When I set the goal to run my first marathon, I also chose a training plan to prepare for the race.
I tracked my performance with every run to ensure that I would be fit on the big day. By measuring the kilometers run per week and my average speed per kilometer I could check performance against my training plan milestones and goals. These key performance indicators (KPIs) helped me stay motivated and disciplined, even on the days when my run felt longer than it really was.
For a successful digital transformation, we need KPIs too. Our digital KPIs are derived from our vision and goals. They are integrated into the existing target and incentive systems so we can have a transparent view of our progress and our shortcomings. When the KPIs are tailored to the business model, opportunities and risks can be identified at a glance and undesirable developments can be corrected quickly.
According a survey by the MIT Sloan Management Review, KPIs can also help leaders develop a full view of customers, develop data sets for AI, share information easily and clearly for collaboration, and even help accelerate growth.
“If leaders can invest in establishing very specific and concrete KPIs that people can orient their work around, the likelihood that a team or an individual can go faster and make the right decisions in the moment, aligned with the outcomes that the business wants to see, is increased.”
Kelly Watkins,
VP Global Marketing at Slack
How to select the right KPIs
Small businesses can typically recognize at a glance if their business is running well. They can use less visible indicators to make a correct assessment: they can see how much money is in the account at the end of the month, how many invoices have been issued, how many offers have been written, how many customers have been acquired.
In larger companies and groups, on the other hand, measurability is often complex. Various key figures are used to measure the performance of a company or a project. Further digital metrics come when increasing digitalization of the business—often old and new worlds collide here. Countless values can be measured with analytic tools and sophisticated business intelligence systems, but only a few say anything about the actual performance: Not all figures are suitable as KPIs.
Reflect the drivers of success in your KPIs
Therefore, we should first be clear about which results, goals and achievements we actually want to measure. Think carefully about which measurable values actually assess your company‘s success, and which are meaningful, before turning to the indicator system. This prevents creating overloaded reports with too many indicators – which only causes confusion and ambiguity, leaving the essential components unrecognizable.
At enable2grow we rely on agile corporate management with lean key performance indicators. With the wealth of data available to us today there are so many things we can track. For some ideas by department, you can find an extensive list here from Databox. Although all can give you insight, a few, well-selected key performance indicators deliver more, and are easier to handle than reporting too many metrics.
Ask questions to define “success”
To select the right KPIs for your goals, it is best to find answers to the following questions in a moderated workshop:
- What are our most important goals?
- Which indicators reflect the achievement of these goals?
- Which of these have the highest significance for our corporate success?
Use discipline to reduce the possibilities down to five or less. Through simplicity you win focus and transparency. With only a few KPIs it is easier to share them with your organization so that all understand how well you are progressing toward your digital transformation vision.
And of course, successes—and also failures—should be measurable. Only in this way can a company assess whether a business is successful or not.
For more on how to develop KPIs for digital fitness, download the Digital Fitness White Paper here: https://www.enable2grow.com/en/digital-transformation-challenges/