What is the first thing that happens after you get in your car and turn on the ignition? Yes, the car electronic system—or Dash Board—runs through a series of checks. We’ve grown to depend on this; no longer are we required to do daily or weekly checks on the oil level or cooling system. It’s automatically completed for us.
How Intelligent Systems Change Our Lives
In today’s world we all have system reports that allow us to know the status of our things, to include our cars, appliances in the home, computers, etc. A car system can provide us checks on the tire pressure, oil, coolant, doors, seat belts, and much more at one quick glance. In our homes, our heating and air-conditioning systems can tell us the health of the system, when filters need changing, and even allows us to program when it is on or off—you name it.
You’re probably asking yourself what this has to do with business. If you are running a business and do not have Key Performance Indicators (KPI’s) at hand, then you’re not going to know when things aren’t working until it’s too late.
Why is that important? Great question. Why does your car tell you the trunk lid is not latched or that your left tire is low on air pressure? These are the things we need to be aware of to prevent an accident or disaster from happening. The same goes for your business.
What’s in the Data?
What should the KPI’s be for your business? Only you will know that answer.
In my previous business, the number one KPI was the number of workers we had on projects. This number allowed us to immediately drill down on what the revenue number would be. In the end, we could accurately predict what our business would be doing in thirty days, sixty days, and longer. If the numbers were not where they needed to be, we had time to react, adjust, and make the right decisions for the business.
Yes, we had more than one KPI and we translated that group of numbers into our dashboard reading—just like the dashboard on your car. We knew that if we had the information about the health of the organization on a daily basis we could make the right decisions.
The KPI’s for each business need to be tailored because every business has a different DNA.
The Operational KPI’s for a service company might be number of service calls. This can be equated to the average revenue for a service call that you should have already established. Then, you can come up with a projected daily revenue number that will cascade weekly and monthly.
For a company that is in sales the KPI can be based on the actual revenue, or you can look at the number of new calls your sales team conducts on a daily basis. The desired results should lead you to the real question—how many new contacts are needed to build your business each day?
A travel company’s KPI can be based on number of airline tickets purchased versus the number of changes. The cost for changes are what drives up expenses.
This works the same way with the departments within a company. A marketing department’s KPI may be based on new leads generated. The HR department might apply employee turnover as a KPI.
What You Need to Look For
The next area that will come into play with the KPI’s will be Leading Identifiers or Lagging. Both can and will be important in how you conduct business within your organization. Gathering the data will require a real effort. It’s important to take your time and build systems that collect data by utilizing existing systems that you likely already have in place, but are not utilizing to your advantage.
I also want to point out that if you don’t get what you’re looking for, then you have to continue to drill down on the data—it’s all there. You just need to get it at your fingertips or at least in the right hands. When you have this data available, you will wonder how you managed without it. Just knowing I could spend twenty minutes reviewing the data in order to ask the right questions, changed our business.
It Was a Game Changer
I had a hard time thinking about how we operated before we had a dashboard. My question to you is: How do you review your company performance and how much time does it take you to know the real health of your organization?