It’s next to impossible to determine how well you are doing unless objective data can be mined and compared against the industry averages over time.
A business metric is used to evaluate factors that are crucial to the success of an organization.
They help an organization to define and measure progress toward the company goals.
Performance measurement brings objectivity into the lean practice and minimizes guessing.
KPI’s are essential to process optimization as defined by the DMAIC methodology (Define, Measure, Analyze, Improve, and Control).
Start with your strategy
It is so important to start with your strategy, with the end goal in mind. Then to determine which questions should be answered, how progress will be measured.
The objective is to determine the few key performance indicators relevant to your business strategy.
Your KPIs should be the essential metrics that allow you to track performance and navigate your way to success, growth, and profitability.
Choose an opportunity, define the measurement, set a target, measure, review frequently, and act on it.
The steps to follow
1. To select only a few KPIs, easy to track, easy to visualize by creating simple dashboards
2. To distribute widely, to make them visible
3. To review often and act: what gets measured, gets done.
The KPIs should be used and owned by everyone in the business to inform decision-making and guide improvements.
Philippe Favreau, Business Process Consultant
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