Picking Your Big 5 KPIs To Measure Corporate Business Success
By Alan Hylands — 6 minute read
I usually despise acronyms. Completing TPS reports. Filling in MAD-C forms. Horrible abbreviations invented by boring people to make themselves feel smarter than the rest of us who don’t know what the hell they are talking about.
They are the devil’s spawn.
Except in this case.
There is no way I’m typing out Key Performance Indicators every time I reference them in this article so KPIs it shall be from here on in.
So what are KPIs and why do we need them? permalink
KPIs are specific, measurable values that show how effectively an organisation is meeting it’s key business objectives.
Basically, are we doing what we want to be doing in the areas we think we should be doing it in?
They are INDICATORS so they should tell us something.
And not just anything but something about our PERFORMANCE.
And not just any aspect of our performance – the magic word for me out of the three is KEY.
I’m not interested in vanity metrics. It astounds me how often I see them trotted out as the reported big “wins” for so many companies. Large corporates should know better but, alas, the public appendage measuring goes on there too.
Facebook likes. Instagram followers. Monthly “web hits” (is it 1999 again?) They all may be interesting metrics if you’re bored (maybe). Do any of them help you really move the real needle though?
We all have limited time to take care of business and a world of competing measures vying for our attention. So you have to ask yourself – are these really the key indicators showing us how we are doing against our most important business goals?
Every business will be different so it will be down to your own business knowledge as a data analyst (and your business partners and colleagues) to work out just what exactly you should be focusing on in the first place.
Early stage start-ups may be looking to prove out their business model and get their user numbers up to a critical mass as quickly as possible.
Enterprise software companies might focus on their market share percentage as new competitors enter their market.
Healthcare trusts may want to know how long their patients have been on waiting lists before getting their operations.
Behind every good KPI is a real business problem that needs properly sourced data to support it’s measurement. If we can’t measure it then we can’t improve it. If we can’t improve it and it really is one of our KEY objectives then, to be quite honest, we’ve dropped the ball and there is nowhere to hide when the shit eventually hits the fan.
Well, yes, of course you could. But then you could stick your fingers in an electric socket to jolt you awake in the morning rather than take a second cup of coffee as well. Just because you could doesn’t mean you should. And that definitely applies here.
“But that’s not enough!” I hear you say. Betsy in Accounts wants to know this and Robbie in Marketing wants to know this, this and this and Pepe in Customer Service wants to know etc. etc. etc.
Here’s some news hot off the press. It’s perfectly fine for each department or area in your business to have their own Big 5 KPI scorecard. In fact, I insist that they do.
Obviously, the metrics that matter most to Marketing are not going to be the same ones that will matter most to your Accounts team. What they will all have to understand though is that there is a bigger picture and, first and foremost, that’s what I’m addressing here.
The concepts can remain the same. The audience will just change. permalink
You will still need subject matter experts from the business area to guide the focus and dig down into the specific business problems of that distinct area. Resist the urge though to throw the kitchen sink at a dashboard if at all possible. I beg you. Stay simple. Which doesn’t mean easy. It just means it cuts out the superfluous shit that gets tacked on when more and more middle managers stick their oar in on anything.
All organisations should be measuring their Big 5 KPIs on a regular basis if they have plans to keep their business running towards any kind of success.
At the C-level you might even find that the Big 5 is too much information for them but I’d stick to 5 for now regardless. Even if it’s used to give a quick notification to your executive level that things are on the right track, it’s worth it.
I know of one very senior executive who, when being presented with a detailed twenty page slide deck by a very talented analyst team, asked them to stop on page 2 and asked where her one number was.
“Your one number?” they replied quizzically.
And she told them that as far as she was concerned, there was one number, one metric, that mattered to her and her business division and that was it. The rest was fluff for her senior managers and middle management layers to dig into but all she needed was the one number.
I scoffed at the lack of sophistication when I first heard the story but over time I’ve grown to think she was spot on in her analysis – for her level. Maybe there is just one main metric to keep an eye on. The real problem is finding out what that one metric actually is.
It does remind us though that any KPI dashboard or scorecard is merely a quick state of the nation starting point to keep our finger on the pulse of the business. By all means dig deeper off the back of what you learn from watching the trends it reports but don’t over-complicate it.