The Piece Missing From Every Strategy Framework

by Stacey Barr

If you’re not happy with the KPIs in your OKRs or Balanced Scorecard or other strategic plan, then you need to add in this one piece…

Business woman and man studying post-it notes stuck to a board. Credit: https://www.istockphoto.com/portfolio/scyther5

Think about the last time you were working on your strategic plan. Or business unit or team plan. Maybe you were building your Balanced Scorecard. Maybe you were designing a system of OKRs. Maybe you were interpreting a strategic performance framework specific to your sector, like a local government performance framework.

Almost certainly, you were writing goals, setting actions, and choosing KPIs and targets. These four things are the common ingredients of just about any performance-oriented plan. And depending on the framework you use, there are different ways to create ingredients, and different ways to organise them.

Strategy frameworks exist to create and organise goals…

With the Balanced Scorecard, you likely created your goals, actions, KPIs and targets by following something like these 9 Steps. And you organised them in a Strategy Map (or set of tiered Strategy Maps).

With OKRs, you likely took the goals from the strategy you already had (from whatever other strategy method you used), and organised them into the Objective and Key Result format.

With other strategy or performance frameworks, they share the same backbone of essential and common steps to create and organise our goals, actions, KPIs and targets:

STEP 1 Scanning the internal and external business environment to find priorities for the coming two to 10 years
STEP 2 Translating the priorities into specific goals or objectives, which may also be staged over the next one to 10 years

 

The next four steps are done in any order, depending on the specific strategy framework, but they’re listed here in the order we find best leads to the most informative measures and the highest leverage actions:

STEP 3 Choosing KPIs to measure the goals or objectives
STEP 4 Setting targets for each KPI
STEP 5 Designing actions (or strategic initiatives, change initiatives, improvement projects) to achieve the goals or objectives
STEP 6 Communicating the strategy to the rest of the organisation, and building alignment among all business units and teams (and they each will follow a version of STEP 2, 3, 4 and 5 to create and organise their own goals, actions, KPIs and targets)

But common strategy frameworks don’t often create meaningful KPIs…

If you don’t take measurement too seriously, you’ll be happy to live with KPIs that are:

  • only loosely related to the goal or objective
  • just a vague name, with no clear quantification method
  • actions, not real measures that are evidence of results
  • easy to measure, based on data that’s readily available
  • traditional, always measured by the organisation or by the industry

What’s wrong with these KPIs? KPIs like these rarely give us regular and objective and direct evidence of how close to our goal we’re getting. They might be easy, but that certainly doesn’t make them meaningful. And you’ll know what I mean if you’ve had any of these experiences with your KPIs:

  • people don’t feel fully convinced that the KPIs are relevant to what matters
  • people don’t know which data to get or what calculation to perform to produce the measure’s values (so some measures never come to life)
  • people are blinkered on getting stuff done and miss out on ever knowing if the goal or objective is truly achieved
  • people treat measurement more like a task to tick off, because they get little to no value from the KPIs
  • people feel uninspired by KPIs that aren’t driving performance improvements that really matter, that truly shift the organisation’s performance

We end up with KPIs like these because OKRs, Balanced Scorecard, and just about every other strategic performance framework in existence doesn’t include enough KPI how-to. That’s the missing piece: how-to guidance on the exact procedure to design relevant and feasible KPIs.

Without this important piece, we resort to brainstorming KPIs, to browsing websites for KPI ideas, to borrowing KPIs from other organisations. Sure, we end up with KPIs that fill the gaps in the strategy map or OKR template or table of objectives. But they never become the useful feedback that maximises the chances of reaching our goals.

To have that useful feedback, we’d have to take measurement at least a little bit more seriously.

Every strategy framework needs the support of a good KPI methodology…

And we can take measurement more seriously without throwing out or reengineering our strategy framework. In fact, we don’t have to rely on our strategy framework for better KPIs at all! Let it do its job of creating and organising our strategy. And allow another process to support it, to do the job of choosing the right measures for our strategy.

It means finding a performance measurement methodology that gives much more rigour, comprehensiveness and practicality to STEP 3 and STEP 4 in the backbone strategy framework, suggested above.

If PuMP is that measurement process, then it simply means putting each goal or objective through two logical techniques:

Measurability Tests: to make sure the goal or objective is articulated clearly enough to be measurable, part of which is to translate weasel words into measurable language. And then you have the option to refine the way your goal or objective is written in your strategy map or OKR statement or table, or just use the measurable version to go to the next step…

Measure Design: to choose the most relevant and feasible KPIs that give direct evidence of the now-measurable goal or objective. These measures then plug directly into your strategy map or OKR statement or KPI column in your table.

These two techniques come from PuMP’s Step 2 and Step 3. They provide the how-to details in STEP 3 and STEP 4 in the backbone strategy framework.

And the right KPI methodology also supports strategy execution…

The other six steps of PuMP are waiting for when you need them: to build more buy-in, to create more alignment of goals and measures across the organisation, and to implement and use those measures to drive performance improvement, close performance gaps, and reach targets.

For example, PuMP’s Step 2 also provides a brilliant strategy alignment tool for STEP 6 in the backbone strategy framework, above. This tool is called the Results Map. And the Results Map is more powerful than a strategy map because it helps everyone see the big picture and how they contribute to it, through collaboration. It’s the same reason why the Results Map is also more powerful than a collection of OKRs.

And because all eight steps of PuMP are like a goal-driven performance improvement cycle, PuMP is used by many as their complete strategy execution framework.

PuMP is not another strategy framework, it’s a how-to support for the strategy framework you already use.

Let a good KPI methodology support your strategy framework…

No matter your choice of strategy framework, monitoring the achievement of goals is a fundamental principle of strategy. Why set goals if we don’t seriously consider how to monitor their achievement? Of course, good measurement gives us one of the most powerful ways to monitor a strategy.

This is almost a cliché, since every strategy framework makes mention of the importance of measurement. But almost none of them have the methodological depth needed to do measurement well. If they did, we’d hardly see any struggles or complaints about useless or trivial KPIs. And we see A LOT of poor KPIs in strategic plans.

The solution is easy: use PuMP and let it seamlessly weave into your strategy framework, exactly when and where it’s needed. And you’ll quickly master the skill in creating the best KPIs you’ve ever had.

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