Bill Canady shows how to diagnose a business with two data points on a line. Upward trends mean amplify your strategy. Flat lines mean you're coasting on market conditions. Downward lines are emergencies: a 40% annual decline hits crisis in 18 months, even if you're still at a decent absolute number.
Now you have 2 dots and a line between them. If the line is going up, whatever you're doing, do more of it. If the line is flat, you're carrying by the market and you should be assuming that the market will stop carrying you, right? Trees don't grow to the sky. Prepare to fall. If the line is going down, that's your emergency and it's your emergency regardless of what the level says. I've had CEOs come back to me delighted because they're at 2.8. Comfortably inside of the healthy band. And then we pull last year and last year was 3.2 and the delight goes away quickly because a business shedding 4/10 a year is 18 months from the first fix-it track and nobody's even noticed. Third move, declare a track out loud and stop funding the other one.
