Version française/French version: LINK
For an entrepreneur, a management dashboard is essential to monitor the key performance indicators of a company, much like a pilot watches flight instruments. These indicators encompass finance, marketing, sales, human resources, R&D, production, and quality aspects. These metrics vary based on the sector and the company’s stage of development. The recipients of the dashboard are diverse, ranging from executives to shareholders and other stakeholders. Avoiding information overload and focusing on relevant indicators for informed decision-making is key.
E. Krieger
For an entrepreneur, a management dashboard quickly becomes necessary to synthetically visualize the key indicators of their company’s activity. The imagery of a dashboard is fitting because, like a pilot in the cockpit of an aircraft, a leader must monitor numerous indicators to make informed decisions.
A novice can be overwhelmed by the gauges that compose the dashboard of a private plane. The same applies to a company, where certain performance indicators require an understanding of the trade to fully grasp their significance.
The comparison between aviators and entrepreneurs ends there, as the latter won’t constantly have their eyes fixed on fuel gauges, engine dials, tachometers, and other instruments of radio navigation and altitude control.
Several types of performance indicators
The information displayed to an entrepreneur comes from a management information system that tracks the key parameters of their company’s activity. These indicators can include, for example:
- Accounting and Finance: revenue, gross margin, operating surplus, cash flow, working capital requirement, break-even point…
- Marketing and Sales: order book, number of new and active customers, average order value, customer acquisition cost (*), prospect pipeline, conversion rate, market share…
- Human Resources: workforce evolution and distribution by major functions, absenteeism rate, number of subcontractors, training days, work environment…
- R&D, Production, and Quality: quantities produced or outsourced, return rate, production capacity, stock in volume and value, number of customer complaints, stock turnover…
These indicators vary depending on your industry and your company’s stage of development. The dashboard of a company manufacturing and marketing high-end acoustic speakers will be vastly different from that of a biotechnology startup developing a molecule whose therapeutic efficacy is a necessary condition for large-scale production in partnership with a pharmaceutical group.
Every company has its own dashboard… but there are a few constants.
The preceding list shows that performance indicators are not solely financial, although these are crucial. This necessitates implementing a highly qualitative management information system, a requirement summarized over 80 years ago by Auguste Detoeuf, an Ecole Polytechnique graduate and seasoned industrialist known for his wisdom and humor: « Work is done poorly in a factory where things aren’t clear, and for it to be clear, good lighting and good accounting are needed. » (**)
The recipients of a management dashboard are far more numerous than a pilot and co-pilot in a commercial aircraft. Executives and members of the board of directors will have access to high-level indicators and can seek clarification on any strategic, commercial, financial, or human aspect of their company. Functional managers will have quantities of performance indicators to closely monitor. Shareholders will finally benefit from concise information on the situation and prospects during regular general meetings or special occasions, such as a capital increase project.
Beware of saturation
It’s important to avoid inundating your stakeholders with a flood of numbers and tables. This necessary conciseness is emphasized by Patrick Georges, a neurosurgeon specializing in cognitive ergonomics. His research on cognitive overload among decision-makers has led him to promote « management cockpits » and advocate for dashboards that focus on essentials.
The need to share relevant indicators to facilitate investment decisions is summarized by Lucien Lapasin, an experienced business angel and founder of Novaris Equity: « If you lack this management visibility, you’re heading for a crash. You’re trying to drive a vehicle without a steering wheel or with a mere stick, missing wheels including the spare one, without a windshield, without a fuel gauge (cash flow), without a seatbelt, without a destination/customers, without a map (not to mention the ideal GPS), without headlights, without a rearview mirror, without knowing who’s ahead, following, and about to overtake you! Or how you’ll pass them and with what resources available or projected. And you’re offering me a big fuel can as a gift? ». It couldn’t be better said…
Now it’s your turn to take action! What kind of management information system have you put in place, and which key indicators are you already tracking? Do these indicators truly allow you to assess the economic, social, and environmental performance of your company? Do they help you manage potential deviations from your forecasts?
Since entrepreneurs are naturally bombarded with information, it’s wise to take a step back and implement such dashboards that will enable you to make informed decisions.
(*) Customer Acquisition Cost (CAC) is a closely tracked indicator by venture capital professionals, alongside the margin achieved for each order. CAC is the ratio of your commercial and marketing expenses to the number of orders. The evolution of this ratio often determines the profitability of a given activity. When CAC is consistently higher than the margin, some investors prefer to withdraw rather than indefinitely refinance an activity where « the sauce costs more than the fish, » to borrow the flavorful expression of a French venture capital pioneer.
(**) Auguste Detoeuf (1937), « Propos d’O.L. Barenton, confiseur, ancien élève de l’École polytechnique« , Paris, Éditions du Tambourinaire.
