A while ago Bill did some coaching work for a big telecommunications company, one of the corporate giants that used to be known as Baby Bells. He arrived at a company service office around 7:30 in the morning and went in to talk to the manager.
“How’re you doing?” he said.
The manager looked suspicious. “What do you mean?” she asked.
Bill said, “Well, I was just being sociable, but as long as I’m here, I wonder, how’s the business doing?”
She said, “You mean how are the numbers?” And he said, “Yes, the numbers.”
So she pulled out a computer printout, and pretty soon she was on to page two, buzzing through about twelve different metrics. Finally, Bill said, “Whoa! Forgive me, I’m just getting started here. I appreciate your diving in like this, but I’m just trying to get a sense of the overall picture of how we’re doing.”
To which she again said: “What do you mean?”
Bill said, “Well, I can see you have various metrics here—you have a customer satisfaction metric, you have a time per call metric—but how do you know whether you’re winning or losing? Because some of these things are going to trade off one against the other.”
You could almost hear her sigh. She said, “You know, I’ll be darned if I know, and I’d appreciate it if you could tell me. Because there are always some of those metrics on that page that are wrong, or are heading in the wrong direction.”
The manager’s sigh—and the confusion it reflected—are echoed every day in company corridors throughout America. People track dozens of metrics. They look at financial indicators, operational statistics, customer-related numbers. Yet they have no idea whether they are winning or losing. Some of those numbers are headed up while others are tanking. Some are more important while others are less so.
We’ll bet you dollars to doughnuts that if we walked into your company right now and asked a group of randomly selected employees whether the company was winning and what the score was, they would look at us blankly. Maybe one might venture, “Business is pretty good, I guess.”
Is this crazy or what? How can you expect people to make smart decisions about their jobs if they don’t know whether they’re helping the company win? How can you expect managers to manage and collaborate if they can’t figure out which numbers matter most?
Here’s what we mean by winning.
First, you sit down with your people and decide on a single number that represents your company’s key priority for right now, maybe for the next six months or year. It should be easy to understand, and it should bear directly on the business’s financial performance.
In a professional services company, the number might be billable hours per person. In a hotel, the occupancy rate. In a restaurant, the average bill. In a manufacturing company, on-time shipments. Remember, this is the number for now, not necessarily for all time.
Then you jointly figure out a target for improvement. How much can we make this number go up in the next time period? What will it be worth to us if we do? Most companies create a scoreboard to track the number. They agree to pay a bonus if people hit the target—a bonus funded by the resulting improvement in performance.
Now, suddenly, everyone in the office, store, or plant knows week in and week out whether they are winning or losing. They have a common goal.
What happens? Engagement and teamwork flow naturally from the common goal. If the goal is a certain gross margin, for instance, sales and operations work together to ensure that they hit it, focusing on the products or markets that have the highest margin potential. If people have differences of opinion about how to proceed, they have a straightforward way of addressing that difference. Which option has the most positive effect on our winning metric?
A clear definition of winning also empowers employees to make more decisions on their own. They don’t have to worry so much about balancing the tradeoffs between the dozens of metrics their manager is watching. Quick decisions make for more agile companies and happier customers.
In the Baby Bell, the office group’s job was to ensure that people who ordered telephone service got a dial tone and the features that they wanted on their line. The company referred to it as service order provisioning, or S.O.P. The number they agreed on was cost per S.O.P. Simple, sure. But they had never focused on this one number before.
From then on, anyone who walked into the office and asked how the business was doing would get a ready answer. Can you say the same for your business?