Tracking business success is hard. Really hard. Using key performance indicators (KPIs) to track success is common, but too often, the indicators are incorrectly implemented and offer little or no insight as to how that goal was achieved—or not.
Don’t fall into the trap of picking your KPIs because they are the ones used by others or on someone’s Top 10 KPI list. KPIs need to be consistent with your particular needs and always driven by your unique business goals. Claiming that the top 10 KPIs would be the same for everyone, is like saying “these are the top 10 winning lottery numbers”. They will always be different.
Make KPIs and business metrics more effective by mapping them to Goals. There is, or at least should be, a logical thought process for how KPIs are conceived that creates a hierarchical structure.
When companies decide to track performance, they invariably begin by measuring results. That’s the wrong approach. Results only tell you what happened, not why. You can choose to measure either the results of your work or the actions that cause the results. KPIs (Key Performance Indicators) should be reserved for tracking things that directly relate to specific actions or activities, not the final result. Revenue, profit and number of customers should not be used as KPIs. They are the result of many activities, so don’t identify particular actions to take.
KPI Karta has published a new white paper which explores how to establish proper Key Performance Indicators and the relationship those numbers must have with corporate goals. Implement these ideas for better business insights and performance measurement.
Tracking business success is difficult. And most people make the mistake of measuring what has already happened instead of the influences to those results. Setting personal, departmental or corporate goals is fundamental to most people, but measuring how we perform against those values is not enough. Measuring high level results such as revenue or number of customers rather than the Events that Cause those results is a mistake. It doesn't provide you with answers of how you got there and what should be done next. Instead, we need to evaluate the activities we perform that drive the results. Certainly, we can conclude that if Revenue increased to meet our goal, we succeeded, but we don't know what we did that caused it.
People are always looking for ways to be more successful. Tracking your results is the worst way to figure that out. Values such as Revenue or Profit only tell you HOW you did but not WHY. Unfortunately, many are blinded by their results to figure out what they should be doing.
KPI Karta is a new service that's unlike anything else on the market. Blogs from us will focus on the importance of measuring and tracking activities and actions necessary for success. That means we'll drill into the detail of work to be done, not focus on high level goals such as Revenue and Profit.