Improve your Business Box Score – Use Business Dashboards to Grow Your Business
With information coming at us from every direction, many times it’s difficult to digest it all and use it to grow our businesses. Much of this information comes from software that is becoming more and more sophisticated. The trend in financial and operational software is to get the user as much usable information based on large amounts of data in order to help us track progress and make decisions. As the facilitator of several industry peer groups I’ve noticed the same topic come up over and over again at our meetings. That topic is how to develop the most useful dashboard to run our businesses.
A business dashboard organizes key statistics produced by a business into a summary report for leadership to as
sess the results of their efforts. It can be as simple as a spreadsheet that contains certain Key Performance Indicators (KPIs) or it can be an elaborate report that contains charts, graphs, and variance analysis. But the bottom line is that it is created to get a snap shot of where the business is in terms of all functional areas. If your organization has multiple managers you may want to develop multiple dashboards to guide them in managing their specific areas.
The difficulty in creating an all-encompassing report is that the information comes from many different places such as operational software as well as financial software. While there are computer applications out there that can help consolidate this information, the user must define exactly what he or she wants to see. Once he or she has defined which KPIs are required the dashboard design can begin. So how do we go about designing a useful business dashboard? Probably the most useful and succinct dashboard I’ve seen is a baseball box score. A baseball box score gives information at a team level giving the score inning by inning. In addition, it gives statistics on each player such as at bats, hits, errors committed, etc. All of this in a neat little box that any viewer can understand who won and how they won.
This baseball box score parallel is extremely powerful in that when looking at a business dashboard report we want more than just financial information. Depending on the role of the dashboard user, he or she may want operational information, marketing information, management information, etc.
Using the baseball parallel think of the team statistics such as inning by inning score as your financial information and the individual player statistics as your operational information. Clearly if you are executing operationally and from a marketing prospective then the financial indicators should fall into place. It’s nice to have all of these items in one dashboard so the user can draw relationships such as how an increase in production or revenue per employee affects profitability or how a reduction in sales lead cost will also have an upward effect on profitability.
So how do we design a business dashboard that is simple to look at but powerful in terms of giving us information on how to grow our business? When designing a dashboard the following should be considered:
- Make it appropriate for its purpose – Only include information that will help in decision making for the person who it is intended. For example if you are creating a dashboard for your operations manager, he will want to see information on route values, route efficiency, revenue per technician as well as items like number of customers serviced and retreatments. He may not be as interested in items such as liquidity ratios or other balance sheet relationships. These would be items that your CFO would definitely want to see.
- Make sure the data points included are easily measured and comparable to prior and future periods. Consistency is key. For example many companies struggle with their definitions of retention (i.e. first year retention, how long a customer must be on the books before they are counted as a customer). If your management is constantly tweaking the definition, the dashboard statistic will not be as meaningful period to period
- Keep related data points together – look at the dashboard as a storyboard that guides the reader through several KPIs that takes the reader step by step through the presentation that allows him to draw conclusions about the business and therefore can make decisions based on information that is clearly presented.
- Make the look and feel easy on the eyes. Too many colors and graphs while may look cool, take away from the objective of being able to look at the report as a one minute manager that allows the user to get a birds eye view of the area being reported on.
Over the last several years management dashboards have become quite popular. Optimal dashboard design needs to combine relevance, usability and aesthetic presentation in order to provide maximum value to its users. If designed properly and disseminated timely dashboard reports can help management define what information is important and educate the team on priorities by putting the statistics in front of them with each periodic update. In addition, they are in important tool in helping to set realistic goals for specific people in your organization and promote specific action to achieve those goals.