To Win Big, Stop Managing the Scoreboard

NEW YORK (TheStreet) -- The main task of a mechanical engineer is to build a machine that consistently produces outputs that are efficient (i.e., cost per unit) and effective (i.e., produces what is supposed to produce).

The core task of a leader is the same: Build a strong organization that consistently produces outputs that are efficient and effective.

Bill Walsh, the former head coach of the San Francisco 49ers, was a master organization builder. He defined his team as a collection of eight positions (for instance, an offensive line and linebackers) and believed that by the end of a first season as coach, the team must be best in the league in two positions, with winning and losing being minimally important. At the end of the second season, the team must be best in four positions and Walsh will begin to worry about winning and losing. By the end of the fourth season the team will be a dynasty. To Walsh, the head coach's role is very clear: build the best organization in the NFL. When his machine is right, the results will take care of themselves.

Unfortunately, too often in the corporate world, rather than building a great machine, managers spend their time managing the scoreboard. They discount to get a sale before the month closes; they delay bill payments to improve profits -- whatever it takes to make the score look better than it actually is.

It's easy to spot managers who manage the scoreboard. Their focus is on today. They spend their days running from fire to fire rather than systematically reducing fire hazards. They don't manage their business; their business manages them.

It's also easy to spot strong managers. For sales managers, simply ask, "Tell me how you spend your week." A great sales manager will answer, "On Monday, I hold pipeline reviews from 9 to noon. We have a set agenda and each rep gets 45 minutes. On Tuesday afternoon I go on customer visits -- my real purpose is to assess and coach the reps ..." Improving the machine is only possible when managers maintain control of their business.

During the dot-com boom, I was a member of the leadership team of AT&T's(T) largest business unit. At the end of each month our leadership team held a one-day business review. Every review was the same. The business unit president would freak out about the financial results and yell, "What happened last week! Can anybody tell me! I need a full explanation. We are below plan. Get your numbers up now!"