KPIs (Key Performance Indicators) are something we talk about a lot at EDGEPro. They’re the core of our software products, and they’re the pulse of your practice. Just like a healthy heart rate is a good indicator of physical wellness, healthy KPIs in specific areas are good indicators of business wellness. But Key Performance Indicators do not exist in a vacuum. They are meaningful primarily in relation to other important concepts and targets. How do those indicators relate back to overall performance? How can they be used to make improvements?
Key Performance Indicators Support Your Initiatives
Your KPIs are actually the nuts and bolts of your business initiatives. They’re like building blocks that support the structure you want to create and / or the goals you want to achieve. To illustrate, let’s examine a popular business management model, Objectives and Key Results (OKRs). This model was introduced at Intel in the early 1980s. It’s been adopted by some of the biggest names in American business, including Google, LinkedIn, Uber, and Twitter.
The basic concept is that we select an Objective (O) that we view as a desired outcome. The objective may be as specific as “increase our optical business 10%” or as esoteric as “be the best eyecare practice in Tallahassee.” (Notice one of these is distinctly measurable and one is far more vague.) Once we have an objective in mind, we decide which Key Results (KRs) – which we could also refer to as KPIs – are most important in supporting that goal. Then we work towards our objective by leveraging those Key Results.
This management model forms a pyramid. The Key Results or KPIs rest on the bottom; they support our Objectives, which in turn support the business goals. In this simplified illustration, you can see the relationship between daily activities, improvement objectives, and your overall business goal. Notice that the KPIs themselves are undefined at this point. That’s important. You’ll want to strategically involve your team in selecting and setting those ground-level targets.
KPIs Are the Point of Engagement
Your KPIs are the point at which your team participates with you in building your business. You can’t overstate the importance of this. Key Performance Indicators are the concrete measurement of the only point at which you can directly impact your practice’s progress toward your goals and objectives – your business activities. You influence your KPIs through the daily actions of your team (which includes you). Improving your KPIs strategically advances your business deliberately and smartly.
That’s why Key Performance Indicators matter.
Transparency Involves Your Team
There are a lot of high-value advantages to using goals-driven initiatives in this methodical manner. One of the most transformative is the way it shares the business vision across the entire organization. When your team understands the relationship between their on-the-ground efforts and the overall vision of improving and growing the practice, they are more likely to become invested in the endeavor. Transparency in your objectives and target-setting allows them to participate, becoming aligned with the business goals, and increasing their focus on the most important contributions they can make. They can claim ownership in the process when they understand why they are doing what they’re doing.
Set It Up For Success
- Leverage the creativity and expertise of your team as you select the KPIs you want to focus on. This is another way to really boost engagement in your team; tell them where you want to go. Share the high-level vision and engage them in formulating the objective(s) that support it, as well as the KPIs that drive the objectives.
- Clarify the connection between the KPIs (which are basically “just numbers and statistics”) and the desired business outcomes for your team. Help them grasp their unique place in the process and the importance of their contribution.
- Be sure your KPI targets are SMART goals (Specific, Measurable, Achievable, Realistic, and Time-Defined). (More about smart goals in this great webinar)
- Create way points, interim goals in the direction of the desired progress, and celebrate with your team when you reach those important milestones. Incentives and other rewards at moments of strategic success help to keep your team focused on improving their efforts.
- Measure, track, and adjust your efforts as needed. Make sure you include your team in the conversation as you fine-tune your objectives. Adjustments must be based on facts. Arbitrary shifts frustrate and confuse your team members and may seriously subvert your purpose.
Business goals should be “big dreams.” They should reflect a long-range vision of your practice, and how you want to move into the future. But “big dreams” are only achieved when you can translate them into a concrete answer to the question “What do we need to do today?” As you’ve so often heard, when you aim at nothing, you’re sure to hit it.