“Selecting the right measure and measuring things right are both art and science. And KPIs influence management behavior as well as business culture.”
― CIO Master: Unleash the Digital Potential of It
The 2018 Strategic Measurement Global Executive Study and Research Report showed that business leaders worldwide are struggling 
to strike a workable balance between tactical and strategic KPIs; operational and financial KPIs; and KPIs that effectively capture the moment while anticipating the future. This imbalance is a source of measurable dissatisfaction and concern as data for KPI improvements continues to increase.
In today’s accelerating technological innovation, intensifying competitive pressure, and increasing customer expectations, business leaders are forced to rethink how they use KPIs (Key Performance Indicators) to lead and manage the enterprise.
These trends – individually and collectively – have particular relevance to Chief Marketing Officers and other marketing executives. They are increasingly finding themselves accountable for growth-oriented objectives. Hence, there is a need to explore new and novel KPIs for assessing growth.
The Use of KPI Alignment Index
A KPI Alignment Index guides organizations in determining whether they have aligned the use of KPIs. This index is build based on the concept of KPI Alignment. It determines what leading organizations are doing and measures whether KPIs within an organization correctly relate to one another.
Most importantly, it illuminates and highlights how actions of organizations set them apart from the rest of the pack which is essential in Strategy Development. This determines its competitive edge. Technically, the KPI Alignment Index consist of 6 questions and answers are selected using a 5-point scale. Z-scores then are calculated for each of the 6 questions and their respective means.
KPI alignment is critical for organizations as it defines its successful strategy execution and lasting performance improvement. To thrive in today’s digital landscape, organizations must take actionable steps to adapt KPIs. Adapting KPIs successful require initiating Seven Key Performance Indicator (KPI) Strategies.
The Key Performance Indicator (KPI) Strategies
There are seven (7) Key Performance Indicator (KPI) Strategies; each contributing to the organization’s successful KPI alignment.
Organizations must have a good understanding of the seven (7) KPI Strategies as KPI definition, development, and deployment will lead organizations to command the lion’s share of leadership time and focus.
Let us take a look at three (3) Key Performance Indicator (KPI) Strategies.
- Use KPIs to Lead and Manage the Organization. This is the first KPI strategy that focused on the use of KPIs as a tool for Business Transformation. It ensures the use of KPIs to tactically manage a business and lead an organization into the future. Organizations that use KPIs as leadership tools look to leading indicators to frame their strategy. McDonald’s is one organization that has grown plan with seven (7) drivers; each drive has up to two (2) future-oriented leading indicators and one lagging indicator to measure success.
- Leverage KPIs to Align the Organization. KPIs to Align is a strategy that is focused on creating internal organizational alignment around shared KPIs. There is an alignment of internal, employee-related KPIs and financial or process KPIs with customer experiences that organizations seek to create.
- Develop an Integrated, Holistic Customer View. This is the third KPI strategy that is focused on a customer-centric KPI. This maximizes the use of externally focused KPIs that enable organizations to better segment and engage customers and have a Customer-centric Design. A good example of a company that maximizes the use of this strategy is Colgate-Palmolive. The organization emphasizes more on KPIs that show how customers are currently interacting with its brands in terms of changing consumer sentiments, future expectations, consumer trends, and others that can contribute to making their brand stronger.
Tomorrow’s most important KPI arguments and debates will focus on how – and what – performances are truly key to the organization’s future success. Being ahead makes a big difference.
To dive deeper into the 7 KPI Strategies, we have 2 framework presentations that span across all 7 KPI strategies:
Interested in gaining more understanding of Key Performance Indicator (KPI) Strategies? You can learn more and download an editable PowerPoint about Key Performance Indicator (KPI) Strategies here on the Flevy documents marketplace.
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