Tip 2.1 The Critical Number is identified to move the company ahead this quarter.
Rockefeller Habit #2 starts with identifying this Critical Number. While all your metrics are important, the Critical Number designation is specific to one metric each year. A key step in achieving the annual critical number is determining, the quarterly critical number. For instance, a manufacturing client set a specific cash target for the year. He then chose a Critical Number in process improvement for the quarter. The goal was to reduce the dollars spent on parts to repair machines, therefore saving significant money and contributing to the cash goal.
The Critical Number concept was introduced and popularized through Jack Stack’s classic book The Great Game of Business: The Only Sensible Way to Run a Company. Though you may consider all your metrics to be critical, reserve the term “Critical Number” for your measurable #1 priority, even when other metrics are nearly as important. To derive the one Critical Number, imagine the hundreds of important things you need to accomplish lined up like dominoes. Find the lead domino: the one initiative that, when pursued, makes it easier to accomplish everything else. Or identify the bottleneck — the choke point or constraint — and address it first. This is why it’s called “Critical.” For example, Facebook’s CEO, Zuckerberg, it was going mobile.
Look for opportunities to refocus activities on a critical number for the quarter, which should support and align with the company’s vision. Defining individual outcomes for team members in the context of the One Page Strategic Plan (OPSP) assures alignment with the company’s strategy and its long- and short-term goals.
In general, you’ll pick a Critical Number that will address either an opportunity or a challenge on the People/ Balance Sheet side of the business (e.g., reduce employee turnover, improve customer service scores, or dramatically reduce a credit line with the bank) or the Process/ Profit & Loss side (e.g., improve gross margins, reduce production cycle time, or increase sales close ratios). And depending on which side you choose, you will want to pick a counterbalancing number from the other side to monitor (e.g., you want to improve relationships but don’t want to give away the store, or you want to improve processes but not impact relationships.)