If you are a regular visitor to this site and are (I hope) encouraged by its content then you will be familiar with what we believe to be the ideas worth spreading. The stuff that matters! For that reason I will not labour the point and risk becoming redundant or diluting the message through (exhaustive) repetition.
Speaking of redundant there is a view that KPIs are redundant, worse still, that KPIs are dead. While an extreme view it is worth considering.
Ross Gittins (The Sunday Morning Herald’s economics editor) writes, “Are KPIs a fad? The problem with key performance indicators is that it’s easy to measure how many jobs you did, but much harder to measure whether you did them well.” I’d go further. Will KPIs tell us if they were even the jobs we should have been doing? “Measurement can be a trap.” Ross warns. He quotes Einstein. “Not everything that counts can be counted.” He concludes that the modern pre-occupation with metrics is an attempt to over-simplify by confusing quantity with quality. So I ask the question. Are KPIs (on their own) redundant and dead?
I want to come up with a sound approach for KPIs that will help us to use KPIs for management not just measurement and to ensure that we can buy into KPIs because they work!
- Set business objectives.
- Each KPI should be aligned with a specific business objective.
- Use the KPIs for business management, not just measurement.
- Translate the KPIs into actionable plans.
Projects and programs that are aligned to an organisation’s strategy are completed more often than projects that are misaligned. We proposed this argument in an earlier blog posting (Delivery Maturity Assessment: The Song Remains The Same?). It is hardly a stretch then to state that bad KPIs are detached from business context and as a result are pointless. In contrast winning KPIs start with an analysis of business context, thus making their KPIs successful as a business tool.
The actionable plan is (in our view) the magic sauce. An action plan should be aligned with a business objective and a KPI. Where there is no actionable plan associated with the KPI, then why measure it?
Back to Ross Mitten and his warning. Measurement can be a trap. Metrics can also be misleading. KPIs can be something to hide behind. All true but maybe it is unfair to pin all our hopes on KPIs and apportion all the blame at their door also. Maybe KPIs need a friend to share the load? CSFs!
Before I get accused of being that person everyone abhors – the jargon junkie – I promise there will be no additional acronyms from here on in.
Critical Success Factors (CSFs) and Key Performance Indicators (KPIs) are frequently used interchangeably or confused. They are in fact two totally different concepts and are (if used appropriately) complementary.
The easiest way to understand them singly and in contrast is by understanding that CSFs are the cause of your success, whereas KPIs are the results of your actions. Thus, there’s a tight relationship between them: cause and effect. If you’ve properly identified your CSFs and have been executing against them AND you’ve properly identified what your KPIs are AND aligned them to your business objectives you will be getting close to meeting your performance targets.
Reminding myself that everyone hates a jargon junkie let’s speak plainly. Ask yourself “what must we do to be successful?” (CSFs) and “what indicates that we’re winning?” (KPIs). Always, always remember to do the stuff that matters to your customer. Otherwise why are you doing it? If it doesn’t matter to your customer then who is going to buy it and who is going to pay for it?