In the theater that is business operations, Key Performance Indicators illuminate the performance of the actors — your strategies and process. Even though the KPIs are a bright spotlight, it can be challenging to create a KPI measurement frameworkthem.
Let’s look at the process from a different perspective, not just ticking boxes on your scorecard but creating a framework which resonates with your goals.
It is important to first understand your ultimate goal. What is your goal? What are you trying to achieve? Identifying your end goal is similar to knowing where you’re going before you set sail on the ocean of data.
Alignment is the next topic we’ll discuss as we move through our story. KPIs must be aligned like the spine and body. Each vertebra should support the company’s goals. It’s not as hard as trying to find a needle in the haystack. Communication is key. It is important that the executive ambitions are shared by everyone in the organization. It’s like playing telephone, except that the message has to be consistent at every pass.
Let’s add to the mix the art and science of choosing KPIs. It’s like selecting the right ingredients for the secret recipe of your grandmother — too much salt can ruin the broth; too little can make it tasteless. Prioritize those things that will add the most value to your organization. If the business is centered around customers, ‘customer service rating’ may be a better KPI than number of new clients’.
When it comes to KPIs, sometimes less is more. Quantity is not as important as quality. If you chase after two rabbits you will catch none. Focus allows sharper and clearer insight that is directly tied to decision-making processes. Pack leaders understand that by concentrating on their goals, their packs will thrive.
Now, everybody likes a good stretch, but when setting targets, unreachable goals can be like setting a high jump bar at the height of Everest–intimidating and frankly, unreasonable. Make sure your goals are challenging but achievable. It will encourage your team to work harder, instead of discouraging them.
The next step is to collect data. This may seem like an easy task, but you can feel like a contestant at a game show that you do not understand the rules. Here, consistency will be your best friend. Data should be collected using the same methods and at the exact same intervals. Make sure that your sources of data are as reliable, as that trusty old compass.
Do not forget that the analytics does not stop at collection. The meaning behind the data is often lost in translation. Consider data as an onion. As you peel away each layer, you get closer to the core. Analysing tools can help you see the big picture. You can use them to unravel the mysteries of rising and falling trends.
It is similar to Darwin’s theory of evolution that you must adapt your strategy or else risk extinction. The business environment changes frequently and rapidly. Your best pals are resilience and flexibility. The perfect strategy of last quarter may be the news this quarter. Stay flexible.
Communication should continue. KPI reports should be dialogues, not monologues. Feedback channels must be looped like a boomerang and always return with new insights. Regularize these discussions like your morning cup. Everyone can drink from the same strategy mug.
Last but not least, refinement is key. Even the most successful plans go through trials and tribulations. Every cycle should refine KPIs. It’s like using sandpaper on rough wood edges. This isn’t set-it-and-forget-it; it’s an iterative process, continually evolving.
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