet, etc. do we use? What type of charts, graphs, gauges, colors, etc. should we use on the dashboard for the greatest impact in displaying the information?
Start small and keep your dashboard to one page. Adding every KPI you can think of will create a lot of information where none stands out. Instead, pick three or four categories like financials, services/sales, infrastructure, leadership development or whatever is important to you. Limit each category to three or four KPI’s. This would give you around 16 key numbers.
The stop light model of green, yellow and red works perfectly for understanding how your organization is doing at a glance. Without reading anything, you could tell how well your organization is performing by the colors displayed.
Some organizations publicly display their dashboards on monitors in their main office, lunch rooms or other locations. Instead of using motivational posters about soaring like an eagle there, KPI’s are displayed in front of the world. If a teams KPI is low, it creates a motivation to improve their performance.
In the future you will ask, “Alexa, how is my business today?” Alexa might tell you this month’s sales compared to last year’s, that employee turnover was up by 14 percent or that cash flow was down. This reality will be here soon to those that know what questions they want to be answered and what data they need to collect.
Alexa just launched their Alexa for Business. Initially, it won’t track your business KPI’s, however, I would bet that it won’t take them too long to add that functionality. Make sure you’re ready.