The Need of KPIs and The Purpose They Serve

There are a few variations of quotes I enjoy that are so similar in nature that I believe they are fully applicable to the business world nowadays. I am citing first Peter Drucker and his renowned:

“If you can’t measure it, you can’t manage it.”

Someone needs to be able to identify (i.e. quantify) in order to be able to understand a process, its outcome, and manage accordingly. That is important indeed; taking that a step further is the following from Lord Kelvin:

“If you can’t measure it, you can’t improve it.”

This shows us the purpose of having the right metrics in place. We often forget that and build thousands and thousands of metrics and presentations which ultimately create noise that do not allow us to focus on a few robust indicators for our business. The process needs to be agile and iterative; on a frequent basis, the agreed KPIs need to be revisited and reconfigured per business needs and conditions. Most importantly though, any KPIs should serve the intended purpose of reflection (how did we do) and business improvement (which areas we need to be focusing on to achieve the desired outcome). Last in the list of favorite variations is the following from Jim Barksdale (former CEO of Netscape):

“If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”

A hunch is useful, don’t get me wrong. Imagine though, all business decisions that need to happen every day are to be taken simply by hunch. It would be chaos. Team members across all levels of seniority in every business need to be able to support and justify their opinion with solid conclusions (ideally) coming from a thorough, quantifiable analysis of internal KPIs, industry analysis, external research, and a “spherical” view of where the world is going. Nowadays, being simply good enough on a very small business niche is simply not enough when the world as we know it changes and gets transformed rapidly. With the breakthroughs of automation and AI coming, our business needs to be set for success by embracing data and combining it with the much needed human hunch and vision which is our competitive advantage in this new era.

In the next blog posts, we’d be drilling down and discussing the KPIs needed around your Quote-To-Cash processes and transformation projects that you might be embarking. Stay tuned

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