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February 15, 2019

Kimberly Smith

How can the KPI creation process be improved?

Analytics dashboards are one-stop shops for your key performance indicators (KPIs) – they bundle detailed and actionable insights into a format that’s highly accessible to project stakeholders as well as end users. In the era of big data, with huge datasets and numerous disparate sources being the rule rather than the exception, the one-two combo of carefully selected KPIs and streamlined dashboards gives you the benchmarks you need to accurately measure business performance even amid overwhelming amounts of information.

At least, it does if it’s the result of a coherent design process. There is no shortage of pitfalls on the path toward KPI success (which we’ll get into below), but they all lead to the same fate – lackluster results for your most important projects. Bad KPIs are comparable to driving into strange territory with no access to a map or functional instruments. Good KPIs are, collectively, the navigation system for your organization. So what’s the best way to ensure your KPIs don’t lead you astray and leave you wondering what happened?

Shining a light in the dark corners of KPI creation

A poorly designed set of KPIs can lead to some weird results. For example, a famous urban legend about Soviet-era nail production described how factories were evaluated on the KPI of the tonnage of nails they could produce, leading to the manufacture of a smaller number of heavier nails rather than the types of lighter nails more broadly useful in construction.

OK, that’s an extreme case, but one that illustrates how KPI creation can have unintended consequences. In other instances, similar oversights can lead to teams being evaluated on KPIs that they have no incentive to meet (think employees whose bonuses are unrelated to hitting the KPI in question) or performing time-wasting busywork.

The good news is that a structured creation process, focused on understanding stakeholder and end-user requirements and meeting them with the right technical implementations, provides a clear solution.

Read the rest on the right way to define KPIs.

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