If data is king, why are most companies today still struggling with tons of data but very little knowledge? The reality is that most of them have too many KPIs (key performance indicators), but no real way to turn their data into real actions and outcomes. Creating actionable KPIs is the first step to solving this problem. To help you do this, we’ve developed a simple method to transform any KPI into a KPY. KPY = KPI + Why.
Unlike most KPIs, KPYs are actionable, measurable, and easy to track and visualize. Think of a KPY as an advanced KPI that not only includes the measurement but also indicates the actions to be taken right in the KPY name, removing the guesswork!
Here are four simple steps to creating your first actionable KPYs.
Step 1: KPI Purging
Tracking multiple KPIs is hard. Filter out the least important ones to focus only on your top 3 to 5 KPIs.
To do this, create a spreadsheet of all your KPIs. Determine the percentage contribution of each KPI to the overall goal of the business. Take 3-5 top ranking KPIs and remove the rest.
Step 2: Turn your KPIs into KPYs
In this step, you will define and quantify the actions that need to be taken to achieve each KPI. You need to point out:
- How the action will be measured
- When will it be carried out
- What are the success indicators
All the above details on the action are necessary to convert a KPI to a KPY. Here are some quick tips on creating an actionable KPY.
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Define actions using verbs: The verbs used in the action definition should be intuitive and action-oriented. Avoid business jargons.
- Quantify the action: Numbers and percentages are easy to understand and create a clearer perception. "Growing sales by 100%", is better than “doubling the sales.” Keep it realistic though.
- Set deadlines: Avoid open-ended deadlines such as, “by the end of the month.” Instead, use specific days and dates. The best practice is to break the goals into smaller periods.
Step 3: Create a KPY story
Data storytelling is an excellent way to communicate your goals to your audience. To make good use of your KPYs you need to develop a compelling KPY story that has three parts: KPYs, Trends, and Actions.
The trends are metrics that provide the reasons why the KPY could be below or above the target. The actions define how to fix the problem (if one exists) to ensure the KPY hits the desired goal.
Step 4: Tracking KPY performance
Measuring the effectiveness of a KPY involves the following four things:
- Accountability: Indicating the person responsible for every KPY
- Goal Breakdown: Breaking the goals of the KPY into smaller targets and deadlines
- Monitoring: Regularly monitoring the progress of the KPYs with the owners
- Adaptability: Adjusting the KPY as the business changes
Conclusion..
Data visualization has become the gateway to achieving business goals, ensuring you are tracking the right metrics is critical. It is impossible to succeed without mastering the art of turning your KPIs into compelling KPYs, then turning it into a compelling data story that is easy to visualize and communicate.
To get more details on each step of this process, check out our free SAP whitepaper Creating Actionable KPYs That Drive Results.
