Phimation Strategy Group
Designing Powerful Dashboards
Updated June 2, 2021
Sometimes I’m asked to help companies find the right path for their next 3-5 years – which qualifies as “long-term” strategy for a second stage company. Other times, my strategy work focuses on short-term performance. In either case, it’s useful to have some way to measure progress and check to make sure we’re on the right track – to have a dashboard.
In designing a dashboard, there are two main factors
(1) what you will measure, and (2) how you will measure it. I strongly suggest that you have a precise description of the business driver and an imprecise metric instead of an imprecise description of the business driver and a precise metric. In other words, it’s more important to understand what to measure than to have a top-quality measure itself – it’s not much help to have an accurate measure of something that doesn’t matter. You should not pick your metrics by what is easy to measure. Rather, you should focus on what will drive your business, and then do the best you can to approximate a metric if there isn’t one easily available.
Measuring short-term performance
The first job is to decide what’s important to track – what’s going to move the needle. In general, the items to track to improve short-term performance are going to be either revenue or costs/productivity. To be effective, I recommend you come up with more specific metrics that zero in on exactly how you’re going to drive those areas.
Examples of short-term programs could be:
Revenues from our top 20 customers
Revenues from new customers
Revenues from a particular product line or market sector
Costs or productivity of non-customer-related activities
Costs or productivity in the areas of your largest expense areas
Measuring long-term performance
For a situation where the short-term performance is OK and the focus needs to be on medium- and long-term initiatives, there are a broader range of areas that are usually represented in a dashboard.
Examples of long-term programs include:
Development of new products
Diversification into new markets
Building a new way to acquire customers
Changing the sales process
Training and developing your people in general, or the skills in a particular part of the business
So, what do you do if you don’t have a precise metric available? I’ve found that Green/Yellow/Red works fine as long as (a) there is a clear owner of the area that is being tracked, and (b) there is discussion about the status. The benefit of having an actual metric is that good data leaves little open to interpretation. “Data ends discussions.” If you’re not working with good data, but instead using something like a color scheme, then you’ll have to spend the time to understand and interpret what’s going on.