Shifting from Metrics Overload to Focused KPIs
We live in an era when there is more data available than we can consume. In 2010, Eric Schmidt, former CEO of Google, said: "From the dawn of civilization to 2003, five exabytes of data were created. The same amount was created in the last two days." There has been some controversy about the exact calculations of this figure, but it is likely we can all agree that we have more data than we can process.
Examine your inbox and see how many reports, stats, metrics, or other data you have waiting on your review. Do you feel that if you don't get that data out to someone, it will be forgotten, or there will be a negative consequence if someone else doesn't know about it right away?
Do you ask your data teams for all available metrics to feel that you are staying on top of your business?
It is easy to fall into "metrics overload" with all the data that we have available today. Here are a few tips that will help you put a critical lens over your data needs and achieve quality over quantity for your metric definitions.
4 Tips that will help you put a critical lens over your data needs and achieve quality over quantity for your metric definitions:
1. Review Your Business Strategy and Goals
Before diving into numbers, review your business strategy.
Has anything changed in your competitive landscape, market position, or core competencies?
Is your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis updated?
Next, examine your goals for the year.
Are these still the right goals?
Is the proper priority assigned to each goal?
Are there changes in resources that impact your goal milestones?
2. Review and Update Your Current Metrics
Once you have reviewed your business strategy and goals, you are ready to dive into the numbers.
Are there metrics, dashboards, and reports that are outdated? Each data initiative has costs associated, and those resources should be invested in the metrics that will keep your team on track to achieve your business strategy.
For each metric, write a brief definition of what the metric measures and why it is essential to the business. This exercise gets your team on the same page and helps eliminate unnecessary metrics.
3. Identify the Key Performance Indicators (KPIs) that Measure Success
Your metrics will provide health indicators for your day-to-day business performance. You will need KPIs tied to your business goals to ensure that your team achieves the goal according to the timeline you set. A KPI may involve multiple metrics, so by establishing the definitions for each metric that rolls up into a KPI, there won't be any confusion on how the team will measure their success or identify opportunities for improvement.
4. Build in a Review Cycle
It is essential to repeat this review process at least once per year. Customer needs, competition, technology, and internal business processes are constantly changing, so your analysis strategy will need to align accordingly.
At EnticEdge, we spend time with our clients building their Cornerpiece™, which defines the unique value proposition offered to their customers and drives clarity in their team communications, marketing content, and tactics for achieving their business strategies.
Metrics are a key part of our Cornerpiece™ work. We ask clients to pull the current metrics they are using, and we review them in the context of their business strategies. We work together to put the right KPIs in place for leaders to have the right pulse on their business without taking their eyes (and ears) off their customers.
The key is to get focused, streamline, and be prepared to iterate as changes happen in your industry, your business, and with your customer needs.
P.S. A great analogy for moving from metrics overload to focused KPIs is the Fremont “Center of the Universe” sign in Seattle (pictured below). It directs to a lot of cool places that are all interesting, but you have to pick one destination to get anywhere, otherwise you’re just standing in front of the sign 😉
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