This week we discussed KPIs and business metrics in class. Why are they important and how do they help?
For companies to gain competitive edge and knowledge from data they need to completely understand and define business objectives. These business objectives become the underlining principles on which business metrics and KPIs are defined and dashboards can be designed. These help the companies to achieve their goals by providing them a direction and guidance.
But how do we make sure that we have the right KPIs?
Many a times people pick KPIs randomly and later on realize that they are not quite right for them. Otherwise they pick too many KPIs just so that “all angles are covered,” which leads to confusion as to what exactly are the performance drivers. Hence, it is very important to decide on the right KPIs that matches strategic objectives.
I landed on this article by Bernard Marr who has developed an approach to bridge the gap between strategic objectives and KPIs which is called Key Performance Questions (KPQ). This basically is a simple approach which requires you to identify performance related questions that you need to answer before defining a KPI. Once these questions are decided, the management can then ask themselves what data and information we need to answer these questions?
We can also use the same for our projects and assignments. Before designing a dashboard, ask yourself questions. We can start with high-level and generic questions which can later evolve into more specific and detailed ideas. Having these questions will give more clarity to what we plan to achieve.
Some examples can be – What is the key focus? What value am I trying to bring from this visualization? What is the goal and action? What will be the impact? What data will best represent the case? I believe that the concept of 5-WHYs can also be of help here. It will help provide us the right direction and create better visualizations!
Source – https://www.linkedin.com/pulse/20140814161947-64875646-what-the-heck-is-a-key-performance-question?trk=mp-author-card&trk=mp-author-card
Very interesting. Good job.
After reading this blog I realized KPQ is as important as setting up a good KPI. I can’t agree more that KPQ decides right KPI. Thank you for sharing the knowledge.