It was an early morning in February when I was driving to the airport on my way to Carmel California. It was foggy as it sometimes is that time of year. The fog was so dense that all I could do was follow the red tail lights of the cars in front of me.
There are times that it makes sense to follow the path of those ahead of us. Those who have braved the unknown and cleared the way for new opportunities. You could be Uber who blazed the trail beyond traditional taxi services, or you could be Lyft or other ride-sharing services which followed.
Other times, we need to take the lead and take off through the fog. Thankfully airline pilots have a full array of instruments to track where they are relative to where they are going. Likewise, you need navigational systems for your business.
Objective measures or key performance indicators (KPIs) create clarity for business leaders in the same way that a pilot’s instrument panel does. Most industries have a standard set of KPIs such as Net Promoter Score, closed sales rate, cycle time, number of leads, voluntary attrition, and many more. These are perfectly reasonable measures for most businesses.
Strategically Aligned – Does this KPI align with a strategic initiative or outcome for the business or the individual? Moreover, yes, that does mean having a strategy is a prerequisite to selecting KPIs. See my article on strategy development here to being devising your plan. Then you can measure its effectiveness by using leading indicators. If your growth strategy is entering a new market, then you need to measure leads in that market and in the existing market.
Decisive – Perhaps you have heard the phrase, “everyone needs to have a number?” In theory, the employee’s number represents success in their job. That is asinine for many reasons including the data collection becoming another corporate exercise to check the box. Some organizations make it their business to collect data and more data. The more important question is what are you going to do with the data? When a KPI is off track, will you make adjustments and correct the course? What value is the data if you don’t tweak your processes when the indicator is off track?
What are the gauges you need on the instrument panel for your organization? Do you measure your strategic performance? What will you do differently based on the results of your KPIs?