How to Speed Up Business Stability With the Right KPIsby Stacey Barr |
Measuring the right KPIs, in the right way, can dramatically speed up the stability of your business performance in times of disruption and crisis.
Just because we measure a goal, doesn’t mean we can easily achieve it. Measuring doesn’t directly increase our capability to achieve the goal. But measuring does tell us what our current capability is. James Clear, author of Atomic Habits, has said this:
“You don’t rise to the level of your goals; you fall to the level of your systems.”
Our capability to reach a goal is fundamentally constrained by the design of our systems, such as:
- business process and work procedure design
- policies that govern the ways things can and cannot be done
- the recruitment and development processes that align talent to task
All these systems dictate how much influence we have over the results we measure, and the improvement we can make in those results. If our systems are capable, we’ll see a lot of stability and little variability in our measures. But if our systems are not capable, we will likely see declining performance, or even chaotic behaviour, in our measures.
In times of disruption and crisis, we often discover our systems are no longer capable to produce the results we want. Even if they were capable before. But we can turn to our measures for clues about what to do next.
Do any of your KPIs suggest your business performance has lost stability?
In the case of the impact of COVID-19 on business recovery, McKinsey reports that most executives believe we’re in for a slow, long-term recovery. We’re recovering from a loss of control or influence over the results that are important to our business success (and even survival).
Which business results have you lost control or influence over? They might be results like, but certainly not limited, to these:
- Market growth
- Employee wellbeing
- Employee retention and turnover
- Recruitment and development of talent
- Innovation and new product development
If we just wait for things to change, the slow recovery will be slower than it needs to be. Measurement gives us feedback that is faster and more accurate than guessing or gut feel or hearsay. Thusly, using our KPIs in the right way can speed up our recovery.
There are 5 steps to use KPIs to stabilise business performance.
Here are five steps you can take to make better use of your performance measures to stabilise business performance:
- What must you stabilise? Focus is very important, because it’s exceptionally hard to improve more than just a small handful of results and KPIs at any one time. Particularly when resources are more scarce.
- Focus on the measures of those results, even if it means putting other measures on the backburner. In fact, you might even find it useful to build a special performance dashboard to focus just on the results that are the priority to stabilise.
- Check for chaotic behaviour in each of those measures. A KPI in chaos shows random and unpredictable fluctuations in variability. Chaos is a clue that
- If there is chaotic behaviour, standardise your systems and processes. You’ll know you’ve succeeded when the variability in your measure becomes consistent and predictable over time. And the XmR chart is brilliant for monitoring variation.
- Once performance becomes stable, experiment to improve. You might want less variability or you might want your performance baseline to shift to a new level.
Stabilise performance, then improve.
During COVID-19, our restaurant and cafe industry went into chaos, and revenue did a face plant overnight. Their capability was seating and serving as many people as they could, balancing the number of tables with the number of wait staff, chefs and cooks. They needed a different capability, and many shifted to take-away lunches and family dinner packs. Once they stabilised revenue from this, and COVID restrictions lift again, they can focus on growing revenue once more.
When the ground on which we’ve built our house shifts and cracks, stabilisation of the house’s foundations is needed before we can rebuild. Don’t waste improvement efforts on results that aren’t stable first. With a foundation of stability, we’ll more likely rise to the level of the new goals we set for improvement, as we continually increase the level of our system’s capability.
When crisis disrupts performance, it’s vital to re-establish stability before trying to improve it.
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