Strategy implementation is an integrated cycle of cause and effect: strategic planning and key performance indicators
When you review your strategic planning process, you will surely find that the whole process is related to a series of causes and effects.
You are in the process of developing your plan to ensure that your business grows in a positive way, so you can monitor the impacts by reviewing some of the key performance indicators (KPIs) on a regular basis. Once you have identified the KPIs you want, you start developing your various strategies / tactics which you hope will have the desired effect.
Of course that would be fine in theory. As it is known, the strategies in your plan should lead to the growth of your business, and your KPIs measure the impact of these initiatives on the overall business process. However, many of us never achieve this relationship because it is complicated.
For example, here we explain to you two common cases that many companies and organizations face on a weekly basis:
- Case 1: Defining key performance indicators (KPIs) without a clear framework, so you don’t know the reason for its success or failure.
X company develops monitoring and monitoring panels and then sends a report once a week to the management team. All people associated with this panel open it and review this data and information. And they begin to formulate questions based on what they see – a set of numbers -.
Typically, this scenario results in a status update meeting. Hurriedly assembled, everyone gets together to spend 55 minutes figuring out why the KPI is crashing and only 5 minutes discussing what happens next. Life becomes a series of meetings to put out fires and failures and you can never move forward.
When you don’t have a framework around your KPIs ahead of time, all of the meetings become dedicated to gathering information rather than proactive strategy discussions.
- Case 2: Establishing KPIs without specifying numbers, so you cannot single-handedly determine the direct impact for any reason.
Company Y maintains a comprehensive Excel spreadsheet containing their strategic plan for fiscal year 2021. They jot down their various initiatives and the latest business updates – but no metric to see.
After looking at the prepared spreadsheet, you will have an insight into the activities of your organization but it is not clear which projects you are running have made the change or achieved success in your various KPIs. There is no alignment between the desired results of the organization and the members of the activities team he works on each day.
If you are in the second case, there is a term that is often used which is “Let’s just see how it goes.” You know that the elements in your plan are not going well, but you do not have enough data to make any meaningful changes; You just hope that time will cure everything. At the end of the year, the measure of success is the number of activities that everyone completed rather than the results that improved.
KPI-based strategic equation
Through the previous two cases, we assure you that they are troubling because they are very common, if you are from one of these two cases then the root cause of the problem is that you cannot reach half of the strategic equation based on the KPIs.
In the first case, you can see quantitative information about the plans related to your projects, but you cannot link or specify any of the activities and projects that lead to an increase or decrease in percentages or numbers.
In the second case, you can see qualitative information about the plans related to your projects, but you do not know whether they lead to results or not. As we explained earlier, the only reason you should embark on a range of activities is to hope for improved business results. If you review the reasons, you will find that you are missing half of the strategic equation based on the KPIs.
How to solve the equation related to strategy implementation using key performance indicators
The primary goal of the strategy implementation formula using performance indicators is to integrate the quantitative aspects with the quality that your team or organization is working on. You can only achieve this if you take time while creating your strategic plan to link results to activities.
The best way to achieve this is to identify 3-5 major areas of interest for your organization and develop the specific goal. If all goes well this year, what would we like to see happen in each of our focus areas?
Once the key areas are identified, develop 2-3 performance indicators for each of these areas that will clearly define the validity of each area. Also include words like maintain, increase or decrease when developing your KPIs, as using this approach will ensure that you do not create a list of activities that do not measure success because quantitative elements only move up, down, or remain the same.
After completing this step, look at each KPI and ask yourself, “What activities would help move this component in the right direction?” Often times this area of your plan is devoted to “strategies,” which are basically big projects that you feel will make a positive impact.
The final step is to break all of your strategies into slightly smaller chunks and call them “the tactics.” (Note: If your strategies are set to last for a year or more, you need to define incremental success criteria at frequent intervals throughout that year to get a more accurate measurement.)
Key performance indicators as a tool for strategic planning
After applying all of the above, you will ensure that a qualitative and quantitative approach to planning using KPIs will allow you to understand how to effectively and well solve and implement your strategic plan, making it easier to explain and detail what you are working on and how it affects results. In addition to understanding the relationship of causes and effects in your strategic plan, thus you will be able to make smarter, faster, and better business decisions. If you find yourself in one of the previous cases, you can contact us and we are happy to provide assistance as we will start with you a free counseling session to clarify many things. Contact us now.
Empower’s approach to designing strategies and performance indicators:
Empower is a specialized company to provide consulting solutions to organizations, small, medium and large companies, as it studies and analyzes organizations and provides strategic plans that will help you to go on the right path.
Empower offers you:
1- Designing the strategy by defining and developing the vision, mission, pillars, strategic objectives, initiatives, performance indicators and projects.
2- Benchmarking and market analysis.
3- Development of the operating model, organizational structure, governance model, and financial analysis.
4- Developing the strategy implementation plan.
