Scorecards

You are what you measure.

That is a startup thing.  Investors, mentors, and advisors always remind startups of that.  If they are measuring the wrong things, they fail. Measure the right ones and make the necessary adjustments to get those measurements up to speed, they do better.

It’s also what you measure.  For some startups, measuring the growth of their revenue is a bad metric.  It sounds counterintuitive when you run a business but for social media companies, revenue isn’t a good metric for how well they are doing.  Engagement is much better.  Of course, revenue has to come eventually because if you don’t have net income you are only running a hobby, not a sustainable business.

What you measure also has to be totally objective.  It can’t have wiggle room.  It cannot be subject to a lot of “feeling” or “judgment”.  If you have a business that is supposed to put butts in seats, you better measure how many butts you put in seats. You can’t say, “That person wanted to put their butt in a seat but didn’t.”, and count it as a but in a seat. You also can’t say, “We had a great slogan, mission, and marketing program so we estimate that we had this many butts in seats because there were some hiccups counting.”   Good intentions don’t count. 

When I was a delegate at the first-ever i7 corresponding with the G7 in Torino, Italy, one of the subjects that came up in our working group was the concept of a B Corporation. In the discussion, you could see that the majority of the people liked the idea because the intentions of the B Corporation are considered “good” by most people.  However, I brought up this point which put a needle in the balloon.  How can I objectively measure any B Corporation metric?  How can I compare and contrast them with other companies so I know one is doing better than the other, and make an investment decision?  How can I know that the B Corporation is giving me the best return on investment and return on assets?  I can do this with fundamental FASB GAAP accounting rules.  I cannot with the rules around a B Corporation.

Measurement also comes with responsibility for management that filters down to employees.  It creates culture in your business. You have to have the discipline to accept the responsibility for both good and bad outcomes.  Isn’t that interesting?  No one thinks about the responsibility for a good outcome.  They always look at downsides.  When you get a good outcome, you have a responsibility to do better.  A responsibility to your employees.  A responsibility to your customers.  A responsibility to your company mission of why you do what you do.

Today marks a big transition in America.  What should the metrics be that President Biden is measured by?  I honestly don’t think that the two Americas could agree on them.

I know the ones I would use:

• Inflation rate
• Gross Domestic Product growth
• Measures of broad unemployment, and measures of the different ethnic unemployments
• Personal Income growth
• Small business startups
• Is the stock market higher than it was the day I took office and by what percentage?
• Interest rates for personal and small business borrowing

Those are objective numbers.  They are cold and hard.  They are measurable. There is no wiggle room.  We have agreed upon ways to measure them.  They matter to the American people.  It affects us all equally.

Things like social justice, relationships with other countries are not measurable. Personality is not measurable.  They are squishy B Corporation metrics.  That’s why the press wants to talk about them all the time.

The post Scorecards first appeared on Points and Figures.