How do we use metrics that matter to drive better business performance and continuous improvement? In this podcast we'll explore using Key Business Indicators. We'll discuss what to measure, how to measure, and most importantly why metrics are useful. Paul Mantica, Project Manager and University Professor for the Faculty for Rare Isotope Beams (FRIB) at Michigan State University joins us for the podcast.
Summary
- Paul provided examples of his KBI focus areas from a project management perspective. This is done through an earned value management system mainly looking at cost and schedule variances as well as gauging progress. Other examples include KBIs in customer management such as scheduling or availability, and internal KBIs such as travel expense reports.
- KBIs are layered, some are organisation-wide such as engagement scores, NPS, new business sales etc. At a functional level teams metrics might include response rates, leads, sales pipelines.
- Earned value management has been in existence at FRIB for some time to measure large projects against other large projects.
- The last example of the travel office metric was an emergent example, as the group evolved, they could use KBIs as measures to show how they should grow.
- We should always look at how to improve in terms of efficiency and efficacy.
- For good reason you want stable KBIs that are relevant. It’s also useful to add more experimental ones.
- One of the important things with KBIs is that we are looking for trends.
- One of the things a KBI can help is with transitions. If you can recognise those transitions it can help your product or organisation to be more adaptable.
- If we have an innovative approach to business, we should expect to innovate around KBIs.
- Key KBIs can be embedded, but new ones can and should be added.
- Data doesn’t lie but data requires interpretation and meaning.
- Part of the disciple is clearly defining what you’re measuring.
- As indicators, KBIs are there to help guide you but they can be misused. They are not a business goal. People can be incentivised on the basis of KBIs, which can lead people to game the system to their advantage which defeats the purpose.
- We should always be clear about what we are trying to achieve.
- KBIs need to be well defined, measurable, consistent and visible. They also need to be justifiable. You have to measure the right things. We often get caught up in measuring the wrong thing.
- Just because you can collect data doesn’t mean it serves the business any value.
- There are a lot of things that are hard to measure. That’s where things get complicated and complex.
- From a decision-making point of view, data can be useful to guide direction, but often we don’t have enough data to guide a decision.
- KBIs don’t have to be lagging.
- KBIs can be experimental. With things like lean start-up we can de-risk product innovation. There is greater need for leading indicators such as early measures of success.
- In the absence of an action plan, data is useless.
- We all have the ability to ring the bell or to take action when something is deviating from expectation - this could be positive as well as negative.
- KBI are metrics that set direction (this is how we are going). OKRs are more action-oriented (this is what we’re doing to address it).
References
The Tyranny of Metrics – Jerry Muller
Innovation Accounting
Certification:
Project Management Institute (PMI)® accredited webinar: This webinar offers 1 strategic Professional Development Unit (PDU) to put towards your chosen certification. Use the PDU Claim Code: 41028YC5EP.
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