Key performance indicators (KPIs) are defined as the quantifiable measures used to determine how well an organisation meets its operational and strategic goals. Too often leaders don’t look at KPIs through the right lens. Executives who look at KPIs to answer the question, “How did we do?” instead need to ask, “How will we do?” Rather than a rear-view-mirror look at performance, the right batch of KPIs can help predict business success, reveal the challenges ahead, and help data-driven organisations gain real competitive advantages.
Predictive KPIs help executives lead the organisation rather than just manage, shifting the focus from short-term objectives to longer-term visions. Instead of numbers to hit, these KPIs can help drive change.
The end goal for any company or organisation is growth. The KPIs will depend on the organisation’s goals, business model and processes. Some KPIs are almost universally applicable, while others will vary by industry. We suggest starting by identifying a value outcome—your organisation’s guiding north star. For public companies, it may be driving shareholder value. Secondly, identify the strategic drivers, then identify the tactical drivers. Lastly, map financial and operational metrics to the tactical drivers.
Start by pulling in the organisation’s leadership and focus on what to measure rather than how. By integrating your ERP with a modern financial management system, you can automate KPIs and then update these in real time. This gives you the ability to create reports and dashboards that automatically combine operating dimensions with financial data so you can analyse KPIs for each operating entity, location, building, region and other units.
As outlined in our eBook Predictive KPIs, predictive KPIs will vary based on the maturation stage of a company, and these stages are typically start-up, adoption, growth, maturity and reinvention/decline. The strategic focus for each of these stages are execution, engagement, expansion, efficiency and perception, respectively.
You can learn more about predictive KPIs by reading our eBook entitled Predictive KPIs.
The Akuna Solutions Team