You Have to Keep
If You Want to Win in Business!
By Jay Arthur
Get a group of businessmen together and the discussion
invariably turns to sports. It doesn't matter what season it is –
baseball, basketball, football, hockey, soccer, etc. – someone can
invariably rattle off statistics about every player and every game.
During a recent cab ride in Chicago, the driver wore a purple
jersey. When asked if those were Denver Bronco colors, he said,
“Absolutely.” My response was, “Thanks for sending Jay
Cutler to the Bears.” And then he spent the entire trip to airport
sharing stories about players and statistics for the Denver Broncos,
Rockies and Nuggets teams.
While many of these businessmen (and women) can tell you
about the runs, hits and errors in their favorite team, few can
recite important statistics about their own company.
Runs, Hits and
To run a business effectively, you have to keep score. Most
companies know who their top salespeople are, but few understand
what makes them the best. What are the equivalent of runs, hits and
errors? Is the business measuring not just EBITDA, but also:
effectiveness (e.g., cost per new customer, lost revenue due to
effectiveness (e.g., average sale, repeat sales, etc.)
errors (e.g., incorrect quantities or items)
(e.g., incorrect quantities or items)
errors (e.g., incorrect quantities, items, taxes, etc.)
(e.g., misapplied payments)
commitments (e.g., late deliveries)
adjustments for errors
Delays and defects (i.e., errors) cost a typical business $25
to $40 out of every $100 spent. Find and fix those mistakes and the
profit falls straight to the bottom line.
Some businesses are
so focused on homeruns that they overlook other important
metrics. In baseball, the Oakland A's found that a walk is as
good as a hit (source: MoneyBall, Michael Lewis). By using
existing and overlooked statistics like walks, the A's were able to
find and field excellent teams for a fraction of the cost of most
franchises. They found that the gut feel of old-time scouts wasn't
nearly as useful as a handful of good statistics.
Invariably, the business owners and managers that have an
encyclopedic knowledge of sports statistics often rely on their gut
feel to make business decisions. Like old-time scouts, they're
missing out on an important source of information – existing
measurements of success and error. Are there important statistics
going unmeasured? Probably.
In football, everyone seems to love the last minute Hail Mary
pass that wins the game. In the world of IT and software development
it was no different. the programmers who fiddled around most of the
time and then worked heroic hours at the end to deliver an
unfinished and buggy product garnered most of the attention. The
programmers who worked steadily during normal working hours,
delivered quality enhancements on time were often overlooked when it
came time for bonuses.
If a business wants consistent performance, it needs to
reward consistent performance. If a business rewards fire fighting
and last minute heroics, it will get more crises to handle.
Businesses get what they reward. How effective is the reward system?
Is it rewarding and reinforcing the right behaviors (e.g., on time
with quality) or the wrong behaviors (Hail Mary's).
What about turnover? Losing the best and the brightest or the
lowest and the slowest? What about hiring? Hiring the right
kind of people? Do they stay long enough to return the investment?
Get the idea?
How to Cut 10
Strokes Off Your Golf Score:
Many executives and
employees play golf. Ask any of them what it would take to cut 10
strokes off their game and they'll probably snort and say that
they'd have to quit working and practice full time. They often spend
hours at the driving range and only minutes on the putting, chipping
or pitching greens. A long, arching drive that lands in the fairway
is a thing of beauty. A missed short putt is a thing of horror.
Prevailing wisdom says that 80 percent of shots lost to par
are within 100 yards of the green. To dramatically improve a golf
game, golfers have to start keeping track of not just the score, but
shots lost to par. Everyone hates keeping track of errors,
but if they want to get better, they simply get over it. It's up to
the individual golfer to decide where they lose shots to par:
Drive (left or
right, long or short)
right, long or short)
right, long or short; too many three putts?)
Keeping track of this information for a couple of rounds will
reveal where to focus practice for immediate improvement. Do this
for a couple of rounds and you’ll quickly discover that distance and
accuracy of iron play, chipping or putting is key. Then you can
adjust your practice routine to compensate.
If businesses want to improve, they not only have to measure
all of the good things that happen – the runs, hits, touchdowns,
baskets, etc., they also have to measure the bad things: mistakes,
errors, hitches, glitches, missed commitments, and so on.
If You Want To Win
in Business, You've Got To Keep Score:
Most businesses measure far too many things and rarely take
time to improve any of them.
anything that can't be used to improve performance (e.g., how
many hot dogs are sold at a game). Too many measurements dilute
the improvement focus.
anything that needs to be measured to improve performance. What
are the hidden or overlooked measures that truly predict
performance and customer satisfaction?
measurements to improve performance. Start with the worst
first. Performance problems aren't spread over the business
like butter on bread; they cluster in a few key areas. Find and
fix them. Employees can tell which measurements are getting the
attention. Unused measurements are easily ignored.
adapt and improve the score, and use the results to improve.
If you want to win the great game of business, you've got to
keep score and focus to improve the score. Otherwise, you'll always
be a duffer, not a pro.
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