In the Entrepreneurial Operating System® we like to aim for progress, not perfection. Few of the tools in EOS® are more perfect examples of that principle than the EOS Scorecard™. When a company builds their first Scorecard, they aren’t saying to the world, “this is how we will predict success from now until the end of time.” No, they are dedicating themselves to constant improvement. They know that they will spend the next 2-3 years trying to build a better EOS Scorecard.
But, building a better EOS Scorecard is easier said than done. Like all things in EOS, there’s a lot of hard work involved. It occurred to me that other day that, while I often talk about reevaluating your Scorecard, I’ve never actually written out my approach to doing so. That’s why this week I want to give you, my readers and clients, this quick guide to building a better EOS Scorecard.
Hope it helps.
Step 1: Build Your First Scorecard
If you’re reading this article, you probably already have your first EOS Scorecard. But, on the off chance that you don’t, you’re still in luck. I have actually written ta guide on the Scorecard already.
Read the tutorial first, if you’re just getting started on your EOS journey. Once you have, you can get down to building a better EOS Scorecard with this article.
2: Don’t Make Changes Mid-Quarter
Once you’ve built your first Scorecard, it’s tempting to want to start tweaking it almost immediately. After all, you’re excited about all the progress you are about to start making, and the profits they lead to.
Seriously, don’t start making changes to your Scorecard just yet. Unless there is a glaring problem with it, you usually want to hold off until you’ve used that version of your Scorecard for at least one quarter. There are a few reasons for this. First, you want to get used to the idea of the Scorecard as an inarguable entity in the Level 10 Meeting™. The Scorecard is meant to be a reliable tool, a gauge for your business.
If you immediately start making changes to it, you undermine your trust in the process and in the tool. Even if you see things that need to be changed, doing so too early will rob the Scorecard of a lot of its power. Take time to get used to the process of reporting Scorecard numbers. Even if your team isn’t 100% satisfied with the numbers they’re reporting, they should get used to the accountability of reporting the numbers each week.
Second, seeing all of the mistakes you made on your first Scorecard (and trust me, everyone makes mistakes) teaches you how to make a better EOS Scorecard next time. There is a significant value in seeing which numbers were off, how often they were off, and why. You create that value by sticking with the Scorecard for long enough to see that play out. Without it, you will really struggle to improve on your Scorecard in the next iteration.
Finally, making on-the-fly changes to the Scorecard can be a slippery slope. Too often I see teams justify failure to hit numbers that were actually important by making unnecessary changes to their Scorecard. That’s the primary reason we don’t do Scorecard changes mid-quarter. It’s far to easy to weaponize those changes to dodge responsibilities.
3: Document Numbers You Don’t Hit
While you shouldn’t be making changes to the Scorecard, you should take careful note of numbers not being hit on a regular basis. Keeping records should be fairly simple, since you have a Scorecard spreadsheet that you reference each week. All you really need to do is figure out a system for highlighting the numbers that were missed, so you can easily reference them when the time comes.
When you look back at the end of the quarter, seeing all of these missed numbers should give you a solid starting point for making revisions to your Scorecard. When you are constantly falling short of the desired number, it may be that you’re either a) being too aggressive with your aspirations or b) not diverting enough resources to a critical aspect of the business. Either way, this is a great place to start looking for ways to improve your company and your Scorecard.
4: Analyze The Predictive Value
I made this the fourth step, but really it is a continuing step. You should be regularly comparing your Scorecard’s intent to the results. The EOS Scorecard should have predictive value. By asking yourself if you did the right things last week, you are able to predict what next week, month, quarter will look like. However, you don’t just right the numbers on the Scorecard and assume that they are providing that predictive value.
A good Scorecard number is an input. It’s something you put into the machine of your business to get what you want down the line. It could be sales calls resulting in sales, social media posts resulting in client connections, or units out the door resulting in client happiness. Whatever the number is, you need to be sure that the input actually results in the output. If you are hitting the Scorecard number every week, but aren’t getting the results you were looking for, it’s time to reexamine the number. Either the input isn’t actually related to the output you wanted, or something is awry with the reporting of that number.
5. Reevaluate Your Scorecard In Your Quarterly
Once your team has spent at least one full quarter with your current Scorecard, it’s time to reexamine it.
If you followed the first four steps, you have a good amount of data to analyze. Set aside time during your quarterly meeting to talk about this data. Your team needs to objectively analyze the Scorecard numbers to determine what will need to change to increase its predictive value. I suggest starting with these questions:
- What numbers were off regularly?
- Why were those numbers to be off?
- What was the effect of those numbers not being met?
- Did any Scorecard item feel more like an output than an input?
- If yes, what is the real input we need to measure?
- Did any Scorecard items feel unimportant?
- What surprised us this quarter?
- If anything, could the Scorecard have prevented that surprise?
As you progress, your team will build their own list of questions. This is a great place to start, though.
Asking these questions will probably give you a list of issues. Use the IDS Process™ to solve those issues and turn them into a better EOS Scorecard.
Meet the Founder
Jeff Whittle founded and launched Whittle & Partners in 2011. Before that, Jeff practiced law in Dallas for 15 years and has an additional 20 years of executive business experience. He has run businesses ranging from startups to 300-employee operations.