Paradise by a Dashboard
I often find myself explaining the difference between Key Performance Indicators, Goals and Targets.
Because the fact is when a metric becomes a target it is no longer a good measure.
KPI’s should help to keep you informed of the level of activity that is going on towards the attainment or your goals and targets, they should be there to gauge progression towards your desired outcome and in turn help you make better decisions about what needs to be done, and or changed to make sure those goals and targets are hit.
Your business is like a machine, and you need to know how it is performing at any given time to know what, if anything you need to do.
Think of the dashboard of your car, everything on it is an indicator of the way the machine is operating, with one glance of less than a second you can see the amount of fuel you have, the temperature, if there are any warning lights, the speed you are traveling, the engine speed, are the lights on and are they on dipped or high beam, what the outside temperature is and all in less than a second.
Not one single thing I have just mentioned on the dashboard is a goal or a target, and yet every single one of them allows you to know how your machine is performing and if you need to make any adjustments to get to your destination.
Yes you have to know what those things mean or its just unhelpful data that will confuse you, and you can’t measure everything or you have information overload after all a modern car is producing about 6 million pieces of information a second and the amount of data you can produce in a business is staggering, and it’s the same if you try to measure too little it becomes unclear and unhelpful.
Likewise, if you measure the wrong things, you may get a very clear picture of something that is totally irrelevant to what you are trying to achieve.
For example, is you are measuring the number of steps you walk in a day as a metric of your fitness, but your goal is to qualify for a marathon and your target is to complete it in 3hrs 50mins, you will have no idea how you are doing and probably never will with that metric — no matter how many steps you take.
KPI’s should tell you things like is a process that you need to be followed being followed, is work that you need to be done being done, are you getting the outputs you expected. They should not be focused on creating incentives, causing teams to act in a way that is actually harmful to the business, or diminishing passion and morale, hurting productivity and quality of output and the worse ones of all are the ones you spend time, effort and money to measure and that still don’t actually tell you anything important.
The key is to understand that a Key Performance Indicator is exactly what it says, an indicator that is key to understanding your current performance.
If you want to discuss your own KPI’s get in touch.
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