What's On Your Dashboard?

Keeping tabs on your business in real time has never taken on more importance. Knowing where things are heading in time to make sound judgements is essential. It can be equally daunting. How do we separate the meaningful few from the trivial many?

As a college student, our class had a session with a commercial airline pilot, including a tour of a flight simulator and an up-close look at a typical flight deck. My classmates and I were in awe of the sight of so many buttons, switches, levers, dials, lights, and gauges. How does the captain keep track of all of these and still find time to fly the plane? The response was both simple and sensible. The pilot showed the five to seven gauges he watched on a constant basis. If there was an issue with any of them at any time, that would lead to a closer, deeper look at other indicators. In other words, his “dashboard” was layered in order of relevance and significance.

Setting Benchmarks: As you embark on plans to capture the pace and rhythm of your business, you will first establish benchmarks; that is, the basis upon which you will compare your performance. That done, you will monitor your results over time (days, weeks, months and annually). To monitor is to observe an action against a pre-determined standard. That standard is your benchmark. These can come from your budget, sales goals, planning objectives, tactical plans, and quarterly targets. Others may be based upon industry standards. Each should be specific and measurable.

Measures vs. Metrics: To establish your dashboard, begin by identifying the data points that are potentially predictive in nature. Don’t be concerned with how frequently these items should be reported; that will come later in the process. Getting the nomenclature right is a good place to start. For example, the terms “measure” and “metric” are often used as though they are synonymous. They are not. A measure is a single point of data gathered in a specific point in time (last week’s sales total, for example). A metric is a measure but with context (last week’s sales compared to the prior week’s sales). It is this comparative element which brings needed depth and meaning to the measure. So, you will use “metrics” where and when you can.

The Windshield vs. the Rearview Mirror: Typical financial reporting provides a look back, usually at the most recent month, quarter, or year. While these reports are needed to keep track, key data points that help predict what is coming are even more critical to effectively managing the business. These are the items that populate the business dashboard. While these will naturally vary based on the nature of the business, there are some that are almost universal in their capacity to help forecast with accuracy.

For more information on setting up your business dashboard, included sample items, contact me at joe@ajstrategy.com.