KPIs that matter – measuring success for your initiative
You’ve created a great initiative. Everyone has agreed to the initiative, resources are in place – things are looking good. But before you dive headfirst into execution, there’s one crucial question to answer: How will you measure success?
KPIs (Key Performance Indicators) are the compass guiding your initiative toward its objectives. Without them, you risk wandering aimlessly, wasting time and resources. In this article, we’ll explore which KPIs matter most when implementing your transformation initiatives and how to use them to track success.
In this article, we’ll guide you through the essential KPIs every transformation initiative needs, offering practical advice on how to measure progress, align with business goals, and make data-driven decisions. Whether you’re leading a smaller initiative for continuous improvement or an initiative for a large-scale transformation, understanding KPIs will ensure you’re on the right path.
1. Measuring success – Are we there yet ?
KPIs are the keys to measuring success and primarily answer the question of: Are we there yet ?
Whilst the steps in your work plan give some indication of the implementation work that has been done/not done for the initiative, the KPIs answer the question of whether the improvement is actually working or not.
We’ve seen a lot of clients miss this point entirely. Too many times, the focus has been on the work plan and if a task has been completed or not. The problem of focusing on the work plans are:
- The planned work steps may not actually lead to the intended result. The work steps might be wrong or there may be deeper issues not fully understood (which often happens when one issue is hidden by another issue).
- Poorly written work steps often have no tangible output for each step with the result that it’s unclear if the step has been completed or not – and the step gets to be ‘fudged’ as completed.
The only way of really knowing if the initiative is working, or not, is to track the KPIs. To be clear, the work plan needs to be tracked as well. A well written work plan should lead to the expected change in KPI but ultimately it’s all about the KPIs.
You’ll know when the initiative is successful when the KPIs are sustainably achieving the expected target levels.
Questions to consider:
- Are you confident that the proposed work steps will lead to a lift in KPI performance? (cause and effect ?)
- Who will track your initiative KPIs through to initiative completion ?
2. Process vs. Impact KPIs: Tracking Progress and Outcomes
To successfully implement any initiative, you need to track both process and impact KPIs. Process KPIs forecast future success, while impact KPIs show past results. Process KPIs are also known as leading or input KPIs whilst impact KPIs are also known as lagging or output KPIs.
- Process KPIs: Indicators that predict future performance. They are usually physical and directly associated with the process being measured e.g., time to complete task, usage of some equipment, time for each customer inquiry.
- Impact KPIs: Metrics that confirm success after the process has completed – for example, cost savings achieved.
Whilst impact KPIs can tell you the cost savings achieved it doesn’t necessarily tell you why its not achieving the desired impact. Hence, the need for process KPIs. If you have the right process KPIs, then the impact KPIs simply confirm the result you would expect to see.
Its critical to have the right KPIs.
To use a metaphor, process KPIs are forward looking and similar to looking at the road in front of you whilst driving – the impact KPIs are akin to looking in the mirror to see where you’ve been (and no use at all to driving forwards!).
Simply put, if the initiative doesn’t achieve the process KPI targets it will likely not achieve the impact KPI targets (unless other tailwinds are happening in your favour).
Questions to consider:
- Does your initiative have at least one KPI measuring the input physical process ?
- How are you determining the target performance level of the process and impact KPIs ?
3. Quantitative vs. Qualitative KPIs: Striking the Right Balance
While quantitative KPIs like revenue or productivity are crucial, qualitative indicators like employee satisfaction and customer experience can provide deep insights.
It’s natural to strive for a ‘hard’ quantitative metric to measure an initiative’s success but sometimes success needs to be measured by ‘softer’ metrics.
Questions to consider:
- Are your KPIs too narrowly focused on numbers and missing out on intangible aspects of success?
- How do you incorporate qualitative feedback into your decision-making processes?
4. Setting SMART KPIs: The Power of Specific, Measurable Goals
A common mistake when setting KPIs is making them too vague. The SMART framework (Specific, Measurable, Achievable, Relevant, Time-bound) ensures your KPIs are actionable and focused.
- Specific: The KPI needs to target the specific metric that will see a lift in performance. A specific KPI is one that is focused on a particular business objective or goal. It should be well-defined and clear, so that everyone understands what is being measured, why it’s important, and how it will be measured. The initiative owner needs to be confident that the process and impact KPIs selected will be impacted by the work plan steps. Avoid vague unrelated KPIs – you’re looking for KPIs that you expect to be tangibly impacted by your initiative
- Measurable: Oftentimes, you may find that the right KPIs are not easily available from your existing performance systems – particularly for the all important process KPIs. That’s OK – you just need to measure these on a temporary basis during the lifetime of the initiative. This can be manual – no need to put in a huge effort automating the data collection. Additionally, you’ll likely find that the act of simply measuring the KPI for the first time ever will actually generate further insights on how to improve performance
- Achievable: This is where the oft-used word ‘stretch’ comes into play 😊. Ideally, your KPI target needs to be achievable but with significant effort. Make the bar too low and you risk leaving potential uplift ‘on the table’. Make the bar too high and it will seem unrealistic and demotivating. At the end of the day, the initiative owner needs to satisfied that the bar height is achievable
- Relevant: A relevant KPI ideally ensures that the initiative’s impact KPI is well aligned with the Transformation goals. If the impact (output) KPI of the initiative is not relevant to the end goal of the Continuous Improvement program or Transformation – then why you are doing that initiative ? The initiative could have standalone value but if its not delivering towards the intent of the overall improvement program then its taking away resources, effort and time from the organization (and directing them to a lower priority initiative)
- Time-bound: The KPI target should be defined for a specific date. In other words, you plan to reach that target level by a defined date – usually when the initiative starts to deliver value and definitely by the initiative’s planned end date
The SMART framework is great for ensuring that you have realistic, achievable KPIs that will be able to measure the success of your initiative.
Questions/Views to Consider:
- Do you know what your process KPIs are ? What results are you currently getting as the baseline ? and what is your target going to be ?
- How ambitious is the expected uplift in performance ?
Conclusion: Measuring What Matters for Initiative Success
KPIs are more than just numbers—they are the pulse of your initiative. By choosing the right KPIs for your initiative, you’ll have the data-driven insights needed to guide your initiative toward lasting success.
Final Thought:
Remember, the KPIs that matter most are those that truly reflect the initiative’s impact—on both the business and its people. By setting the right KPIs and constantly measuring progress, you ensure that every step you take brings you closer to achieving your initiative (and strategic) goals.