Here are some really bad ways to choose the measures you use and report on:
Interesting measures – People are driven by curiosity and that’s great, but don’t overdo it. I once worked with a call centre that had 128 KPIs, they just couldn’t bring themselves to leave any out. This is a symptom of not clearly understanding how you are driving your strategy through your measures. Want know how to do it thoroughly? Sign up for my free “Success Map Method” download and tips news letter. It’s a straightforward visual tool that means you will always know how the measure you are looking at links to your strategic objectives.
What’s easiest – We are all lazy. Often we choose the measure that drops into our lap, rather than take the harder path (link to smooth btm blog). A series of compromises can leave massive gaps in our reports and dashboards. By starting from the strategic objective and working backwards, then comparing the ideal measure with what’s on offer, you are much more likely to take an honest look at how suitable your “easy” measures are.
What IT or finance chose for you. Very often IT and or Finance own the most comprehensive systems in the organisation (for example JDE Edwards or SAP implementations). They will often implement the measures that they think the organisation wants, but miss the mark. Often discussions centre on modifying or tweaking reports that are completely unfit for purpose. These reports also suffer from the problem of “What’s easiest” discussed above, where the output is shaped strongly by the reporting peculiarities of the software rather than the need (you at the back, with the 30 pages of densely printed text tables – you know who you are!).
Firefighting leftovers- You have a panic, there are intense hourly meetings in which you (or one of your managers) demand to know progress on the problem. This sort of pressure leaves scars and often residual measures that were designed to micro-monitor a particular problem. These measures and KPIs can persist long after the problem has gone. How many of your measures are regarded as essential by are obsolete or irrelevant now?
What your customers ask for – This sounds like an odd one, but increasingly clients and customers are demanding KPIs, reports and dashboards. I spoke with a lawyer friend who shuddered when I mentioned KPIs, as they are required to report KPIs to their clients. Now there’s nothing wrong with this as such, you just need to make sure that you don’t confuse your reporting needs with theirs – so make sure that you don’t only use the customer/client KPIs you are required to report.
What your competitors use – Off the shelf KPIs? Beware. You must make sure that your KPIs and measures reflect your strategy, not a competitors. If you copy (ahem, sorry, “follow best practice”) then at best you will end up with your competitors are, but chances are you won’t even achieve that. Again, work backwards from your strategic objectives when you develop your measures and you’ll end up in a far better place.
So how should you choose your measures? Well a good start is your strategy, after all that's what you are supposed to be working towards. Then use a structured approach to translate that strategy into a comprehensive suite of measures the work together in a predictable way. Success Maps can help you do this. Have a look at my free Success Map introduction to find out more.