Keeping the Pulse of the Organization
Many leaders ask me what is the secret to keeping their fingers on the pulse of their organization. My short answer is almost always “communication,” but just what type of communication varies from organization to organization. A general communication tool that can help leaders stay on top of their organizations performance is called a Dashboard.
What is a dashboard? Well, it’s a collection of critical information that tells you all about how you’re driving. Unlike the dashboard in automobiles, however, dashboards in business can vary widely from organization to organization. For example, way back when, there was a drugstore company called Eckerd Drugs – I worked for them while I was attending college. Across the street was our competitor, Walgreen’s. One of the items that Eckerd tracked on their dashboard was profit-by-store. It was the measure that alerted them to build additional stores in an area. By contrast, Walgreen’s, which also needed a predictor for store expansion, used a measure called profit-by-customer. By closely monitoring this measure, Walgreen’s charted the course of their store expansion strategy. At times, they would build a new store just blocks from an existing store. Why? Because their dashboard told them they could serve more customers if they expanded in this manner. Eckerd on the other hand, never really did a thorough self-examination in order to determine if some refined dashboard ingredients would make sense for them.
Where are they today? Walgreen’s is a highly thought of market leader, while Eckerd’s is, well, dust. Did effective dashboards make the difference? Not totally, but it certainly didn’t hurt Walgreen’s.
So what kind of items should be on your dashboard? Some items to ponder include the following:
- Goals versus actual results with regard to revenues, operating profit, net profit, and selected expenses.
- Year-to-date revenue, profit and expense comparisons with last year and the year prior.
- Year-to-date revenue and profit per employee compared with last year and the year prior.
Are there others that should be included? You bet. There are probably some unique measures that, if truly understood, will set you apart from your peers and maybe even turn you into the Walgreen’s of your market area. How do you determine these unique measures? Think creatively, and then drive smart!