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Breaking down strategy KPIs to ensure strategy is effective and works

This final out take from an hour of discussion recorded exclusively for our Pivotal Marketer Community on Facebook (where the full recording is available) sees Mike Baxter strategy expert and MMC’s Rene Power covers key performance indicators for strategy and the three things KPIs should cover.

It’s the fifth and final in a series of serialisations on strategy. Scroll to the bottom of the post if you want to see them all in order.

So, yeah, application into this marketing space, I think is really important. Now there’s one I’ve come across called, is it AMP, A-M-P?

Mike Baxter:

Yes.

Rene Power:

Again, thinking about this one and how it might work for some of the marketing focus people in the group?

Mike Baxter:

Yes. So this is a way of evaluating key performance indicators. And there’s quite a few things that could be said about key performance indicators before we get into what makes a good one. So a key performance indicator is three words, but it’s also got three quite important messages.

Number one, it must be key. There’s no point in having a performance indicator, if it’s not key. And key means that are not hundreds of them. Key means there is a handful of key performance indicators, and these are a few like the litmus indicators of everything else that is going on in the business.

So key is quite an important word in key performance indicators.

It must actually relate to performance. It must be closely bound up with what we actually do. So if it’s to key performance indicator that affects you and I, then we must be quite clear that both you and I are able to do something that is going to change it.

So it’s got to be within our control and it’s got to be an indicator. It’s got to be a measurement. It’s got to be a good metric. It’s got to be something that is robust, that doesn’t widely fluctuate despite what we’re doing.

So those are the basics about key performance indicators. Think about the three words that make up key and performance and indicator.

But once you’ve got past that, then there’s another layer if you like, which is that they’ve got to be actionable, they’ve got to be measurable and they’ve got to be purposeful.

Actionable

We’ve got to be able to move the metre. And there’s no point in having a key performance indicator that I am responsible for if I don’t have within my power, in other words, within my own actions and possibly the actions of my team, if I’m a team leader or the actions of my department, if I’m a department head.

The actionable part must mean that we have got not just the capability to move this indicator, but also the authority and perhaps the resource to marshal enough effort to move it.

Strategy measurement

So measurable. We’ve got to make sure that we understand what it is actually measuring. Is it a leading indicator? In other words, is it something that is indicating progress in the right direction, but we don’t care what it’s measuring.

What we’re actually measuring and the leading indicator is not what makes us money, or it doesn’t sell products, or it doesn’t make us profit.

But it’s an indicator of good stuff to come down the road, or is it a lagging indicator? And a lagging indicator is a measure of the good stuff that we wanted to achieve.

So it is a measure of good sold or a measure of money made or profit realised. So when you think about measurable, it’s not just has it got a kilogrammes or pounds or customers are bounced rate metric attached to it, but what does that signify in the business world? Is it a leading indicator? Is it a lagging indicator?

Purposeful

And then finally, it’s got to be purposeful that it’s got to lead me to get somewhere. It must be clear that if I do achieve my target on this key performance indicator, that it matters because how many key performance indicators do we hear about in business and you achieve them and you think, well, what did that do? It hit the target, but did it move anything else?

Did anyone else in the entire organisation care that I hit my target and you really need to build up a critical dependency? The action that I take should ripple out across the entire orga