Skip to main content

Can you get away with one KPI?

This is a challenge for most businesses. Can you 'get away' with only having one KPI?

The short answer is 'yes', if you respect the letter K. As I am sure you know, KPI stands for Key Performance Indicator.  Key, as in critical or super important.

This means that the one 'killer metric' has to be meaningful. Really meaningful.

A good KPI will cascade into other areas. Supporting data / metrics can be dug into when required. If the primary KPI is off track, you'll need the other data for context and to help with decision making.

But, if the KPIs is not off track, what else do you need to know.

Thinking like this is an antidote to too much data. I see businesses with reams of information. Each measure is defined as a KPI, but how can it truly be?

The reality of this situation is that this approach could lead to one KPI per business team / function.

Most metrics can be translated back to into a financial measure, ultimately profit. This is a hard nosed meta metric. Better customer experience, potentially more profit. Improved products, potentially more profit.

So, what about cause and effect. Profit comes at the end, if everything goes well. What about the bit upstream? Well this will depend on your mission as an organisation.

Available online at Amazon and iTunes
For example, I went to a sweet factory many years ago and their one key number was tons of sugar processed per hour. They gave me a bin bag full of sweets when I left, but I digress...

Let's bring this back to you. What do you do with your KPIs? How many do you have? Do they already have supporting data? Do you record them for the sake of recording them?

Designing KPIs can make a massive difference to your focus and ultimately your results.

If you have read my book On Time Delivery, you'll be aware that I focused on one key metric:
  • Is my capacity plan loaded correctly?
I measured on time delivery and lead time, to present back to the workforce, but they meant nothing if I hadn't loaded the businesses resources correctly.

I hope this article has given you some food for thought. If you need some more ideas, then check out my book Designing KPIs to Drive Process Improvement.

Giles

About the author:

Giles Johnston is a Chartered Engineer who specialises in helping businesses to grow and improve through better business processes and embracing Kaizen.

Giles is also the author of Effective Root Cause Analysis and 'What Does Good Look Like?'.

Labels:

Comments

Post a Comment

What do you think?

Popular posts from this blog

The Kaizen Checklist is here!

Do you want to get better results from your Kaizen programme? Improve your business results quickly with my downloadable kit (including guidebook, workbook and templates) for only $39. Are you looking for a sustainable way to identify and implement improvements across your business? Practical improvement strategies The Kaizen Checklist is a downloadable kit that you can use with your management team to develop a system that suits your business and allow you to quickly implement Kaizen effectively at your place of work. This works great if you use it as the centre piece of your own internal workshop. The kit includes a 40 page guidebook, a workbook, four appendices and three templates. All parts of this kit are designed to get you up and running as fast as possible. If you are unfamiliar with Kaizen, let me stress that this is a simple improvement philosophy that is so much more than just  ‘a Japanese word for continuous improvement’. I’ll cover what it...
Read more

How to get started with continuous improvement

We all know that continuous improvement is a strategy that is essential for business. It involves constantly seeking ways to improve processes, products, or services in order to achieve better results and outcomes. However, for many people, the thought of starting on the path of continuous improvement can be daunting. The fear of doing it incorrectly or not knowing where to start can be overwhelming.    The key to successful continuous improvement is to start small and gradually build upon your successes. Here are some tips to help you get started if you are unsure of how to begin:   1. Identify areas for improvement: The first step in continuous improvement is to identify the areas that need improvement. This can be done by looking at the processes, products, or services that are not performing as well as they could be. It is important to involve all stakeholders in this process to gain a comprehensive understanding of the areas that need attention.   2. Set specifi...
Post a Comment
Read more

Nail the number one improvement project

Over the past few weeks I have intervened in my client's continuous improvement programmes . I did this for one good reason: They weren't getting results. They caught the improvement bug, like so many organisations do. They got caught in the trap of wanting to change everything now! As I said, this happens to most of us from time to time. You start with some small improvements and you then identify more improvements you could get your teeth into. The next thing you know, you are trying to run ten improvement projects as well as deliver your day job. I know from bitter experience that this usually leads to having lots of loose ends rather than tangible increases in performance. So, what can you do about this? I know that with careful experimenting and resource management, you could find your sweet spot and figure out how many projects you can handle at once. Or, you can take the quick route and pare back your list until you have one priority. The one project that will give you t...
Post a Comment
Read more