Here are some questions to help you determine what to measure:
- What are the key indicators that tell you if your business is healthy?
- What metrics do you already look at to know if your company had a good week or a good quarter?
- When you go on vacation, what are the few numbers you want to see while you’re gone of first thing when you get back?
- Is there a specific business problem you need to solve?
When you are brainstorming your initial KPI set, remember to stay focused. Try to only track 8-12 KPIs at a time; less is more here. The fewer metrics you are tracking, the more focused you will be on moving the needle on those specific KPIs. Patrick is fond of saying, “Don’t measure everything that moves; measure what you want to move."
Once you establish a list to get started, the next step is to agree on who owns each KPI. This is the person on your team who is accountable for the result you are measuring and for updating the weekly status of the KPI. Also, you need to determine the Red-Yellow-Green success criteria for each of the KPIs in your list. Your success criteria should be clear and specific, and everyone on the team should agree on what you are striving to achieve:
- Red: Unacceptable performance
- Yellow: Between Red and Green
- Green: Your success goal
- Supergreen: Your stretch goal
Another critical component of establishing your KPIs is agreeing with the team on HOW you are going to measure them. For each KPI, determine where the data will come from, whether you are updating the status on the actual result or on a forecast of how you will finish the quarter, and the due date for when all of the weekly updates should be made. It is crucially important to know that you are measuring the same way and that you are all on the same page about what your status updates really mean. The data in your KPI dashboard is only as good as the data that your team puts in each week, so to maximize the effectiveness of this powerful tool, it is key to be abundantly clear from the start about how you are measuring each KPI.
Now that you’ve brainstormed a list of KPIs, narrowed them down for focus, assigned an owner and set success criteria and data standards, you are ready to start tracking them weekly in your dashboard. Remember that this is an iterative process; next quarter, you might decide that you need to tweak your KPI list to ensure that you’re measuring the right things.
Good luck, and let us know how it goes!