Imagine going into map shop and saying “You know a lot about maps, I’d like you to recommend some good ones?”. It sounds pretty silly and it’s pretty clear that the response will be “Well, where do you want to go?”.
Strangely enough, many people and organisations don’t get beyond the first question when it comes to selecting KPIs. They are more interested in how good the tool is, how it compares with similar tools and how much it costs, but they lose sight of what it is that they want to do with it.
Put simply, the KPIs and measures are the tool, the strategy is the job that needs doing. Without knowing what you want to achieve, it’s impossible to chose or devise the right measurement tool.
The ultimate objectives of the organisation can have a really profound effect on what you decide to measure.
If you don’t have a strategy that works and makes sense it is worse than useless if you don't linking up to the real everyday operations of your business. It is also impossible to put together a meaningful KPI system without a clear idea what strategic outcomes you're looking for. KPIs are often blamed for excessive admin burden and poor outcomes, more often though it is a failure of strategy and strategy translation that leads to the really big mistakes.
Strategy is a pretty big field, and well beyond the scope of this how-to guide, but here's a quick test to see whether you have a strategy that is good enough for our purposes:
- Do you know what the strategy of your businesses? (Without going and looking it up)
- If you ask a two or more senior people in your business what the corporate strategy is, do you get the same answer?
- If your strategy is defined, is it clear what results are implied throughout strategy? For example “our strategy addresses: climate change" - what does this really mean?
If the answers to questions one or three are “no" or you get significantly different answers to question two, you have some more work to do on your strategy.