The balanced scorecard is a familiar accessory in the corporate world. Its early legacy includes a period in the early 1900s when French companies used the tableau de bord – or dashboard.
Harvard Business School professor Robert Kaplan and David Norton made the case for the modern scorecard in a 1992 Harvard Business Review article (and subsequent writings) to give managers and executives a strategic framework for their performance in all areas of business that would integrate financial and nonfinancial measures.
So what does this corporate tradition have to do with a 21st-century startup? Actually, a lot.
Often, startup founders don’t dedicate enough time to establishing solid metrics to measure the company’s structure: They’re too busy building every aspect of their company’s brand from the ground up.
But the sooner you balance all the elements that will help you determine how productive your startup really is, the sooner you can define and grasp your success.
Thankfully, you don’t have to go back to business school to create the next generation of the balanced scorecard. You already have all the ingredients you need.
Related: The 5 Key Metrics You Need to Be Tracking in 2015
1. Consider four elements.
When you’re growing your startup, you might be tempted to focus on one key area at a time. But you need to strike a balance. You want to keep selling, but you also need to maintain solid margins. You want to excite new customers, but you also need to keep your core group of clients satisfied.
The four elements of Kaplan and Norton’s scorecard are designed to help you achieve that harmonious balance. They include the following:
“How do customers see us? (customer perspective)
What must we excel at? (internal business perspective)
Can we continue to improve and create value? (innovation and learning perspective)
How do we look to shareholders? (financial perspective)”
Once you apply these metrics to your goals, you’ll be able to accurately gauge how your business is performing. Adopting these four variables to guide you will ensure that you keep your eyes on everything leading you to the prize – not just the prize itself.
Related: 5 Must-Track Metrics to Keep Your Startup Alive
2. Tailor your scorecard to your startup.
The traditional scorecard system aimed to give leaders a holistic view of their companies’ performance. But as the world becomes increasingly data-centric, holistic scorecards are becoming more advanced. This generation’s data-wielding power makes it possible to track multiple aspects of your business at once.
Now you can achieve a holistic view by tailoring your scorecard to your particular startup. Choose questions to accompany your four elements that will produce helpful metrics for your startup. Map these metrics to your unique business objectives and values, then communicate them to your team.
3. Start from Day 1.
Incorporate scorecard monitoring into your daily routine. Only then will you start to integrate your performance metrics with focus and clarity.
Dedicate at least 10 minutes each day to monitoring metrics (whether that means building a digital scorecard or maintaining a hard-copy version that’s large and visible) and making it part of your overall business awareness. Keeping a vague view of your metrics won’t help your business move forward. You have to know where you stand on a daily basis.
4. Test out ideal numbers.
For your scorecards to do their job, establish target numbers that will suggest success. It’s OK for this to be a bit of a guessing game at first.
As you become more comfortable with integrating your performance metrics into your routine, you’ll be able to evaluate your targets, make them more realistic and adjust them to your goals.
5. Trust the scorecard.
Sometimes it feels good to follow your instincts. But once you’ve established performance metrics, pay heed to the scorecard’s readings. If the metrics seem to be saying (or screaming) something and you ignore them, be prepared to face the consequences.
When you’re nurturing a budding business, don’t zero in on only one aspect or you’ll leave other elements of your business vulnerable. By adopting the time-tested balanced scorecard to monitor the progress your unique 21st-century startup, you can turn your touch-and-go strategy into a fact-driven, harmonious system.
Related: 4 Reasons Sharing Performance Metrics Will Accelerate Your Business
