By now, you are convinced that business systems are the essential building blocks of the perfect business, one that runs itself efficiently and profitably. Getting the right people, those who are competent and motivated, adds spirit and power to your business processes. It is the combination of great people and great systems that produces great companies. When you add the elements of fun and competition—when you turn your business into a game and keep score—you will discover the grand secret to developing a truly remarkable company.
People will actually pay for the opportunity to "work hard" when they enjoy what they are doing. Recreation and sports generate enthusiasm, energy and motivation not usually found in work-day activities. Many people feel their jobs are stressful, unrewarding, and even boring. Games are fun, engaging and fulfilling. People don't like to work. However, they do like to play and compete. So, start having some fun!
Make It a Game
Let's compare the game of football to your business. The coaches (managers) begin with a strategy for winning games. They recruit skilled players (employees) and assemble the best possible team. The coaches watch game films to learn the strengths and vulnerabilities of the competition. They create an effective game plan and practice hard to execute the plan with exactness.
Players learn the rules of the game, the field of play, and the importance of staying within set boundaries. During games, they continually have their eye on the goal and know how much time they have to reach it. Every play provides feedback that enables players and coaches to make necessary adjustments. Adversity and opposition produce even greater courage, determination and achievements.
But what would happen if there was no scoreboard? The stands would be empty. There would be no screaming fans; no one would even care. Keeping score and following player and game statistics is what generates buzz and creates wealthy sports stars.
The goal of any sport is to put more points on the board than your competition before the clock runs out. And the players' gritty determination to push the envelope of human performance gives us the amazing highlights on the evening sports news.
Scorekeeping in a positive way can help people become winners. Your employees want that opportunity. Only you can provide it!
Games are all about numbers! The number of yards the ball moves on a play determines if the play worked as planned, or not. The final numbers on the scoreboard reveal if a team had a successful game, and if the fans go home feeling triumphant and proud, or heads-down discouraged. Performance numbers are used to set player salaries and they determine if the managers get a new contract.
Managing by the numbers can transform teams with poor performance into fierce competitors. Analysis of individual and team scoring data leads to better results and winning seasons.
There are three types of business scorekeeping that you should pay attention to. The first includes a profit and loss statement, a balance sheet, and a statement of cash flows. These financial tools are rich with information on the health of your operation. They reveal strengths and weaknesses, performance trends, break-even points, and other intelligence for decision-making and problem-solving. They show the company's ability to generate profit and cash flow—the life blood of your business. These scorekeeping tools, referred to as lagging indicators, are primarily used by owners and managers.
The second type of scorekeeping involves measuring the results of your business systems, often referred to as leading indicators. System reports may include the number of sales leads generated by marketing campaigns, the percentage of defective products returned, the person-hours required to complete a job, the number of orders processed within a day, and so forth. Setting goals and measuring system results increases productivity and profitability. As in football, employees should receive frequent feedback regarding their individual and team performance.
The third type of scorekeeping requires a deep understanding of the key number that drive the economic engine of your company. Control of the key numbers determines the performance and growth of the business. If these one or two results are good, everything else tends to fall into place. An example in football might be the success rate of first down conversion attempts. If the team converts third-down plays to first downs at a high rate, they are moving the ball and have more opportunities to score.
Key numbers indicators (KPI) are usually expressed as ratios such as profit per "x" (profit/x). Search for the one denominator that has the most impact on the business. The obvious might be profit per product line, profit per store, profit per hour, or profit per job. However, a closer examination of what makes your company tick might reveal a better measurement such as profit per employee, profit per customer, profit per ton of finished product, profit per mile driven, and so forth.
Results to Resource Ratio
Charles Coonradt, author of The Game of Work, explains key numbers in terms of a "Results to Resource Ratio." In other words, what is being accomplished with the available resources? Managers, like coaches, are people who turn resources into results. The more efficiently they do this, the more successful they are as managers.
With the Results to Resource Ratio, results are expressed in quantifiable terms representing quantity, quality, timeliness, accuracy, profitability, and so forth. Resources include such things as time, space, equipment, inventory, or budget. In plain English, these ratios may appear as:
- Sales dollars per square foot of floor space
- Pounds of flour per ton of wheat processed
- Defective units per thousand units produced
- Average sales dollar per customer visit
- Warranty service calls per client contract
- Feet of wood moulded per machine hour
Focus attention on the most important results and the most expensive resources. These ratios can be used at every level of your business operations.
Manager-Coaches Drive Success
Managers are on the constant lookout for better ways to refine their business systems and add useful measures that will increase productivity. Progress is based upon the ability to improve measurement. In sports, statisticians look at new ways to measure player performance and compare output with other players.
Business and religious leader Thomas Monson teaches, "When performance is measured, performance improves. When performance is measured and reported, the rate of improvement accelerates."
Effective managers create specific, written goals. Team goals shape personal goals. Personal goals are the foundation of all achievements. Goals must answer the questions of how many (or how much), by when, and by whom. "How many" is the desired result. "By when" is the adrenaline-boosting deadline. "By whom" indicates ownership and accountability for the result.
Empower with Ownership
Ownership of a task drives personal motivation. This happens when the "right people" are allowed to choose their own rewards, set their own goals, and decide how they will accomplish those goals. Personal goals must fit within the prescribed system boundaries and be consistent with team goals. When a person chooses a goal, he or she simultaneously chooses to pay the price to attain it, and the payoff for its accomplishment.
Hire and empower self-motivated people who want to win. Tell them why the business system was created, how it works, and why it will benefit them. Enlist their knowledge, talents, energy and resources to improve the system and raise the bar on performance standards. As they achieve results, their self-esteem and sense of value to the company will grow. They will set new performance records. When they create greater value, compensate appropriately. Remember, "Winners keep track of results; losers keep track of reasons" (Charles Coonradt).
Give Frequent Feedback
Scorekeeping must be simple and objective, self-administered, and provide frequent feedback during the game. Employees should not have to depend on a supervisor to tell them how well they did. They know the score as the game progresses. The use of charts and graphs can give even more impact. Effective scorekeeping offers a comparison between current personal performance, past personal performance, and an accepted standard. If you want to improve the quality of performance of any activity, you simply increase the frequency of feedback.
Without scorekeeping, we don't know when to celebrate. There is no end-zone dance. There is no glory! Create "games" in order to celebrate and savor the victories. Winning makes the game of work fun, brings the best out of players, and creates an extraordinarily profitable business.
In the Zone, imagine yourself as the coach of a team bound for the Super Bowl. Establish measuring systems that let you know every day how much closer you are getting to the goal. Focus your attention on the 20% of activity that produces 80% of the results. Find and work the key numbers that drive the economic engine of your business. Expect to win. Pay the price. And have fun!
One final thought: There is a very real price to pay! Read on and decide now if you are willing to pay it.