Its amazing to witness the popularity that Key performance indicators (KPI’s) have seen over the past 15 years. Like many executives in planning, strategy and marketing, I too marvel at the thought of having magical KPI’s that will propel my programs or business. Unfortunately, in the process of consulting our clients, too often we see that organizations rarely understand and benefit from KPI’s. Those that do understand the effort and commitment needed to craft effective KPI’s, very often find it too daunting in today’s era of rapid change.
My original use of KPI’s came from practicing the principles in David Parmenters 2007 book, “Key Performance Indicators” where he states, “KPI’s tell you what to do to increase performance dramatically.” Its a good read, and really outlines the best and most thorough approach to finding effective KPI’s.
In order to make KPI’s meaningful, useful, and achievable, I use a simple 4 part framework that can help launch you on a manageable and focused path.
1 – Understand your platforms – The capabilities and power of the platforms you have (CRM, analytics tools, people, etc.) are very important in determining what you can monitor.
Take time to understand them and how they work, as they may also tell you about gaps you have in uncovering or monitoring key performance indicators. As a planner, strategist, or senior executive, its good to actually administer to some of the tools and platforms rather than rely on reports that roll-up to you from within the organization.
2 – Set “good” goals – Organizations are typically good at crafting a list of business goals. Begin your goal setting exercises with a set of example goals from the world of best practices. This will ensure that you define good goals first (specific, measurable, associated with timing, etc.) rather than leading with what the goals should be. Thinking through the details of your goals before you hire consultants or delve into KPI’s, will make your KPI launch point that much higher up the mountain.
3 – Performance indicators – Think of performance indicators as the measures that are most likely being tracked somewhere in the organization. They tell us results in the context of a benchmark or relative metric. They also begin to tell us what to do. For example, a high bounce rate on a web page might tell us something is wrong with the page, or with the people we are attracting to the page. Performance indicators need to become a superset of widely used metrics that flame the serious discussions about KPI’s.
4 – Create the KPI’s – Showing the patience and discipline to practice steps 1-3 before before coming up with KPI’s is the biggest suggestion I can make. If you made it this far, and some period of time has elapsed using performance indicators, you and your organization can begin the more serious decisions around finding those magical Key performance indicators. In your planning sessions with the group, use the simple KPI validation; they tell us what to do, with dramatic impact. A KPI I like to reference from our consulting world: “In-person planning with my clients, monthly, maintains the relationships needed to build our business.” This one measure in the category of “relationships”, is measurable, directional, and can have a tremendous impact on our business.
If you can find the time to really invest in the practice of KPI’s, they can be a powerful tool for your business. This distilled 4 part framework can start you on the right path to better finding and executing your custom KPI’s.