There is a difference between a scoreboard and a dashboard. The scoreboard determines winning and losing. The dashboard indicates how the game is going. Unless it’s baseball, keep them separate!
Baseball is an example where scoreboard and dashboard items are combined. Hits and errors are right up there with the runs. But at the end of the game, it’s the runs scored that matter. Nonfans are rightfully confused by all this extra “stuff” on the scoreboard.
In today’s business environment with chronic information overload, there is often obsessive attention on metrics, that somehow make it onto a dashboard. Over time, players become overwhelmed, dashboards get confused with scoreboards, and it’s no longer clear what winning looks like.
Let’s start with some basics.
What you measure is what you get. Furthermore, Newton reminds us that every metric has an equal and opposite counter metric. Please, pick measures wisely!
Scoreboard items are relatively easy to choose. Yes, business is what Simon Sinek calls an Infinite Game that one cannot “win” in a traditional sense. But revenue targets, cash in the bank, earnings per share (EPS), and so on are rather uncontroversial measures of winning. Just make sure the scoreboard is linked to the organization’s strategy and vision.
Dashboard items are more open to interpretation. The best dashboards highlight key indicators of whether the organization is performing well enough to win – hence the basis of Key Performance Indicators (KPIs). “Key” means “of paramount or crucial importance,” so having too many defeats the purpose.
KPIs are also imperfect by nature. Strive to use metrics that are objective, indisputable, actionable, and predictive. This means avoiding metrics that are subjective, confusing, disconnected from action plans, and backward-looking. Market share is a good example of one to avoid.
Scoreboard and dashboard items will change with time and circumstances. Refer to the organization’s Outcome Hierarchy. When something in the hierarchy changes, so should the measurement system!
Would outside counsel be of value?