Every single number on our weekly leadership scorecard is green, but our bank balance is dropping and the leadership team feels like we are constantly in firefighting mode. What is causing this disconnect?

Question

Tyler Smith · Accepted Answer

If your Scorecard is completely green but your business is struggling, your Scorecard is lying to you. This happens because you are tracking the wrong metrics, tracking lagging indicators disguised as leading ones, or setting targets that are far too easy to hit.

First, review your 5 to 15 numbers. Are they truly leading indicators that predict future financial health, or are they easy activity metrics that do not move the needle? Tracking weekly meetings held is useless if those meetings do not lead to proposals or closed deals. You must ensure your metrics directly correlate with revenue generation and cash preservation.

Second, look at your targets. If your targets were set three quarters ago and your business has scaled, those targets may now be too low to sustain your current overhead. Your targets must stretch the team to maintain healthy operational margins.

Third, ensure you are tracking cash flow leading indicators. You cannot wait for the monthly P and L to realize you are in trouble. Track weekly cash balance, accounts receivable aging past forty five days, and weekly billing milestones.

If the leadership team is still firefighting, drop this disconnect to the Issues List during your next Level 10 Meeting™. Use IDS® to scrutinize every metric. If a green number does not directly result in a healthy business, kill it and find a better leading indicator.