KPI's and a Strategy Map

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Key performance indicators are useful in performance management, and in most cases, the use of a strategy map is the most direct and useful approach to selecting them. Check additional information about Strategy Map.

One buzzword that is being thrown around quite a lot these days in management circles is the deceptively simple "key performance indicators". Okay, so these KPI's, as people so like calling them, are pieces of information that can tell me about how well or poorly my company is doing. But with all the information out there, how do I even begin to go ahead and choose which one of them are worthy of being called key performance indicators? For this problem, a strategy map might be the best and most effective solution.

Yes, one of the biggest hurdles in using KPI's properly is precisely that of selecting them in the first place. Information is widely recognized to be one of the most important factors dictating success or failure in the business world today, and most companies have already put information technology measures in place. Sometimes, however, it is actually too much information that threatens to overwhelm human judgment and management. It becomes necessary to have some sort of framework on which to base judgments and around which to build a larger, more robust system. In the case of business strategy and the use of KPI's, this framework is commonly called a strategy framework.

Building such a map begins from the most fundamental objectives of the organization: its mission and vision. These are the broadest, most basic goals that the organization hopes to achieve through its various activities. These are usually formulated at the company's inception, and fine-tuned through the history and progress of the organization. Now, starting from these goals, each department and component of the company should then formulate their own goals. These sub-goals are more specific, but should still be in line with the company mission and vision. The smaller parts should then make their own objectives following from these sub-goals, and so on.

Of course, simply having lists of various goals would not be as useful as having a map of these goals, with linkages between them. And, in fact, this is the next step: forge the causal links between these various desired outcomes at every level. Make the connections between the goals within a level and between different levels as clear as possible. Not only will this help in determining the proper key performance indicators to use, but it will also serve to confirm the validity of the goals being formulated. As the connections become clearer, it will also become clearer whether a particular goal is well-connected to the rest of the company strategy or not.

Now, the end goal here is not the product or the strategy map itself, but rather the deeper understanding that comes after undergoing the process. By taking the time to elucidate company strategy with such detail, not only will the resulting strategy be better, the members of the management would also gain a deeper understanding of the underlying reasoning. Hence, apart from a KPI system, managers can also expect to be much better grounded for making future important company decisions and judgment calls.

If you are interested in Strategy Map, check this link to find out more about strategy diagram. Also, you can check other articles in Strategic Planning category.

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