Strategic Solutions International uses the OpportuneTM methodology to help clients create frameworks that measure business performance and align to business strategy.
Key Performance Indicators ( KPIs ) are those critical markers or measures that provide information about business performance. They tell you how well you are doing. So what do these look like? Historically companies have relied heavily on financial metrics, but financial information tells you about past performance and is a poor indicator of future success. Think of your company as embarking on a journey and you have a destination that you are driving towards. You will want to know that your car is running smoothly (oil levels are good, enough petrol in the tank, electrics all functioning). These are Diagnostic or operational measures. But you will also need Directional or strategic measures. These tell you how you are progressing towards your destination and alert you to changes in road condition. Relying only on financial measures is like driving while looking through the rearview mirror. By the time you realize the road condition has changed, you might already be stuck in mud up to your axles. |  |  |
 | Relying on only financial measures is like driving while looking thorugh the rearview mirror. |  |
Principal 1: A reliable KPI framework will include both diagnostic and directional performance indicators. Directional or strategic measures seem to be the biggest challenge for companies. How do you select them? The answer is start with strategy. Unless you know where you want to be in the next three to five years, how will you know you have arrived? Measuring performance at a “whole of company” level begins with developing a strategic plan. There should be a direct correlation between your strategic direction and what you measure. Your performance indicators tell you if you are achieving your strategic goals or objectives. For each strategic objective, ask yourself these two simple questions: 1. How will we know when we have been successful?
2. What is the best measure of success?
Principal 2: Relevance to strategy. Directional performance indicators help you monitor achievement of your strategic goals.
Your strategic plan should include objectives around customers, stakeholders and competitiveness in the market. Your performance framework will therefore have customer-centric measures and targets. Your plan should also have internal process objectives that help you deliver value to your customers, maintain or grow market share etc. These internal objectives will have related KPIs. Similarly, to optimize internal processes and deliver value to customers, you will have some people or employee related objectives. These too need suitable KPIs.
Principal 3: Your KPI framework at the corporate level should mirror your strategic plan. It should include metrics around customers, internal processes and people as well as financial indicators.
Just as the strategic plan needs to be “operationalised” in business unit action plans, your KPI framework needs to be cascaded down to business units, teams and individuals. Each level of the company should have its own “scorecard” outlining its objectives and the related measures and targets.
Principal 4: Alignment. All levels of the KPI framework are aligned to the company’s strategic objectives. Following these four principles will ensure you develop a robust performance framework. Need help? We are only a phone call away.  Back To Top
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