A KPI is a key measure that is linked directly to a strategic outcome. With a fast moving market, strategies can change significantly more often than just ten years ago. This means that KPI must also change and be monitored using a transparent performance management system. The key in selecting and filtering KPI are the decisions that the organization makes, and which of those decisions are most critical at any one time.

There are effectively three kinds of decisions made in any organization:

1. Strategic decisions – these are the small group of ‘big’ decisions, made by the small executive group, that involve big investments, with significant outcomes. For instance, developing a new product line to attract a new market or acquiring a competitor.
2. Tactical decisions – those decisions made by a larger, but still contained group of managers that determine exactly how the strategic decision will be put into play, in terms of approach and offering. For instance, a product manager making decisions around a pricing schedule and launch bonuses relating to the new product line.
3. Operational decisions – the business decisions made by many people, on a daily basis, that have a smaller business impact when measured independently, but when aggregated with multiple operational decisions add up to a lot of value. For instance, a sales person may offer an additional discount to add leverage to a significant account to sign up to the new product.

Using the above example, the new product group, the executives will be making strategic decisions around meeting EBIT targets, the product manager will have KPI focused around profitability and portfolio contribution to EBIT, and the sales person will be tracking to sales targets related to account revenue and profit. If this discount was offered to his entire account portfolio, the impact on profitability and EBIT contribution could be significant, and could drive decreased performance to KPI up through operational and strategic levels. And this is where the critical missing component comes in.

KPI’s must have business rules attached. Business rules help to define how performance to a KPI must be implemented, and will in this case restrict the offering of additional discounts to drive revenue at the expense of profit. Implementing KPI without business rules definition is a common occurrence in businesses, and accounts for many instances of targets not being met. This is the reason that The Logical Organization focuses very much on decision making when defining its business intelligence strategy.

Check out the article and comments and let me know your views – I like to know what you think?  The Rise of the Chief Performance Officer

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1. Ignore It,
2. Accept Defeat, or
3. Take Control

And the way to take control is to put the customer back into the center of your business

“Act on every lead, Win every deal, Keep every customer.”

It is easy for businesses to seek complex solutions to simple problems, and whilst the magnitude of the problem today is significant, the best response is quite simple. If your business does not have the tools to tell you how well you are performing in each of these three key areas, how do you expect to perform better than your competitors. BI is about collecting data on a continuous basis so you can convert it hour by hour into usable, actionable information. If you can not see the change in state of your business in real time, you are going to find it very difficult to make the best of the current market environment. I have a favorite saying….If its not in sight, it’s not insight!

Even large, cumbersome businesses are experiencing remarkable improvements from using BI solutions:

Sales Pipleline – 172% increase

Sales Growth – 70% increase

Team Productivity – 20% increase

It’s no longer a matter of not being able to afford CRM/BI tools – it’s a matter of not being able to afford to NOT have them.

So don’t let the current gloom beat your business – get data, get insight, get ahead….Take control!

Watch out for my next blog which will include a short audio on exactly how BI provides competitive advantage in EVERY part of your business.

Studies have shown that managers’ behavior dramatically affects an employees’ work. And with the Peters Principle alive, well and kicking it doesn’t take a genius to work out that perhaps delinking an individual’s personal performance from their managers perception and personality might just have a positive impact. In some interesting research by Teresa Amabile and Steven Kramer’s carried out over three years daily entries by knowledge workers over revealed how dramatic this impact can be.

People need continuous, honest feedback of their work and the opportunity to improve based on their own efforts. The single most powerful motivator for employees is their ability to make progress in their work. Often this progress is shrouded in a raft of small calamities that naturally occur throughout a workday, or the mood of a work colleague or boss. Having a personal dashboard gives an employee the truth without the attitude. It helps individuals see past the gloom and recognise small incremental gains in their performance. If the dashboard is correctly designed to link performance to corporate strategic goals, it also helps them understand how their work contributes the overall success of the business. This in itself is a powerful motivator.

The motivational strategy of many managers is somewhat misguided, especially when praise is given without real progress. Equally, good progress without recognition is more demotivating; especially for Gen Yrs who thrive on instant feedback.

As an admission, I am not an HR expert, or even a manager of a large team, but I have been a performance coach and consultant for nearly 30 years and have worked with a lot of different businesses, managers and teams. I am however an expert in the power of business intelligence – and it’s not just for measuring operational and marketing performance. Personal dashboards should be on the desktop of every employee. They provide the transparency of real performance, without the filtration by management. They relieve managers from micro-managing their teams and empower individuals to make small incremental improvements in their daily tasks.

The power of personal dashboards is not just with the task workers. Managers also benefit greatly from them. Most managers are generally overworked and overstressed and it is almost impossible to isolate these feelings from your staff. Using technology to help manage team performance makes a lot of sense, and releases managers to evolve to a more coaching and leadership role.