Analyzing Your Corporate KPI System

You can optimize only what you can manage. You can manage only what you can measure. You can measure only what you can see. Hence, you need a comprehensive system of Key Performance Indicators (KPI) for each corporate object, process and for the whole business system.

It is also very important to set up a dynamic system for analyzing and optimizing values of each corporate KPI. Such system (your KPI database) must include the following key components:

·         Employee responsible for optimizing KPI value (KPI manager)

·         Appropriate benchmark value for the KPI in question

·         Current planned KPI value

·         Current actual KPI value

·         Historic actual KPI values

·         Analysis of historic and current actual KPI values

·         Conclusions

·         Recommendations for improvement

·         Comments

It goes without saying that all your KPI values must be accurate and up-to-date. Clearly, you will need to use exactly the right benchmark KPI values (not necessarily from your industry) and your planned KPI values must exhibit just the right degree of ‘stretch’ (not too easy, but not impossibly tough). And because you can optimize only what you can manage, you need to assign a KPI manager for every KPI. One manager can manage many KPI, but every KPI must have one and only one manager.    

Obviously, your KPI system must be comprehensive and well-structured. The key advantage of the corporate cockpit methodology is that it allows you to visualize all key corporate objects (brands, products & services, clients and other stakeholders, assets, etc.) and develop an optimal KPI system for both individual objects, object portfolios (target markets, brands, products, etc.) and for you whole business system.

In addition to the right KPI system methodology (identifying individual KPI and structuring them into an optimal system), you will need the right methodology for calculating values of individual KPI (KPI valuation).

Obviously, you will also need a highly competent KPI system management professional (in-house or outsourced) – or even a team. A team using an optimal and highly efficient KPI system management process. These are professional system engineers responsible for developing and optimizing the KPI system, not your functional managers responsible for your KPI values.