By definition, the Critical Number is the operational or financial number that represents a weakness or vulnerability that – if not addressed and corrected – will negatively impact the overall performance and long-term security of the business.
Overall, the Critical Number is the heart of The Great Game of Business. Each of our three fundamental processes (Know & Teach the Rules, Follow the Action & Keep Score and Provide a Stake in the Outcome) revolves around educating, involving and engaging employees to improve the Critical Number.
Choosing a Critical Number is a technical process not to take lightly, though there are some indicators that should help you choose.
Identify Characteristics of a Strong Critical Number
- The Critical Number Is a Weakness or Vulnerability. While it may be tempting, do not measure your Critical Number on something you already do well. Choosing a Critical Number is your opportunity to direct focus and teamwork on an issue that is critical to the business’s success.
- The Critical Number Is a Measurable Number. The Critical Number you choose must have a clear method of measurement in order for you to effectively track performance and measure improvement. Furthermore, you must be very clear with how you are going to measuring success (we recommend clearly identifying your baseline and stretch goals) so that employees know if they are winning or losing.
- The Critical Number Is a Performance Yardstick. Your Critical Number should be helping each department understand what they should be doing on a daily basis in order to be more successful at driving the numbers in the right direction.
- The Critical Number Is a Rallying Point. Because achieving your Critical Number for the year will (most likely) be tied to an overall company reward, you should use the number to unify your employees. Each department (and employees within that department) should have an understanding of how they affect the Critical Number in order to help everyone work toward a common goal.
Again, keep in mind that these four characteristics are not the only components to consider when choosing your Critical Number. You must choose a number that promotes the long-term success of the company and promotes education and teamwork in your workforce.