Scoring your business – how do you measure up?

Topics: Business Strategy, FMCG, Sustainability

In the final of the Business Regeneration article series, ShopAbility discuss how scorecarding your business can help you get from good to great. For Retail World Magazine.

WHY SCORECARD YOUR BUSINESS?

Rather than point out the icebergs, or where your company Titanic may or may not have holes, scorecards are designed to help you rank where you’re good and not so good across the business and then improve them incrementally. Evolution rather than revolution.

Once you’ve ranked each area you can then prioritise where you need to get from bad to OK, or from good to great. Scorecards help you identify the broken bits that need fixing vs the bits to leave alone, and then to determine the relative importance of the bits that need improving.

Do you want to fix what’s broken, or if what’s broken isn’t that important in the scheme of things will you get a better result from shifting some areas from good to great?

Done correctly, scorecards act as a form of progress barometer for your business and often spark a series of important initiatives.

GETTING STARTED  – HOW LONG IS A PIECE OF STRING?

Who to Measure?
Ideally each function of the company should be scorecarded. This includes externally facing disciplines (external being consumers, shoppers, customers/retailers) including:

  • Marketing
  • Sales (account and field)
  • Category/trade/customer/shopper marketing
  • Insights
  • Supply & Operations

… and also internal functions such as

  • Human Resources
  • IT
  • Finance.

The examples we’ll discuss focus on the externally facing functions.

Within each function, you’re effectively scorecarding a rolled up or average ‘take’ on the entire department based on a number of individuals’ opinions within it. You’re not measuring individuals, you’re measuring departmental outputs and approaches.

The responsibility of building and completing a scorecard for each department or business function lies with, and needs to be driven by, the head of that department/function with the support and encouragement of top management in the business.

How to Measure

You can really only measure where you sit by knowing what the market is doing.
A good scorecard takes into account where you are, where you’ve come from and how you compare against the market.

Note however that the market – ie the average of your competitors’ activities – might not be at the level you determine aspirational or ideal either. Ie current ‘best practice’ may still be only at Average, particularly for disciplines and in areas that are new and emerging such as sustainability.

So to build the scorecard you need to start with an intelligence gathering review of competitor activity in each business function.

This activity should be amalgamated into a series of competence headings (see below) with each area of competence summarised and ranked eg Below Average, Average, Above Average and Ideal/Best Practice.

Bus Reg Scorecarding Article diagram 1

Measurement Scope – Areas of Competence

The lenses you use and some measures will be common across business functions, and other measures/competencies will be function specific.

Overall lenses to use might include macro areas such as Industry, Company, Operational, and Cultural.

Areas of common competence across all business functions and generally relate to industry, market and company knowledge are include aspects such as:

  • Industry makeup – key competitors and customers/retailers
  • Company product and category knowledge
  • Company structure, culture and processes.

There will then be lenses that are specific to certain functions. For example, Customer Engagement is important for Sales, Category/Trade Marketing and to a lesser extent Brand Marketing and Insights.

Planning and Operational (in various function specific forms) applies to Sales, Marketing and Category/Trade Marketing.

Something like Brand Performance is largely specific to Marketing (although bits will also apply to Sales).

Building the Scorecard

Once you’ve identified the common and function specific areas of competence (‘lens’), next you flesh out the aspects of each area as they apply to that function.

So for Operational for instance, aspects that might apply to Sales are Presentations, Territory Management, Reporting and Retail Maths.  For Category/Trade Marketing, Operational aspects might include Trials Management and Category Reports Distribution.

For a lens like Planning,  for Marketing the aspects might include Strategic Planning and Brand Planning, where for Sales the Planning aspects could be things like Account & Customer Plans, Promotional Planning, Territory Mapping.

So now have a scorecard containing a number of levels that looks a bit like this:

Bus Reg Scorecarding Article diagram 2

GETTING ENGAGEMENT

The easiest way to get engagement within your department is to involve a number of individuals across various levels and job types in the ranking and prioritising part of building the scorecard.

Using the scorecard you’ve developed, for each aspect of each Competence area you’re after a group consensus on:

  • Current score (where we are now)
  • Aspirational score (where we want to be in 12-18 months, based on what’s realistic ie if you’re currently a 2 on something, getting to a 5 over 12-18 months is more realistic than trying to achieve a 9)
  • Where the biggest gaps are (current vs aspirational scores)
  • For where the biggest gaps are, closing which of them will make the biggest difference (ie, ranking the gaps in importance).

Once the departmental scorecard is completed the department heads should get together to share, challenge and agree results as a cross functional team. This is because departments will have different views of each others’ competencies, and what you’re after here is a 360 degree company view that minimises departmental turf protection.

The last step is then to determine what actions will be taken to close the gaps.

MAKING IT STICK – APPLYING IT

So now you’ve developed, completed and scored yourselves, what are you going to do with it? This is the most crucial part of scorecarding. Unless you’ve turned your scorecards into actions, you’ve really only conducted an extensive naval gazing exercise.

Scorecard uses include (but are not limited to):

  • Departmental capability and training needs identification (eg training courses)
  • Build into new processes eg changing the promotional planning process
  • Build into strategic plans as enablers eg category knowledge required to build customer plans
  • Identify knowledge gaps that will help inform innovation into new products, services and markets/channels
  • Initiatives and trials for the department or business to undertake to close the gap
  • Determining inter- and intra-departmental organisation structure changes required.

Progress against the initiatives outlined should be monitored by department heads and senior management monthly as part of ongoing business review.

So that’s it for the Business Regeneration series. Comments welcome.

For 2010 we’ll be talking about Customer Relationship Management, Shopper Marketing Evolution, and best practice Shopper Research from a number of angles.  In the meantime, we welcome feedback about what you’d like to see discussed. Email us at enquiries@shop-ability.com.au