This is not your father’s business!
Business ain’t what it used to be! For the first three or four hundred years, all a business had to do was make money. Things began to change in the dot-com era as we learned about non-financial business drivers – things like the number of visitors to your site and your market’s potential.
Evolution is happening faster and faster. Two decades later, we have a much richer view of business success. Modern success indicators include things like Velocity, Agility, and Resilience.
The timing has changed, too – in the old days, getting monthly reports two weeks after month-end was good enough. Now, we expect near real-time data and reporting from a mix of owned and not-owned sources.
Location is different, too. Business meetings no longer happen once a month in some plush Board Room, but happen from our smart phone while the team is in multiple locations, time-zones, and whenever required.
And it is impossible to fly a SpaceX spaceship with a Model T dashboard!
1980s Business Executive Dashboards
Not much changed between when accounting was developed in ancient Mesopotamia and the 1990s. “The business of business is business” – all we had to do was monitor how profitable the business was. No concern for employee well-being, waste, regulations, or environmental impacts.
Our only source of information was our accounting systems. All data was filtered by GAAP (Generally Accepted Accounting Principles). Everything was measured in dollars, and if it could not be dollarized, it would be ignored.
The problem is this: most current business executive dashboards are firmly rooted in this history and mindset.
2000s Business Executive Dashboards
By 2000, a number of seismic events hit the business world: the quality gap, exemplified by Japanese cars and the need for process improvements, described by Hammer’s book Re-engineering the Corporation, and executed through Lean and Six-Sigma tools; and the dot-com bubble, showing us the value in active customer (user) bases, defendable intellectual property, and the power of a great idea.
Business as usual came to an abrupt end… though this triggered some evolution of our business metrics to include leading indicators and other elements from the Balanced Scorecard, the valuation view of our businesses, and the need for GAAP reporting stuck like glue.
There were a lot of poor investments made, based on really outdated measures!
2020s Business Executive Dashboards
So, where are we now? We have new business models where metrics like Monthly Renewable Revenue (MRR), Net Promoter Score (NPS), and Churn Rate are super critical. Our dashboards need to show executives new metrics – not the ones that your father used!
Let’s take a tour of what matters these days (in no particular order):
Viability: The ability for your organization to survive given the realities of today’s business environment. This is important for Stakeholders that have a near-term view of the organization… how secure are they over the next short while?
Vitality: The capacity of your organization to explore new options – products, services, customers and regions. Your ability to renew strategy and grow in tomorrow’s world. This is important for Stakeholders that have a longer-term view of your business to ensure they have a future with you.
Resilience: Business resilience is the ability of your business to quickly adapt to disruptions while maintaining continuous business operations and safeguarding people, assets, and overall brand equity. This is important as our current business environment is full of unpredictable disruptions to business as usual.
Agility: Business agility refers to distinct qualities that allow organizations to respond rapidly to changes in the internal and external environment without losing momentum or vision. Agility is an important capability for businesses since all eventualities cannot be forecast – or mitigated. Successful organizations can react to stressors faster than their competitors.
Employee Experience: Employee experience encapsulates what people encounter, observe or feel over the course of their employee journey at an organization. Employee Experience includes elements around their physical working environment and technology, culture, and rewards. Employee engagement is the key driver of employee retention and satisfaction, and therefore customer satisfaction and profitability.
Risk: The possibility of inadequate profits or losses due to pressures on the organization such as disasters, cyber-attacks, changes in tastes, strikes, increased competition, change in government policy, obsolescence etc. Monitoring risk is critical to ensure the organization is operating at a comfortable risk-level.
Velocity: Business Velocity refers to a company's ability to generate operational speed while heading in the right direction, with the right quality and cost, at the right price. Speed to market and speed to meet demand are key to winning in today’s business world.
Traction: Traction occurs when your product or service has started that “hockey- stick” adoption rate which implies a large market, a valid business model and sustainable growth. Traction is an early indicator you have the right processes to address your target market.
Bringing it all together
Many companies are leading revolution towards the new realities, and measures of business. They have moved completely towards the New Age measures. In this case we see only the new-age metrics being used and presented as a simple Heads-Up-Display (HUD) for the executive team.
This company has good Strategic Performance, supported by excellent Agility, Velocity and Employee Experience. It is significantly Vulnerable and overall has low Viability in its current business. Luckily it has strengths in Vitality (moving to new markets) and is getting good Traction on that journey.
Some of our clients don’t want to throw out the baby with the bath water…they cannot abandon the “traditional measures” required by their investors and other stakeholders. For them a combination of traditional and new age makes the most sense.
The traditional measures, down the left, are selected based on strategic priorities – what are the “seven” KPIs that are most critical this period? On the right are the new age measures with the core business represented in the middle.
In this case the “traditional” measures would indicate all is well with this company... Good profitability, strong Sales with only minor concerns about Expenses and Risk.
The “New Age” measures reveals significant issues that the traditional measures do not see – critically low Vitality, a weakness that is accentuated by critically low Agility combined with low Traction. There are also Vulnerability concerns. This is a business that is performing fine today, but is about to fall off a cliff without a parachute!
If this company were using only the Traditional measures they would be blind-sided sometime soon. The complete view would allow them to see what’s coming and take corrective action.
But wait, there's more...
In either case, we need to provide more detail behind these high-level dashboards. For example, a drill down into the “Growth” dial would show something like this:
This client looked at Growth in three categories – Organic (coming form existing business), Acquisition and Innovation. Within each of these categories they have their own sub-categories. Within each sub-category they report the KPIs with performance indicators and sparklines.
The concept here is levels of ever-increasing detail, each level being reported but in a way that can be quickly understood. This framework is repeated for each top-level area, but with the unique charts for each area – such as Sales Pipeline charts, risk scatter diagrams, etc.
This is a similar dashboard evolution as we have seen with cars
Dashboards matured into a collection of operational metrics – things that describe how the car is performing… Oil Pressure, Battery Charge, Engine Temperature, etc. This is like the “traditional” measures we have been describing for companies.
New Age car dashboards show you not only the traditional measures, but other real-time data that extend beyond the car – things like road temperatures and conditions, predicting traction and safety issues, traffic well ahead of where you are and alternative routes, helping reduce travel time and stress.
The evolution of organizational dashboards is well underway. We need to upgrade to a modern dashboard if we want to be a modern organization, the only question is: Are you ready to retro-fit your company yet?