Do you know your KPIs? And why are they so important for business agility?
Now more than ever, companies that are unable to adapt or pivot easily to adjust to changing market conditions don’t just risk falling behind. They risk their very future.
But business agility isn’t something you can implement overnight.
It takes a modern, multifaceted planning environment—one that isn’t weighed down by static, legacy planning processes characterized by spreadsheets, siloed data, outdated annual plans, and stale historical snapshots.
Those are the attributes of static planning. When the world moved at a more predictable velocity, static planning was usually sufficient. But as the digital age emerged, companies found they needed nimble, data-driven financial modeling powered by cross-departmental collaboration and encompassing a panoramic view of the business—one where planning happened not just within finance but throughout the enterprise. This is active planning. It’s continuous, comprehensive, and collaborative.
And it’s exactly what businesses need right now.
To realize the full potential of your planning process, you’ll also want to engage a series of key initiatives that will amplify your ROI and increase the velocity of business transformation. Here we look at the first of these: identifying your critical KPIs.
When everything is important, nothing is important
When everything is deemed critical, how can you be expected to prioritize? It’s impossible to effectively plan or make decisions quickly when it’s unclear what is truly driving business success. Bring those mission-critical KPIs to light, however, and you can quickly get everyone aligned around them.
But before homing in on these metrics, it’s imperative to step back, take a look at the entire organization, and recognize that performance is tracked differently in each department and team. Your core KPI model should take into account different flavors of measurement strategy across departments, recognizing the metrics that weave through multiple departments. This will help ensure that planning is collaborative and comprehensive, and that tracking progress and reporting means the same thing to all the players involved. The biggest plus in all of this? This shared measurement strategy establishes company-wide ownership and direction.
Practical steps to identifying your mission-critical KPIs
To help you isolate your organization’s KPIs (and ultimately to plan better), consider these three steps.
Partner with operational leaders to uncover their mission-critical KPIs. Rather than try to guess what functional leaders care about, take the time to sit down with those key stakeholders and walk through how they define success. What does their measurement strategy look like? How do they currently track and manage their own progress? What are their data sources? Whom are their reports important to? Do they use specific language or terminology that might mean different things to people in other departments? Be as thorough as possible in fleshing out their measurement strategy and any processes they have in place to support it.
Keep it simple. People can get caught up in attempting to adhere to KPIs that aren’t easily tracked or aren’t even truly indicative of performance. Avoid establishing complicated processes or adding new, hyper-focused metrics to the mix. Yes, your goal is to maintain accuracy, but you need to balance it with minimum resistance. The last thing you want is to get lost in data and complicated algorithms, forcing you in the end to have to manually follow up with gatekeepers when the time comes to pull a report.
Establish a reporting system. After isolating the necessary KPIs, you’ll need to set up some workflows around reporting. What are the tools you need to access and generate a KPI report? Are these tools accessible and easy to use for all stakeholders? What are the bottlenecks, and who are the gatekeepers holding back the flow of KPI reports? Ensure your reporting operations are accessible, easy to use, and accurate enough to give you a true snapshot of your organization’s progress—without data overload.
Stay tuned for more advice
Unearthing your mission-critical KPIs is important, but it’s just the first initiative you must engage to kick your active planning and business agility efforts into overdrive. Four other equally important actions demand the same attention, and you should consider deploying them simultaneously.
You can learn all about them in upcoming blogs.