The Scorecard Solution

Dan E. King: Well, Rachel, I think the predominant reason that I felt the scorecard could help business leaders is that it provides a very precise and numerical way to understand organizational health, and it really takes the guesswork out of figuring out where investments need to be made and where leaders need to spend their time.

As I did research for this book, I spoke with a number of CEOs and business owners and the resounding response was that if we had a quantitative way to really measure organizational effectiveness, we could be much more precise on where we spend our time and where we put investments and allocate resources.

So that really is what led me to the development of a scorecard concept.

Rachel Salaman: In the book you say it's all about organizational prowess. I wonder if you could just define that for us.

Dan E. King: Sure. This was an interesting part of my research. I felt that leaders need a label, that if they could really comprehend what it means to drive accelerated growth in a business, they would know better where to make those investments. So I came up with the name Organizational Prowess for that reason, and the definition, which I dissect in great detail in the book, includes four main things: the definition as I've used it is, "leveraging data and talent to execute a strategic imperative within compressed timeframes."

That's a bit of a mouthful and it's easy, I think, for a listener to just let that definition slip past, and so, in the book, I really broke it apart, and the data is really having good facts, so this is the essence of a scorecard where you are able to go into your business, collect information, very detailed information around capabilities, and then use that to address weakness. So that's leveraging the data. Talent, similarly, people get things done, we all know that in business, and having the right people in the right roles, and making sure they're very focused on the strategic initiatives at hand, is what helps drive success. So it's leveraging the data and the talent, and then obviously to execute. In the book, I spend quite a bit of time talking about an execution framework. There are a lot of elements involved in how a business team will execute within a given business cycle. And then the strategic imperatives really define what is it that has to get done within a given business cycle.

And lastly in the definition, I touch on compressed timeframes. I found that this truly is the competitive advantage. If a business and a management team can get done in less time what they've committed to, everybody wins and, from a financial perspective, that's what allows a business to exceed the plan, to exceed the goals. So if you're able to hit your 12-month business objectives, for example, in 10 months, that's profound. You not only overachieve in that given year, you've now created a run rate to overachieve in the following year, which is really the definition of sustainable growth.

Rachel Salaman: So the scorecard uses those ideas around organizational prowess to look at three aspects of an organization: strategy planning, execution framework, and talent. So who within the organization should be using the scorecard and over what time period?

Dan E. King: Great question. I've found that the person who has authority over a discrete part of the business can easily adopt a scorecard. In other words, this could be the CEO of a business, it may be a division head, it could be a department head, but it's somebody that has some say-so over what kinds of changes can be applied within that part of the business.

So the leader essentially would adopt or sanction the scorecard and will go through certain steps to engage others and to create the kind of buy-in that would be required to apply the scorecard, and then use that data to drive growth. So it really comes down to whoever feels that they have the influence and the authority to make changes within the discrete organizational setting.

Rachel Salaman: The scores on the scorecard rate the business as either agile, resilient, vulnerable, or lagging. Can you tell us a bit more about those four categories?

Dan E. King: I did not initially have those terms in mind. I had this scorecard, it's a numerical scale from 10 points to 100, and as I built out that scorecard, I talked to some business leaders, shared what I had at that point, and the feedback was very consistent, that, for a leader to use a scorecard more than once, which is highly recommended, they would want to see some progress, they would want to feel progress, and the labels, that puts a word to the improvement.

It's obvious to the listener that, certainly, you want to have things in place that move an organization towards agile. Not everybody will reside there ultimately but that should be what management teams should aspire towards. Resilient is a strong business, they're generally making their numbers, they're doing well, they are retaining their key people, so there's a lot to like about that type of an organization and, in that case, continuous improvement is really the mantra. It's just keeping track of where we are through the scorecard and continually monitoring and addressing weakness as it's identified, but that's a healthy enterprise.

Vulnerable, similarly there's a lot of companies from what I've seen and where I've measured, be it a scorecard, that are in a vulnerable place. But the good news is that, with the right things, they can move quickly out of vulnerability into the resilient realm. So that's usually where they've got to make more investments in talent and get a little bit better at their strategic planning and reassess that execution framework.

And, ironically, a lot of companies will slip from resilient to vulnerable after a growth year. This is the whole challenge to sustainability, that companies may do everything within their power to exceed their goals in a given 12-month business cycle, and that has taken so much energy and resource to achieve those goals that the next year there's a dip, and that's a fairly common dynamic, and so now they've found themselves back in this vulnerable place.

So that's why I talk a lot about the status quo and how that can truly be a death knell to a growth business, and I'd like to say to business leaders, don't wait for the crisis to work on your business. When you're enjoying those good times in a growth year, that's the very moment to apply a scorecard and figure out where can you get better, because that will carry you into growth for multiple years.

Rachel Salaman: So given that this is about rating parts of your own business, what kinds of checks and balances should be put in place to make sure that leaders are being objective in their scoring?

Dan E. King: This is a very subtle, but important, part of the scorecard application. The process or the approach that I recommend in the book is to create a scoring team, and this may be only two individuals, maybe three, I would suggest no more than three, but these are individuals who, number one, are fairly senior in their role, because you want people that can have a view of the enterprise across functional areas. Secondly, you clearly want people who can be objective and unbiased in their ratings. Some companies that I've worked with the scorecard will actually engage an external expert, they'll bring in a consultant to help guide the scoring to ensure that unbiased approach, but I've found that a lot of companies do have leaders who can tackle this in a way that's objective. But then, to ensure objectivity, I recommend an audit team to review the work of the scoring team, and again this may only be two or three individuals but it's a check. It's a sort of second view of the data to make sure it's been captured accurately.

And this comes down to a work session. Once the scoring team has been out and done their observations, done their interviews, gone through the process to collect data, they would bring that into a work session, and it could be anywhere from a couple of hours to half a day, with the audit team to really scour the scorecard, validate the data, and make sure it's as accurate as possible. From that point it would go to the senior leader, whoever had sanctioned the work, and they would do another pretty thorough analysis of the information and then, from that, create outcomes.

Rachel Salaman: In your experience of using the scorecard, have you ever found subjectivity has crept in, or do you find that most people are able to do it objectively?

Dan E. King: What I've found is most people are very objective because the end result is you want to make your business better, you want to create a healthy organization that can perform at a high level, and so, to game the system or to score elements of the business higher than what's real, I think defeats the purpose.

And secondly, I always recommend a repetitive approach. So, for example, if an organization is applying the scorecard for the first time, I recommend they do it again in six months. So that also keeps honesty as a very real aspect because, when you can show improvement, that's a rallying cry, and I've seen companies that they get on this repetition of every six months and they literally post the results within the organization - they want everybody to see the progress and to see the improvement.

So, to start out on a false benchmark and give yourself an artificially high score would really undo the opportunity you have to create great momentum and commitment throughout your entire workforce.

Rachel Salaman: Let's look a bit more closely at the strategy part of the scorecard, strategy planning to be precise. What are leaders asked to rate here about their business?

Dan E. King: To really apply an excellent strategy planning process involves two things: data and then the actual process of planning. And what I mean by that is the homework. Senior teams oftentimes will go into a planning session without really having taken a look at their organization or collected market information or competitive intelligence, so they're in a planning room reliant almost 100 percent on their own opinions and their own past experience. And this, unfortunately, can lead to a flawed planning outcome because past experience really is not a great predictor of future success.

So, while opinions are important and certainly experienced leaders have gut instincts and they have great ideas about what the future should look like, you really need to apply some pretty intense data around current capabilities within your company and also what that external marketplace looks like. That's all the data, then secondly to ensure a great outcome is the planning. So, if it's an offsite session, for example of a day and a half or two days, it's what occurs within those two days that determines success, and I go into some detail in the book around what that means but, certainly, to have a very effective facilitated session and you have a way to vet ideas.

So, typically, there's a brainstorming and the team envisions what the future could be and they come up with a list of strategic initiatives that could take them into that future. Then, most importantly, there needs to be a prioritization and a limiting of what will be done within a given business cycle. I've been part of companies, and I've worked with companies, that invariably there's an overzealousness, there's a desire to really get aggressive in planning, and teams need to be cautioned to be realistic. And that's why the SWOT analysis, understanding your capabilities, has to be part of the process so you don't outstrip your ability to execute.

So, how those two days come together in terms of the brainstorming, the prioritization and, ultimately, the decisions around strategic initiatives is a bit of the art within the science, and most companies do use some facilitator for this, and that is highly recommended. I think that does keep the process on track and allows you to reach an outcome that's not too conservative but also very achievable within a given period of time.

Rachel Salaman: And you mentioned the offsite aspect of strategy planning. Is that something you recommend? What are the advantages of taking people off site for this kind of session?

Dan E. King: Yes. I've found it is preferable - people tend to think better in a fresh environment. Getting away from the day-to-day certainly helps to think about the future. You'd need to separate yourself for that period of time from the day-to-day distractions and if the planning is done within the workplace, invariably others are going to seek you out, there will be interruptions.

I don't believe that a team really can be as effective on planning the future if they don't seek out that unique environment for that couple of days.

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Rachel Salaman: Moving on to the second section of the scorecard, which is the execution framework. What kind of questions are being asked and answered here?

Dan E. King: As I thought about the scorecard, the execution framework portion is, in my view, probably the most critical. In fact, numerically I gave it a value of 40 points, whereas with strategy planning and the talent piece each 30 points.

So execution, clearly it's all about getting done what we said we would do, it's making good on your commitments, and the execution framework has a number of sub-components that would need to be measured and then invested in. But essentially it comes down to ownership of chosen strategies, and then what I refer to as the execution team. This is usually a cross-functional assembly of experts, these are the true skillsets, the people who are going to actually on a day-in, day-out basis get the work done. And because, by definition, a strategic initiative supersedes the day job, the experts need to be people who can perform beyond the day-to-day, so it's stretching some new muscles in many cases, it's working together with people who maybe they don't normally interact with to get new things done. And so that execution team and the way it's assembled is I think the cornerstone to the execution framework.

And then tracking progress, this is where many companies struggle. What happens in very real terms is that an execution team can get off track for different reasons, sometimes it just might be the day job is taking up way more time and not allowing certain people to get to the strategic initiative work, or perhaps it's technology challenges or resource limitations but, usually as part of an execution team, human nature is you don't always want to cry for help or announce that we're falling short, so part of the execution framework is the dashboards and keeping metrics very visible so that people in authority, the senior team more specifically, can track progress in very real time.

And the reason for that is, when there is a bit of a blip in performance and if the team gets a little bit off track or gets derailed or there are certain barriers that manifest themselves, it's the senior team's job to remove those barriers, put the resources back in that need to be there, do whatever is necessary to help that team win.

So it's what I call the real time course correction aspect of execution that differentiates companies from the mediocre pack of those who do very conservative work on their strategies and they may show modest growth year after year, but those that really have a well working execution framework, marshal resources in such a way that they can accelerate growth and it's what a lot of us refer to as hyper growth.

Rachel Salaman: Technology features strongly in the execution framework section of the scorecard. What are your main observations about technology in this context?

Dan E. King: I think that, from what I've seen, technology will vary in significance depending on the business and the industry and at what stage of growth. In fact, in some cases, technology is broken out as a separate component of the scorecard, actually it becomes a fourth component in addition to the strategy planning, execution framework, and talent.

In most cases, as I've worked with companies of various sizes and in different industries, it works fine for technology to be measured and assessed within the context of the execution framework, because, as we all know, technology is an enabler to getting things done, it's part of execution, it's part of how you build product etc. However, in what I might refer to as technology-centric businesses, this could be software companies, companies in a technology sector it's much more core to the business and, in that sense, technology should really drive product innovation, not follow.

I've worked with some companies where technology actually held back growth because they did not have the software development capability or the agility to really lead that effort, so the business development side of the organization had to slow down. They couldn't go to market with new product, they had to wait for technology to catch up, and that is certainly an Achilles' heel in that type of environment.

Rachel Salaman: Let's talk now about the third and last section of the scorecard, which is talent. What are the key questions a leader will be looking at here?

Dan E. King: This is what I think is the most fun. I think the people part of the equation is the most interesting in any organization. And, in summary, the scorecard really unveils if we have the right people in the right roles, and part of that is assessing talent vis á vis the strategies, and one of the biggest challenges organizations have is doing new things, as you think about the future, with the same set of skills in the business. And leaders quite naturally are reticent to address weak performers, there's clearly an aspect of procrastination when it comes to upgrading and injecting the organization with new talent, but it's vital and the scorecard really creates the courage.

When you have very factual data around people's capabilities, it's easier, I think, to address the challenge. Managers often feel that they're stuck and they have to get new things done with the people they have currently because they're just concerned the organization may not support them hiring more people or they don't know really how to change out certain people for new skills, and certainly HR organizations need to be adept at this and be able to help managers get there quickly.

So, in the book, I actually create an individual scorecard, because I've struggled with okay, we hear the term A player. Every time I ask someone, "what do you mean by A player," I get a very different answer, so I created an individual competency scorecard so I could once again quantitatively define what that A player means.

Also what I've learned is that not every job requires A players. I'd see it as the mission critical jobs, so if you think about a strategic focus and what a management team has committed to for a given year, there are certain roles that are directly aligned with those strategies and, in those roles, I would argue you need A players. These are people who truly can get the work done, who have the requisite skillsets, who have followership, they can influence others who may not work for them to come together to get big things done.

So I think having the right mix of A players in the right roles and then having a talent management methodology to upgrade and to add the skills as needed over time needs to be core to the capabilities of a growth business.

Rachel Salaman: So, once a leader has completed their scorecard looking at these three areas, or four if they've broken out technology as a fourth, how should they interpret the data?

Dan E. King: This is where the real change happens. So, towards the end of the book, I introduce the idea of a play book. My goal with the book was I really wanted a reader to be able to adopt not only the principles, but to have a tool that could be theirs, that they could really embrace and put to use in their business.

So, very simply, once the scorecard has been applied and you've got that data, leadership teams then extract from the scorecard those things that they agree need to be addressed. Those, then, are put into the play book, which is a very technical, practical tool that a management team would really use on a daily basis. It includes actions, ownerships, timeframes, the metrics, and it's once again very precise and companies that I've seen and worked with that really have taken the scorecards seriously bring this play book to every one of their management meetings. It becomes what one CEO called the management bible and he expects his team each week in their meeting to have that in front of them, and there's a very candid discussion about progress and where are we and are we on track and what else needs to be done, and it literally will change a culture.

Adoption of a play book at the top of the organization and then it being cascaded down throughout the management ranks changes the way work gets done, and it really becomes the way in which improvements are made and how a company builds capability so they can really move much faster.

Rachel Salaman: So what are your final tips, then, for staying on course with this process?

Dan E. King: Growth by any measure is an outcome of quality decisions and if you really think about it what the scorecard does, it gives a leader, it gives a decision maker the information to make those quality decisions, probably much quicker than he or she might otherwise.

So good information leads to good decisions around where do we need to invest, where do we need to get better, and you can move quickly to shore up those deficiencies. What I've seen in companies that have adopted the scorecard and then it becomes part of the culture and they use it on a repetitive basis, it actually accelerates all the decision making within the organization and it removes the guesswork about where to invest resources.

So, at the end of the day, I think if the scorecard can lead to you having a very decisive, confident leader who then, with the right team, will outperform the peer group every time, and the scorecard will have removed the mystery around why are we faltering and allows for a very precise investment of resources.

So I think that it's the leader with the conviction to adopt the scorecard approach and the fortitude to stay with it, organizations will follow the culture, will change and now, in most cases, you will achieve this agile distinction which is that top quartile of the scorecard.

Rachel Salaman: Dan E King, thanks very much for joining us today.

Dan E. King: My pleasure Rachel, I enjoyed being with you.

Rachel Salaman: The name of Dan's book again is "The Scorecard Solution: Measure What Matters and Drive Sustainable Growth," and you can find out more about him and his work at his website closereachconsulting.com. I'll be back in a few weeks with another Expert Interview; until then, goodbye.