In the second of four installments in Crafting a Winning Strategy, we cover setting objectives and key performance indicators to gauge success in your journey to solving the problem defined in step one.
As a recap, the four steps that will be covered over the four posts will be:
- Why? This step focuses on outlining and better defining the problem into a useful problem statement.
- What? This step identifies your ideal outcome to the problem.
- How? Crafting the strategy for solving the problem.
- Who, When, Where? The final step creates the action plan for you to execute and solve your problem.
So now that we have defined the scope of our problem in the “Why?” section we want to solve though a well defined problem statement, the next step is to decide how you will measure success in the journey to solving your problem.
What is success to you?
There are many names for this (i.e. metric, objective, key performance indicator (KPI) depending on the project/problem management methodology that you ascribe to. However, it all breaks down to one thing: What thing(s) will you measure to make sure that you are successful? This is not a “how will I accomplish my goal?” question, but a “what do I want to achieve?” question. For the purposes of this post, we will describe this as a KPI in further discussions.
For example, “change to make customers happier” is not an adequate KPI, however “improve our customer satisfaction metric from 3.5 to 4.5” absolutely is. The key is to make your KPI(s) achievable, but also with a high impact to the organization. The catch however is not to create a KPI that encourages the wrong mindset. Very easily, upper management can push the above KPI onto an organization with no clear boundaries. We can very easily improve our customer satisfaction metric is we only send the surveys to the company’s most loyal customers. The manipulation of data is a very dangerous and deceiving science if not done correction.
The DMAIC Process
Individuals familiar with the Lean Six Sigma (LSS) methodology, they will recognize both the “Why” and “What” steps described in this post and the previous one as the “D” in LSS DMAIC process. LSS has been recognized over the last couple decades as one of the most proven improvement processes in the industry. While there is a significant investment for a company to adopt LSS in an effective way, there can be very amazing and real rewards for companies that choose to adopt it. According to Six Sigma Academy, a LSS Black Belt (the LSS system operates off of a level system similar to the karate belt color system) can save a company on average $230,000 per project and completes approximately six projects per year. For those of you not adding that up, that is a savings of nearly $1.4M per year per Black Belt.
That is my little plug in this post for the LSS system (it wont be my last, I promise you), so back to the article at hand…
Gather your Results Key Ring
By defining your KPI’s you have now decided what results you care about to accomplish your problem statement. The key things to remember is that these KPIs should follow the SMART goal system of being:
S = Specific
M = Measurable
A = Attainable
R = Relevant
T = Time-Based
The last piece of advice about these KPI’s is: do not sacrifice the key parts of your business to satisfy the objective. By that I mean, is that KPI’s and strategies as a whole should be crafted with the company’s mission, values, and goals in mind.
If your company markets itself as a “green” company, KPI’s should support sustainability and the environment. I know that sounds like a “duh” comment, but you would be surprised with the lengths that some companies go to gain that added 5% edge on the competition. This two-faced nature, ends up destroying the customer’s faith and loyalty in the product/service. By attempting to gain that edge, the company is now playing catch up as customers find more “honest” companies in the competition.
Get help with your strategy!