365 Data Science KPI PDF

Section 1: Script: Welcome to my course, mastering key performance indicators, the essential guide to finding the metrics that really matter. I am Bernard Maar, and I have developed more KPI's and performance management systems than anyone else in the world. I have worked with companies like Google,...

Section 1: Script: Welcome to my course, mastering key performance indicators, the essential guide to finding the metrics that really matter. I am Bernard Maar, and I have developed more KPI's and performance management systems than anyone else in the world. I have worked with companies like Google, Atozanica, HSBC, Expedia, Walmart, Shell, T Mobile, and Toyota, as well as government organizations like the Ministry of Defense, the Home Office, the Bank of England, NATO, lots of police forces, the National Health Service, and the UN. I'm also the author of the globally best selling books on KPIs, including key performance indicators published by the Financial Times and now translated into over 27 languages, key performance indicators for dummies, as well as strategic performance management, managing and delivering performance, and doing more with less, which is focusing focused on analyzing and measuring and improving performance in government and not for profit organizations. In today's fast paced and data driven business environment, having a clear understanding of your KPIs is essential for any professional looking to drive organizational success and make better informed decisions. This course has been designed to provide you with a solid foundation in KPIs and their practical application across various industries and functional areas. Throughout this course, we will explore the fundamentals of KPIs, their key purpose, the selection criteria, and the role they play in achieving strategic objectives. You'll learn how to identify the most relevant KPIs for your organization, align them with your strategic goals, and use them effectively to measure and improve performance. We also cover best practices for tracking, analyzing, and reporting KPIs as well as addressing common challenges and pitfalls in KPI implementations. Throughout the course, I will give you many practical tips, plenty of real work examples, as well as key templates that you can apply immediately to make a real difference in your organization. By the end of this course, you will be equipped with the knowledge and skills to confidently use KPIs in your organization, helping to drive performance improvement and achieve long term success. Whether you're a seasoned professional or just starting your career, this course will provide you with a with really valuable insight and practical tools to excel in the world of performance measurement and management. So let's embark on this exciting learned learning journey together and unlock the full potential of KPIs. Key performance indicators or KPIs for short serve as critical navigation tools for organizations, helping them chart a path towards success and stay on course. To truly appreciate the importance of KPIs, we can draw a parallel between their evolution and that of navigation instruments used on ships. It is essential to recognize that before employing any navigation tools, sailors first need to map, their path and understand where they wanted to go and how to reach their destination. Similarly, organizations must establish a clear strategic plan before leveraging KPIs to measure their progress towards it. In the early days of seafaring, sailors navigated using simple tools like the sun, stars, and landmark. And while these methods provided a basic sense of direction, they lacked the precision required for accurate navigation. And and and in the business world, organizations also essentially struggle to measure their performance effectively due to limited tools and data. As maps became more sophisticated and navigation technology advanced, ships began to adopt precise instruments such as compasses, sextans, and chronometers. These innovations enabled sailors to accurately determine their position and chart the most efficient course greatly improving safety and success of their voyages. Similarly, the business world also saw the development of performance measurement tools like KPIs, and these metrics allowed organizations to monitor progress towards their strategic objectives and make data driven decisions to optimize their performance. Today, modern ships are equipped with state of the art navigation instruments that integrate GPS, radar, and electronic charts providing real time data and unprecedented accuracy in determined determined the vessel's position and course. And in parallel, the evolution of KPIs has been fueled by the rapid advancements in data analytics and digital technology. Organizations now have access to an abundance of real time data and sophisticated tools for tracking, analyzing, and visualizing their KPIs, And it enables decision makers to gain deeper insight into their performance and make more informed strategic decisions. So KPIs, much like navigation instrument on ships, have evolved significantly over time and have become essential tools for guiding organizations towards their strategic objectives. And just as sailors needed a map to set their course before relying on navigation tools, businesses must first establish a clear strategic plan before networking KPIs to measure their progress effectively. By understanding and effectively using KPIs, organizations can ensure they stay on course, make well informed decisions, and achieve their goals in ever changing and competitive landscape. My second analogy is flying a fighter jet. I was helping the Royal Air Force here in the UK develop their KPI system and their performance management system, and I remember sitting down with the head of the air force in Whitehall in London to talk about their strategic needs and the KPIs that might be might be really important for them. And I remember that the only thing that went through my head at their point was how could they ever get moved into a fighter jet. And this was clearly down to the fact that I watched cop down far too many many times when I was a teenager. So I asked this question a lot, could they ever get me into a fighter jet? And I think in the end, I wore them down, and they agreed to do this. So I was so excited and probably a bit naive at this point. So I had my invitation come through to come to the airbase to have my fast jet flight. And I just assumed you just roll up, you turn up, you jump into a jet, you have a great experience. But then the letter explained that I needed to come the day before to be brief and to have a medical and to get kitted out, and then the next day, you would fly. And I remember sitting down with the the doctor in my medical, and she basically the first thing she did is she weighed me for the ejection seat settings, and I thought, okay, this is slightly different to what I was, expecting. Then she was talking about the g forces and how tough they were, and basically that you have to really monitor your vision because the g forces can basically press all the blood out of your upper body into your lower body. And if you have enough blood in your brain, you pass out and the eyes get affected straight away, and this is a signal. And if this happens, you have to compress your stomach muscles really hard to prevent the blood from easily going to your lower body. But she also said, don't worry, all pilots wear g trousers. I said, what are they? They're trousers basically that you wear over your flight overall. And as soon as the g forces become stronger, they basically inflate and squeeze your legs and lower abdomen to make sure the blood can't go on to those areas. As you can imagine, quite nervous. Luckily, we met the station commander in the evening for a drinks reception, and I was feeling a lot happier. We then, I then got up in the morning, met the pilot, and we basically set on, and we then planned our mission. So he said, where do you wanna go? I said, you suggest something. So he was saying, we're taking off from this airbase. We have a really nice mountain range nearby. So what we would do is we would take off. I show you a few things with what we can do with this aircraft, and then we will complete a pretend mission to drop a bomb in the mountains. We need to find this bridge across the lake, and we need to pretend to drop a bomb there, and then we return back to base. And what you then do is you print your flight path out, and you have a clear plastic pocket in your flight overall. So when you sit down, you have the map right in front of you saying, this is the mission purpose. This is where we are planning to go. So we then got into the aircraft, got strapped in, took off, and I very quickly realized when he was casually saying, I I'll show you a few things that we can do with this aircraft, What he probably meant was I would try to make you feel sick as quick as possible. Because we took off, he turned the aircraft upside down. I was now looking into the sea. My trousers starts to inflate. My oxygen mask was on. It was all a completely bizarre experience. So after surviving the first 10 minutes, I had 1 of the best experiences of my life. We followed the stream up into the mountain range. I never realized how no these jets could fly. It felt like I was watching a video game. We then followed our path, decided, found the bridge, pretended to drop the bomb. Again, what he didn't tell me is that another aircraft that took took off with us turned up, and then they showed me a little bit of air to air combat. At which point, my my body decided to have enough. He basically I I basically said, please take me home. I need to I I can't take anymore. I never realized that humans are the the the the weakest link in all of this. So he then went about the cloud, and he said, don't worry because lots of people don't feel unwell in these planes because you've basically started from 0 to a100. What we'll do is we'll go about the clouds. I would give you control for a bit, And this way, you will feel a bit better. It's a bit like when you car when you're car sick. You never car sick when you are driving only when you're passenger and you have no idea what's going on. So I know I had to stick in front of me and the airplane was doing what I wanted it to do and then the pilot took me through the dashboard that they're using and he was basically saying they have 5 critical dials in front of them that tell them exactly where they are relative to where they should be. And they actually learn to fly those jets blind because if you fly to the clouds or into fog, you need to trust your instruments to understand where you are. The other thing happens is that you are in constant contact with mission control. So he was telling them that, you know, passing control over to me even though there's a whole mistake and he was doing everything else. Mission control monitor the airspace around the aircraft. They look at any other possible unidentified aircraft in your flight path. They monitor the weather conditions and so on. So you have this really interesting set of measures operationally on your on your dashboard as well as strategically to help you complete your mission successfully. After about an hour of flying, we then finally touched back down, and I was physically completely exhausted. So I basically said, okay. I'm off. I'm going to bed. And the pilot said, no, you can't go to bed yet because we have to complete another important step. And this is an after action review meeting where basically you go into a debrief room and you talk about how this went, what was good, what's bad. So in my case, this was most likely the most unconstructive, after agent review meeting ever. However, I had the pleasure to watch the Red Arrows. They are the elite display team of the air force. The 9 they would argue they're the 9 best pilots in the world. They do these amazing air displays flying at a few 100 miles an hour, a few feet from each other, doing air displays and acrobatics. And when I watched them do this debrief, and this was really fascinating because they would bring in some video evidence, some data. They would go through this step by step. So this was really good. And usually the squadron leader stands up first and says, I think I gave you a command too early, which wasn't perfect. I think towards the end, some of you pulled in too sharply, which we need to improve next time. And then they go around the room. Everyone looks at the evidence, the data, and then you talk about what was good, what was bad, and how you can do things better next time. And for me this analogy is so powerful because it illustrates these really important components of having a clear plan, your flight path mapped out right in front of you. Then you have a set of indicators, key performance indicators that help you to navigate successfully both operationally in the jet as well as back at the airbase. And then you use this information to inform strategic decision making afterwards. We have your meetings and you sit down, you analyze the data, you look at it, and you say and then you discuss what you can do better next time. And these for me are 3 really vital components of getting KPIs right in your organization. My last analogy is losing weight. Losing weight or getting fitter and eating healthier is 1 of our most common New Year's resolutions. So comes the end of the this year, the new year, we would say, okay, we want to eat a bit better and lose a few pounds and become healthier. What is also very well known is that most people that make those commitments at the end of the year or the beginning of the new will never deliver on that. What is interesting is that people who join weight loss programs like Weight Watchers, for example, tend to do this better. They tend to reach their goals and they tend to keep the weight off for longer. And you think why would that be? What is different between me telling myself and my friends, hey, this is now my goal and what, companies like Weight Watchers enable us to do. And for me, they are the same 3 components. Because when you join Weight Watchers, the first thing they do is they will create a weight loss plan for you that is customized based on your goals and your current lifestyle and what you want to achieve. So you you set goals and you set milestones. The second thing they will do is they will establish some measures and they will try to find good measures because when we do this by ourselves, we tend to simply just monitor our weight. And the problem with weight is that it fluctuates dramatically if you just have a pint of of water, for example, suddenly you weigh a a pound more. So we need to monitor this on a more ongoing basis, and we want to look at the, body mass index because if you simply monitor weight, this is not a good indicator. Body mass index puts your weight in relation to your height and suddenly it gives you benchmarks. It tells you this is an upper limit. This is where you go into the obese category. This is a lower limit. This is when you become too thin and you don't want to do this either. This seems to be the healthy range here and it puts your weight in relation to your height. So you have benchmarks, you have a better indicator, but they also measure body fat percentage, they will measure your actual measurements around certain part of your body. So you have a set of indicators that will give you a much richer insight. And when you turn up meet at meetings, for example, you will then get measured and weighed and they do the statistics. And the other thing happens is that you join those meetings. And again, in those meetings, we will then look at your progress. I'll also discuss what you can do differently. They will give you tips about, how you might improve your lifestyle and what you could eat differently and exercises you could do. So again, you have these 3 components starting with a plan, then identifying meaningful indicators that help you to monitor your plan and your your achievement of various milestones. And you have those regular check ins where you discuss progress in a constructive way. And they are for me, again, the key components of good key performance indicators. And so for the rest rest of the course, we will look at these 3 components, and I will give you very, easy to follow templates and tools and advice that you can use from today to use and implement KPIs in your organizations properly. So let's look at the key components of getting KPIs right. And they have to start with you agreeing your strategic goals. We have seen this in the analogies that they start with a a a sailing path, a flight path, a weight loss plan. Once we've done this, we can then design meaningful indicators and collect the right management information that helps us to monitor progress. And then the third component is that we need to use this to learn and improve because otherwise, the whole process is worth nothing. If we don't act on those indicators, if we don't use them to learn from it and put actions in place and change things in the same way you would change a route if there's a a a big storm ahead. This is what we need to do. So if you look at these 3 components, agreeing your strategic goals, measuring performance, and managing performance, what I see in practice is that we do a little bit of the first, but not enough. So organizations very often create strategic plans, but for me, they feel very often a bit like the New Year's resolutions I was talking about when we plan to lose our weight. We create this plan at the beginning of the year, and then we forget about this, and we get sidetracked by lots of other things. And then we spend an awful lot of time on measuring on the second part. So we, organizations, tend to measure everything that walks and moves and nothing that really matters. They tend to measure everything that everyone else is measuring. So we end up having these massive systems of reports and dashboards that give us information, give us data, but then very little of this is ever used to inform strategic decision making. In fact, less than 1% of the KPIs and metrics that most organizations have is ever used to inform strategic decision making. So for me, we are doing not enough in the first part. We're doing too much measurement without linking it back to our strategy, and then we don't do anything with it. And I believe if we smooth this out a little bit, if we spend a bit more time really, really figuring out what are our strategic goals and what do we need to measure and know, so you identify your information needs based on your strategic goals. This then links the first to the second, so you then end up measuring the right things. And quite often what you will find out is that you, need to measure fewer things that are really important and that you will have gaps. So in most organizations, what they realize, we can get rid of all of these metrics because they're not really linked to our strategic goals and we will identify gaps. So we say, we would really like to know this, but currently we can't really answer some of these critical questions that we have around our strategy and how well we're doing. And once you link the strategy to your indicators, it is then so much easier to use this information to create reports and then to analyze this information and to then feed this into meetings that really inform strategic decision making. So what we want to do in the rest of this course is to look at each of these 3 components, and I will give you tools that you can use to put this into practice. Summary: This lecture, presented by Bernard Marr, introduces a course on mastering key performance indicators (KPIs), which are essential for measuring and driving organizational success. Marr, who has extensive experience in developing KPIs and performance management systems for various organizations, including Google, HSBC, and the Royal Air Force, aims to provide a solid foundation in understanding and applying KPIs across different industries. The course will cover the fundamentals of KPIs, including their purpose, selection criteria, and role in achieving strategic objectives. Participants will learn to identify relevant KPIs, align them with strategic goals, and use them to measure and improve performance. The course also addresses best practices for tracking, analyzing, and reporting KPIs, as well as common challenges in KPI implementation. Marr shares practical tips, real-world examples, and key templates to help participants make a tangible difference in their organizations. By the end of the course, attendees should be able to confidently use KPIs to drive performance improvement and achieve long-term success. The lecture draws parallels between the evolution of KPIs and navigation instruments, emphasizing the importance of having a clear strategic plan before using KPIs to measure progress. Marr also shares personal anecdotes, such as his experience flying in a fighter jet with the Royal Air Force, to illustrate the importance of having a clear plan, relevant indicators, and regular reviews to inform strategic decision-making. Marr concludes by discussing the three key components of getting KPIs right: agreeing on strategic goals, measuring performance, and managing performance. He emphasizes the need to focus on meaningful indicators linked to strategy and to use the information gathered to inform strategic decisions. The rest of the course will provide tools and advice for implementing KPIs effectively in organizations. Summary: This lecture focuses on the development of a performance management framework and the identification of key performance questions to manage and improve organizational performance. The lecturer introduces the analogy of an organization as an apple tree, with different layers representing various aspects of the organization, such as products/services (apples), internal processes (trunk and branches), and enablers (roots). The lecturer suggests using existing frameworks like the Balanced Scorecard or creating a custom framework using the Smart Strategy Board tool, which incorporates elements from various performance management frameworks. The Smart Strategy Board consists of several panels: purpose, customers, finance, operations, resources, and competition and risk. Each panel helps to map out strategic goals and identify key performance questions. The lecturer emphasizes the importance of aligning strategic goals with initiatives and action plans and using KPIs to monitor progress. The lecture also discusses the difference between leading and lagging indicators, tangible and intangible indicators, and quantitative and qualitative KPIs. The lecturer advises focusing on outcome-based KPIs rather than activity-based ones and tracking actual behavior over opinions. The impact of the data explosion on KPIs is highlighted, with new technologies and data sources enabling more precise and real-time performance tracking. The lecture concludes with the importance of aligning KPIs with strategic goals and continuously updating the performance framework to reflect changes in the organization and market. Transcript: Identifying Strategic Goals and Tools 00:00:03 - 00:01:46 Okay. So far, we have agreed that we need to start with identifying and agreeing what actually matters. Then you need to measure the right things, and then you need to use it to improve and manage performance. So let's look at the first element. Here, we want to agree our strategic goal and identify what actually matters. And in order to do this, I want to give you 2 very practical tools. The first 1 is that we have to map our strategic goals into a framework into a framework of your strategy. And the second tool is that we develop key performance questions to identify our information needs and identify what it is we actually need to know. So let's do this step by step. Let's start by developing this performance framework and mapping out your strategic goals. And for me, there's a a really powerful analogy that that I find really helpful and lots of my customers find really helpful, which is comparing any organization to an apple tree. If you think about this, if you have an apple tree, the first question you have to ask yourself is why have we got this tree? So if you're a for profit apple tree or apple orchard, you would think, okay, I need to grow apples to make money and deliver returns to my shareholders and make profits. If you are not for profit or government apple trees, say we need to produce these apples because no 1 else does or because we are we are filling a need in the market. So this is the first question. Then we look at the the tree, and we are then see the apples at the top. So they are the food. They are your products and services that you are producing. And then the rest is you see the foliage, you see the branches, you see the trunk of the tree. So this is holding your organization up there. They're vital things that you have to be good at because through the trunk and into the branches, this the the internal processes happen to them produce apples. But we also know that there's something that is below the ground. So we have these enablers that we can't necessarily see when we first look at an apple tree, and they are the roots. And very similar to organizations where we have things that are intangible that we can't see. Things like do we have the right skills and the right competencies in place? Developing a Performance Framework 00:01:48 - 00:08:25 Do we have the right organizational culture and leadership style? Do we have the right infrastructure in place? Do we have the right, IT systems objective of either making money or or delivering value elsewhere. So for me, if you take this apple tree analogy, what you want is you want to map out your goals across these different layers of your tree. And for me, you can pretty much use any existing performance management framework. So for example, if you like the balanced scorecard, which is 1 of those frameworks that was delivered, developed by Bob Kaplan and Dave Norton in the early early 19 nineties and has become really popular, then you could overlay this. You could then say, okay. We want to have some financial metrics at the top. Then our apple layer is our customer goals we want to achieve. The trunk of the tree are your internal processes that you have to be really good at. And then the the roots are your learning and growth goals, the theme the more intangible components. Or you can overlay a quality framework where you have outcomes and things you have to be really good at and enablers. Or even objectives and key results where we say, okay, we need to identify objectives across some of these key layers of your organization. And what you then have is you you have a really nice framework. In order to help you develop this, I have actually developed a framework, a template that you can use to help you identify the right strategic goals, and this is what we're gonna look at next. Okay. To help you now map your strategic goals, I have developed a tool called the smart strategy board, and the way I've created this is that I've taken the best from all the different performance management and strategic performance management framework and put them into 1 tool. So I've taken things from the balanced scorecard, from quality frameworks, from OKRs, and so on. And this framework starts with a purpose panel. So here you identify your purpose. So, basically, why does your organization exist And your ambition. Where would you like to get to in, let's say, 2, 5, 10 years time? The next layer then is where you look at your customers. So this is where you say, okay, who is my target market? What is my value proposition? So this is when you go back to the apple tree. You think about, okay, what apples do I want to sell? Who do I want to sell them to? What do I sell green apples, red apples? What kind of taste? What kind of shape? And who are my target audience? And how do I fulfill their their wants and needs? Then we have the finance panel next to it. And here, we then say, okay, in order to, deliver to our customers and to the market, we also need to make profits and drive revenue. Or if you are a not for profit organization, you might want to you basically need to cover costs. So for me, having this customer panel alongside the finance panel works really well Because then we go to the next layer where you look at the tree trunk, and your key branches, which is your internal operations, your operational panel. And here you look at what do you actually have to be really good at as an organization? What do you have to excel at? What are your core competencies? The few things you have to be really good at that will then turn into the the key branches of your tree trunk. And you might want to consider partners because no organization can exist in isolation to suppliers, to fulfillment partners, and so on. So here, you might want to consider who are the most important partners that we need and identify goals around that. Then again, you have the finance penalty next to it because we then need to think about costs and reducing efficiency and and and so on and and improving efficiency. So, again, you have the the customer layer that we might want to look at profits and revenue, and you have the operations layer where you might want to look at costs and making sure you operate as efficiently as you can. The nay layer beneath this, we get to the roots. And here we have things like, do I have the right IT systems in place and the right data? Do I have the right people and the right talent in place with the right competencies? Do I have the right culture and values and leadership style in place? And do I have the right infrastructure? And then next to all of those, we have the competition and risk panel. Here you basically identify what are some of the competitive challenges we have. What are some of the biggest risks? And organizations traditionally look at risks only from a financial risk or a a a a cyber risk. For me, risk is really the flip side of performance, and we'll come back to the topic of identifying key risk and indicators for the organization too. But here, you would identify, okay, what are some of the biggest challenges in terms of markets? You might want to look at your your key weaknesses and challenges and say, okay, what do we need to watch? And and we will identify this. So what we will do is I will give you some examples of how you populate this, smart strategy board in practice. This is just a template. And in the next, lesson, we will look into how how you use this to develop your goals. So now you have the main framework. Let's look at how we use this in practice. And it's really important to understand that this is a template, a thinking framework. So this is not a painting by numbers where you have to have something in all of the boxes. This is just a framework that helps you to think about what is really important in the organization, What are the strategic goals that you need to focus on? So the the purpose panel is the very top. Sometimes, organizations talk about mission statement and vision statement. And the reason why I didn't use those terms is that they are very confusing. That literally half the literature that talks about mission statements uses the definition of a mission statement or the other way around. So this can be really confusing. And I prefer the the words purpose, and ambition because they, for me, really articulate what this is about. But purpose is we articulate, in very simple terms, why do you exist as an organization. So 1 of my customers is the motor neuron disease association, an amazing charity that is that their whole purpose is to, make the world better for people and families with MND. So their mission is or their their purpose in this case is saying we improve care and support for people with MNDs, their families, and carers, which is an amazing and very clear and concise status statement. The next 1 then is the ambition or some people talk about a vision, but I prefer the word ambition because, again, sets a where do you want to get to in the future and their ambition is a world free of MND. So this for me is is a really good starting point. So you now set the framework for your organization and basically why you have this apple tree. Now, we need to figure out what apples you want to sell. And in the customer panel, so you don't want to necessarily you can identify your target audience and your value proposition, but from there, you would then identify a goal. So for example, 1 of my customers is DHL, the the the delivery company, and they might have a specific target market. So I was working with in in a particular country to design the strategy and performance framework, and they had mapped all their target markets, their customers, and their value proposition, but they wanted to refine this. They wanted to really create these win win partnerships with some of their most profitable and best customers where they become a true partner. And, again, this then becomes a goal. So for this panel, once you've talked about your target market and value proposition, you can then turn this into a goal. And I would expect it to have, 1, 2, or 3 key strategic goals for your customer area where you say, we want to become the strategic partner for our most profitable customers. This could be 1 of the goals. And then you move to the operations panel, and then you say, okay. Here, we need to figure out what do we have to be really good at, which partners do we need. And, again, from there, you turn this into a number of goals. Strategic Goals and Framework 00:08:25 - 00:10:59 So again, you would have a smaller number of goals in this perspective. We say, actually, in order to now become this win win partner and business partner with our most profitable, customers, actually, there are things we need to be really good at. It's relationship management, and we need to become really good at customer relationship management. So this could be a goal that you want to improve processes around customer relationship management. And then we have the finance finance panel next to it. So again, here you would have traditional goals around growing your revenue and, improving your profitability and reducing your costs. Then we move to the resource panel and again this is a template, so not all of these 4 areas are equally as relevant to an organization. For example, if you are a consulting organization, then maybe this infrastructure element is not that important. You rely on your IT system and the knowledge of the people, but the buildings don't really mean a lot because people are working from home now, offices, infrastructure doesn't really matter that much. However, if you are Shell, for example, 1 of my customers, their, oil platforms, their refineries, their infrastructure, it's hugely important and a key enabler for them. Or if you are a health care provider, a hospital trust, for example, their hospitals and the machinery is vital, a key enabler for their performance. So for some organizations, some of these will be more important than others. And, again, here you identify some of the things you have to and it's almost asking question, does IT and data really matter to us, and what are the biggest challenges, and how do we then turn this into a goal? So again, coming back to the DHL example, in the case that they wanted to improve their customer relationship processes, maybe implementing a CRM system across the business is a key goal in this, area. So what you try to do is you try to put these all together and realize that there are interdependencies between them. And, again, around the people element, maybe there's training required, there's a cultural component to becoming this new partner becoming a more customer focused organization, creating different processes around this. So this is how you use this framework. And then the customer and risk panel at the end, this is where you then sit down and say, what are some of the biggest risks we have? So who are the key competitors? What are some of the market challenges that we're facing? Some of the macroeconomic challenges. What are some of the challenges around talent? So for example, if you have identified that you want to really improve your digital literacy in your organization, some of the data skills, you want to put some systems in place to apply data and AI more effectively in in your organization, then 1 of the risks might be actually is really hard to recruit people with those skills because everyone is competing for them. So that's a big risk there. So risks very often become the flip side to some of your strategic goals and and some of the performance milestones that you put in place. This is how basically how you use this framework to identify, a number of strategic goals. And again, a ballpark figure, I like to have anything between 9 15 strategic goals mapped out onto 1 piece of paper. And this you then use to create your plan on a page or a visual representation of your strategic goals, and this is what we will look at next. So based on the smart strategy board, do you know how to identify a small number of strategic goals across the key areas of your business from finance to customers to internal processes to some of the enabling elements across your your organization. You can just keep this as a list, and there's nothing wrong with this. Visualizing Strategy and Adaptation 00:11:06 - 00:16:31 This is how basically how you use this framework to identify, a number of strategic goals. And again, a ballpark figure, I like to have anything between 9 15 strategic goals mapped out onto 1 piece of paper. And this you then use to create your plan on a page or a visual representation of your strategic goals, and this is what we will look at next. So based on the smart strategy board, do you know how to identify a small number of strategic goals across the key areas of your business from finance to customers to internal processes to some of the enabling elements across your your organization. You can just keep this as a list, and there's nothing wrong with this. But I believe that mapping this out into a visualization, into a strategy map, into a performance framework can be really powerful because then becomes this visual representation that everyone can link to. And this is where you can be as creative as you want. So some organizations that use, for example, the balanced scorecard create a strategy map, and they map this across traditional layers of finance, customers, internal processes, and learning and growth, and they map their objectives into this. So a small number object objectives nicely distributed across the different layers. Other organizations say, actually, we don't need this. We want to create a different visualization. So maybe a circle where you identify the various strategic goals. And I've done this for parts of the National Healthcare System here in the UK where we designed strategic performance management systems and the circle really resonated with them. And now when you go to their website, if you go to the headquarters, these representations, these visuals sit in reception. They sit on their website. I've done this for police forces in the UK and policing organization. And again, they like this, but again, they didn't want to have the trish trish the stake of having finance at the top. So finance runs alongside, and the FBI, for example, has implemented this really successfully in the US. And again, their top objectives are all around what they are delivering to the American public in terms of counterterrorism, capabilities around, making sure that everyone is safe and they protect them from foreign intelligence. Then they think about they map out what they have to be really good at internally in terms of detecting and deterring, deterring these key security threats. And then identify what they have to be really good at in terms of building the right partnership, managing the organization well, having the right finances, and the right capabilities in the organization. So the way you map these out can be a better list or can be a very creative way of visualizing your strategy. And and for me, the visualizations can be really powerful because they can become part of how you communicate your strategy and how everyone relates to this. What is important to realize that those strategic goals are a snapshot in time. So for me, the time frame for those should be the next 12 to 18 months. So you map out the strategic goals that you want to achieve within the next year or year and a half, and then you need to continuously reevaluate them. So maybe every few months, maybe depending on how dynamic your industry is. Some of the industries are happy to do this once a year or twice a year. Other others do this every 3 months or even more frequently. We then say, k. Are these goals still the right ones? So this has to be a dynamic framework that gets updated continuously because sometimes you will achieve your strategic goals, and then you will set new ones. The market has changed. There are mergers. There are external economic conditions that will have an impact, and therefore, your strategy is this fluid, process that continuously changes. And I feel that I've done seen this in so many organizations that they're creating this framework, and then it stays stale for a few years. And this is not helping because your strategy has to adapt, has to change. So this is an ongoing process that you need to change. So 1 example is I was doing some work with 1 of the bigger retailers here in the UK, Tesco, and they had initially 4 elements of their performance framework. They looked at customers and finance and operations and people, and then they added a 5th 1 to this, which was around environmental impact and social impact of the organization. So these things have to evolve. You can add perspectives. You can change and amend your strategic goals. And this is a really again, for me, having the visual representation, updating this regularly can can be such a powerful way of communicating what actually matters in your organization. And for me, it's just like going back to the very first analogy I talked about, the the the boat. If it was a rowing boat, what this map does is really tells everyone in your organization how they can help you achieve this. So the customer element you have to say is it marketing, the operations element, the operations team, you have the finance team, you have the people management team, and all of them see how their role is linked into everyone else's role and supports them. So you then have have the rowing rowing book where everyone is rowing into the same direction and clearly understands how their their goals link to the overall goals of the open session. When you develop your strategic goals and map them out into a performance framework, you can do this for the entire organization. But sometimes the organization is so big and so complex that it makes sense to cascade them because very high level strategic goals might not be relevant to everyone in the organization. So I've done this in Shell, for example, where we developed an an overarching performance framework for the business and then another 1 for each their sub businesses. So they have a business that's trying to find oil. Another 1 is run is running retail stations. They have a chemicals business. For each of those organizations, we then created a more detailed set of strategic goals because otherwise, the high level plan would have been so big and wooly would have had 100 of of seemingly disconnected strategic goals on it. So it gives you a better focus, and it means that you have a smaller number of strategic goals on each of the different layers of your organization. So an example here is Tesco's, the the supermarket that I've talked about before. So they are 1 of the largest supermarkets in the UK. They have developed their framework as a corporate framework. So that's in the finance perspective, for example, they have 3 goals. They talk about growing sales, maximizing profits, and managing their investments. So you have sales, top line, profit, bottom line. And managing investments is important because they have a huge portfolio of property and land that they need to manage very effectively. If I now work in a store, I might have to now break these down because not all of them are relevant. I might not understand all of them. So what they've done is they created a store version of it. So when we talk about growing sales, maximizing profit, and managing investments, the first 2 make sense of growing sales that links to growing sales sales in the store. Maximizing profits is something that without trying to be patronizing, some people in the store might not understand. How do I contribute to profits? Because I can't set the prices, I can't look at the margins. Strategic Goals and Performance Frameworks 00:16:56 - 00:18:48 And what they did is they created a laminated version of the store, performance framework, which they call their steering wheel and put this into the staff rooms in their stores. And in this laminated version, you could then write down, when I look at our customer goal, what's going well at the moment? What isn't going so well? And so it becomes this daily reminder of what are we actually here for, what are our strategic goals, and there's this clear line of sight between the goals in the store and how they relate to the overarching goals of the corporate. So So this is something that organizations need to decide. Do we are we too complex? Are we a massive organization? Does it warrant cascading? There's also nothing stopping you doing this without starting at the top. So you don't have to wait for a corporate performance framework to be in place and a set of corporate goals. I get this often that people come to me and say, okay. I'm the director of this department in this organization. The overarching strategic goals are not really clear. How do I start this? You can make assumptions. You can say, this is what I assume the goals are. This is what I work towards, and then you can put this on piece of paper onto a performance framework, and this is a great way of then having those conversations. When I did this process with the Bank of England, for example, in the UK, we started in 1 of the departments, created a performance framework, made a few assumptions, and this then triggered a broad conversation about what are actually our strategic goals. Are we really clear about this? And then they ended up creating the the the more corporate framework afterwards. The other thing is so that you cascade this operationally. In Hilton Hotels, for example, very similar to Tesco's, what they did is they created an overarching, framework for the corporation, and then they created a a template for each of the hotels. But they've given hotel managers freedom to change this a little bit because a hotel in London might face completely different to a hotel in Singapore. In 1 of the area in in hot London, there might be a big problem recruiting staff at the moment in Singapore that isn't. So you can adapt this. You need to give people freedom to create their own strategic goals and don't to create this whole framework that has to be maintained and aligned to the nth degree. You want to create this in this really fluid dynamic way where you update your strategic goals, And quite often, organizations update this, the, the lower level framework, the cascading framework and the strategic framework at the same time, and then make sure that they're on the line. So for me, this has to be this dynamic process that you go through. But the key is that you identify your strategic goals, map them out into a list, into a framework, and this then becomes the starting point for your KPIs. The final level of cascading your strategic goals is to look at support functions and departments like finance, HR, and others. Aligning Initiatives with Strategic Goals 00:18:50 - 00:25:06 You need to give people freedom to create their own strategic goals and don't to create this whole framework that has to be maintained and aligned to the nth degree. You want to create this in this really fluid dynamic way where you update your strategic goals, And quite often, organizations update this, the, the lower level framework, the cascading framework and the strategic framework at the same time, and then make sure that they're on the line. So for me, this has to be this dynamic process that you go through. But the key is that you identify your strategic goals, map them out into a list, into a framework, and this then becomes the starting point for your KPIs. The final level of cascading your strategic goals is to look at support functions and departments like finance, HR, and others. Because what they do, they you can't easily cascade a strategic framework into those departments because there isn't a clear link to some of the operations. So if you're a supermarket, you want to sell more, how do they help you with this? They are basically sitting alongside the organization supporting it. So what you do is you create some of the top level goals as your starting point, but then you're saying, how do I now redefine myself? How do I as a people function? What are my key goals here? It might be about making sure that people have the right skills, the right competencies are supported, that the right organizational culture is created. And then from there, they then become your starting point, and then you identify your own, apple tree, basically. So when you think about support functions, like finance, like HR, like building support, any of those, they will have their own unique set of strategic goals that you try to link into aspects of the corporate goals. So if the corporate goal is around having more people with data skills, then this becomes the starting point for the HR version of your strategic goals. We say, okay. But this is 1 of our top level indicators. How do we now create this? How do we make this happen? So they sit alongside and are not easily cascaded in the way more operational units are cascaded. It. So now that you have your strategic goals all mapped out in a list, in a performance framework, hopefully, in a pretty visualization, you then need to bring this to life. And for me, there are 2 critical elements. The first 1 is that we need to align this to strategic initiatives and action plans. So basically, this means we need to make sure we have a set of projects, programs, initiatives, action plans underneath each of your strategic goals that will help you achieve it. This then makes it real. Otherwise, it stays this pretty picture or pretty list that could be a trip to fairyland because there's no substance behind it. So what I recommend you do is you look at each of your strategic goals and you say, if we could only do 1 thing, what would we do? And you put this as your first initiative or action plan. And then you say, if you could do 1 other things, other things, what would we do next? So you then identify a prioritized list of activities that will help you deliver your strategy. Then it's a really useful thing to consider all your existing initiatives and action plans and programs and projects that you have already committed to or you have a budget against and see how well they align. So a good starting point is to map out everything you're doing at the moment and everything you've you've planned, and then see how well they map against your strategy and your strategic goals. What will normally happen is there will be some that you can't map. So here, you then have 2 choices. Either you realize maybe I'm missing a strategic goal because I'm I've committed a lot of resources, lots of money, lots of time to something that is obviously important, and therefore, maybe I need to add another strategic objective to my list. However, very often what is the case is that you will identify projects and initiatives that are not aligned to your strategy, and you actually you have to then question whether you should be doing them or not. So it's a really nice way of since checking both your strategic goals and your initiatives. Once you've done that, your plan becomes real. The next the second thing that we need is KPI. So we need to have ways to monitor progress to say how well are we now achieving our strategic goals. We need to have those navigation instruments I talked about in my analogies. And in order to develop those, we need to identify the questions. And this is, the focus of the next section of this course. But before we do this, I just want to give you an example of what we're talking about here. So if you have identified a strategic goal around improving customer satisfaction, for example, because you've identified that this is a real challenge in your organization at the moment that this has dropped. You then look at your activities around this, and you then say, actually, implementing this customer engagement program is the right way forward. You then command this. You have a budget for this. You have milestones for this, and then you identify indicators, and an indicator could be something like the net promoter score that measures customer satisfaction or customer satisfaction survey. We will talk about all of these in more detail later. So before we get to those indicators, it's a really good thing to think about the questions that you want. Okay. So in order to identify what indicators and KPIs might be useful for your business, it is really powerful to identify the questions that you want to have an answer to. And this is something I developed when I did my research training because when I was at Cambridge University and was doing some of my PhD training there, I went to the process of how you develop good knowledge, and good knowledge starts with a research question. And once you've identified the question, this then determines what data you need to collect in order to help you answer this question, and it will guide you to the right data. I remember I had a a PhD student I was supervising, and he came to me and said, Bernard, I'm sure I will get a PhD because I've got access to this huge database of of really good metrics, and this is such a powerful treasure trove. I then said, actually, I'm not sure whether this will be the case because when you identify your research question, you might look at all the data you have and you realize this is not quite right. I would have asked different questions, collected different data over different time frames, involved different people, and so on. So and this is something that I see in lots of our organizations that we start measuring and collecting information without really being clear about our strategic goals and the questions that we want to have an answer to. And this is what we want to look at here. Identifying the question will also help us figure out whether we need just 1, 2, or 3, or a number of indicators to help us understand and fulfill our information needs. So for me, what's really important to understand is that KPIs are indicators. They are indicating performance, but they will never measure performance holistically. Sometimes we make this assumption that by measuring a customer satisfaction score, that this is a real true representation of customer satisfaction. This isn't actually the case. So for me to think about this and to think about KPIs, a really good analogy is to think about a KPI as a torchlight, a light beam that you shine into a specific area of the business to identify what is going on. But you will never be able to switch on the light and see everything. You will only have the light beam that you're shining on. So this is a limited way of measuring. This is why I like to this is why it's called indicator because it indicates customer satisfaction. It can never holistically, comprehensively measure it. And for me, a really good analogy is if or example to illustrate this is to think about measuring human intelligence. Just think of human intelligence as this cube that has 6 sides to it. And in this cube is human intelligence. Measuring Human Intelligence 00:25:06 - 00:26:12 So we will know when to measure this. And quite often when someone says how do we measure human intelligence, we would jump to 1 of the metrics that is often associated with intelligence. Things like your in, your IQ, your intelligence quotient. So the problem is that this is only 1 of so many possible indicators. So if my question is to understand how intelligent someone is, then this IQ only measures 1 element. An IQ test only measures our logical and mathematical reasoning, which is 1 side of this cube. Then the cube has 6 sides. So we have emotional intelligence, hand eye coordination, spatial awareness, communication intelligence, so all of these different forms of human intelligence. And if we are simply taking an IQ score and using this as a metric for our intelligence, we are missing out other elements. So if my objective is to measure over intelligence and I try to measure different facets of this cube. So at the moment, an IQ test is almost like you're shining the torch into this cube. You're only lighting up 1 facet of this cube. And even this facet, I'm shining a round torch into the square side. So I'm only measuring past it because we also know that we can all train to pass IQ tests. So this is an imperfect measure of just 1 of the 6 facets of human intelligence. Developing Key Performance Questions 00:26:44 - 00:33:10 They are indicators and they will never holistically measure anything. Okay. In this section, I want to look at how we now develop those key performance questions. And for me, the starting point has to be the strategic goal. So you look at the strategic goal, and then you figure out what questions do I need to have an answer to to better understand how well we are delivering on against the strategic goal, how well we are achieving it. And what you want is you want to develop the 1, 2, or maximum 3 questions per strategic goal, and then you would identify maybe 1, 2, or 3 KPIs for each of the questions. The aim is to have the as as few questions as possible and as few indicators as possible. For me, a really important way to to develop, key performance questions is to make them open questions. And there's a difference between open question and a closed question. And a closed question basically is 1 that you can answer with a 1 word answer or with a simple yes or no. So closed questions are example of closed questions are, did you go on holiday this year? Yes. Where did you go? To California. Did you enjoy it? Yes. Would you go again next year? No. So these are 1 word answers, and they don't take us anywhere. An open question on the other hand, they do something to your brain. They trigger a search for answer. They activate your brain. And I feel that organizations who implement these key performance questions well, they're creating these open questions that make people think, and they trigger this process. And a really good way of doing it so if you went go go back to to the holiday example, if I ask you, why did you choose to go to California? What was best about that holiday? Suddenly these answers, I can't I can't simply give a a a a 1 word answer. I need to explain this. And for this, I need to activate my brain and search for those answers. And this is the kind of engagement that you want to create in your organization around business performance and strategy delivery. And really good starting phrases for key performance questions are how well or to what extent. So if you're asking how well are we didn't bring, the service next to our customers in this area, Or to what extent are our customers in this market segment likely to recommend our service to others? Or to what extent, we're using our budgeted manpower in this area effectively? So these questions that will identify an information need, but they're linked to your strategy, to your performance. So they are performance related questions. What you don't want to do is you don't want to ask strategic choice questions, like, should we do this or that? Should we provide this service or that service? Or how do we know our customers are happy? Because this wouldn't be questions that you're asking about your strategy. They will be questions hopefully you you're asking in your business regularly to identify the right strategic goals, the right initiatives, but they're not helping you to get to better KPIs. So the KPIs are linked to your strategic goals. You want to understand how well you're delivering it, to what extent you're delivering them. So there are open questions that are related to your business. Okay. Let's look at an example of key performance questions in action, and this 1 comes from Google. Google wanted to understand whether good leadership actually made a difference. Google invested a lot of time and money trying to recruit best managers, and they wanted to know, see to what extent does good leadership actually impact performance. So what they did is they, look at have we already got data in place to help us answer this question? And they did. They had some performance reviews. They had information from their 360 degrees performance discussions, and they had some hard measures around financial performance, around staff satisfaction, staff, turnover, and so on. And what they were hoping is that their data would show that if they're correlating, staff feedback and performance evaluations with things like staff turnover, staff satisfaction, efficiency, performance in the department, that they would see that good managers actually also deliver better results. And this is exactly what happened, what they saw. So that was fantastic. But then these questions evolved. So they now had an answer that this was actually happening, and the top quartile of managers had significantly better performance results. So their correlation was very strong. They then thought, okay. Now what what next? Because we have no answer to this question. So the next question they came up with is what actually makes a good manager in Google? And again, they thought, do we have data in the organization that we can use to help us answer this question? And they realized, actually, there wasn't any. So they then end up creating new data collection methods. 1 was a an award, a best mentor award for basically anyone in Google could submit, a form saying I, nominate this manager as 1 of the best managers, and then they need to give some reasons. And then they also interview the top quartile from the first exercise and the bottom quartile managers and ask them, how do you manage? What's your management style? What do you emphasize? What do you struggle with? And so they then analyze all of these all of this data. And this is interesting because this is all soft data. It's is proof is it is written information from the awards. It's data from interviews, but you can very easily nowadays analyze it. You can use software, but you can also analyze it simply by going through this and categorizing the information. And based on this, they then identified 7 factors that make a good manager in Google and 3 things that struggling managers very often have in common. And they then started using this in their recruitment process, in their performance evaluations, in their, succession planning, and so on. So for me, this is a really powerful example of how you can use questions to guide you to better indicators. Another great example of how to use key performance questions comes from a butcher's shop. So this was a shop that was located in the High Street in England, and they were facing some real challenges. The the library closed down and and the supermarket moved in. So they had some new competition, and the owner didn't really know what to measure. He said, I've got some real challenges here. I don't even know how I am competing against the supermarket. Am I competing on price? Am I competing on quality? Do I need to rethink my customer value propositions? There were some some big questions. So we then said, okay. What what questions do you actually want to have an answer to? And 1 of the questions he wanted to answer was, how is football actually changing? Maybe we now have more people walking out past our shop because of the supermarket being here. Maybe, actually, the opportunity is bigger. And then how do we attract people? So what messages do actually, attract our customers to come in and buy something? And those 2 questions around footfall and then conversion rates were really interesting. So we then thought about how can we collect meaningful information to help this butcher shop answer their really strategic questions. And they didn't have literally any data. They had transaction data, how many customers came in and bought something, but this was pretty much it. So we installed a little device, a uPro device, into the shopping window, and these devices basically pick up mobile phone signals. And because everyone nowadays carries smartphones, these devices continually send out signals to look for Wi Fi and Bluetooth connections. And these pick these signals can be picked up by this device. There's no personal data being transformed, but it gives you an amazing real time ability to count and measure how many people walk past the shop. They installed another device inside the store, so they now had conversion ratios. They had the ability to understand how many people walked past and the percentage of them walking into the store. What was interesting is they now wanted to understand, k, how how do we attract people? Do they come and because our meat is cheaper, because it's better quality? Experiment and Insight 00:33:10 - 00:35:03 So they created an experiment. They basically, had a promotion for a couple of weeks competing on price. So the outside board would say, come in. We're visiting the supermarket on all our chicken and our pork and so on. And, then they basically measure the conversion ratio, how many people pass and how many people end up coming into the shop and buying something based on their sales transactions. Then, a week or a 2 later for another 2 weeks, they then started a campaign that focused on quality, where they basically said come in and try out our family recipes. All our food is locally sourced and organic and so on. And then they basically compared the results from those 2 campaigns. And what was really interesting is that they realized that, actually, what they were competing on was quality. People wanted to come to the butchers because of the locally sourced produce, produce because of the organic nature of the food and so on. So this very simple process has putting meaningful indicators in place to help them understand and answer some of their most important questions really worked. And as a bonus, what they realized is when when we analyzed all of this data that there was actually a significant footfall in the evening when the butcher shop was closed because there were also a number of pubs on the same stretch of the high street, and basically people would walk home when the pub closed walking past this butcher shop. So again, what they thought, okay, now we have a new insight, Maybe we can use this. So they applied to the council to have a pop up store on a Friday Saturday night when they realized it was particularly busy, in front of their shop, and they now sell, pulled pork burgers. And, again, they use data to help them identify this because they look look at food trends and more particularly, fashionable at that point, and they realized pulled pork was really fashionable. And then they looked at their own profit margins, and so actually pulled pork burgers is something that that could really boost our our revenue and profit. So they're now selling pulled pork burgers for 2 hours on a Friday night and Saturday that day night, and a significant proportion of their revenue and profits are now coming from those 4 hours of trading. So for me, these are just fascinating examples of using key performance questions in action. Okay. So this concludes our first section around how we agree on what actually matters. Developing Meaningful KPIs 00:35:03 - 00:43:01 And the 2 tools we looked at performance frameworks, so we've identified the strategic goals that really matter for your organization, and then we discussed the importance of defining your key performance questions to really identify your information needs. In the next section, we will then go and look at how we now develop meaningful KPIs to help you answer your questions and help you to understand how well you're delivering on your strategic goals. Now that we've completed the first part of this course, we'll be looking at developing a performance framework and identifying the key performance questions that will help you get to your true information needs, now it's time to look at how we develop the right KPIs, the really meaningful measures for your business. And in this section, we will explain what KPIs are and some of the key concepts around KPIs, and I will give you many best practice tips that you can apply as well as a detailed KPI template that you can use to really develop solid meaningful KPIs and help you avoid some of the biggest mistakes people make when they develop meaningful KPIs. For me, the analogy here when it comes to KPIs is a bit like how we determine whether someone is healthy or not. So if you go to your doctor for an annual health check, for example, they now have some key indicators that they will use to assess the overall health from your weight to your blood pressure. They will take a blood sample where they measure cholesterol levels and other key markers. And these have really evolved over time to a meaningful set of KPIs, and these will holistically give people a very solid understanding of where you are in terms of your health. And if suddenly 1 of those markers is off, you realize actually the blood pressure is too high, maybe we need to run a few more tests to get to the bottom of it. And this is really what we want to do in our organizations. We want to figure out what it is we want to know and then find the right set of KPIs. And this is what this section is all about. Let's define what exactly KPIs are. In simple terms, KPIs provide a way to measure how well companies or business unit projects or individuals are performing in relation to their strategic goals and objectives. So in the broadest sense, KPIs provide the most important performance information that enables organizations as well as their stakeholders to understand whether or not the organization is on track towards its stated objectives. In this way way, well designed KPIs are vital navigation instruments giving a clear picture of current levels of performance and whether the business is where it needs to be. When it comes to KPIs, it is really important to understand the difference between goal, KPI, and target. And in many organizations, they can get confused, and this can cause lots of problems. So we've already discussed how you define your goals, and your goals are the objective that you're trying to achieve. So let's say your goal is to improve health. Your KPI then is is the measure that helps you understand whether you are achieving your results. And KPIs can be blood pressure or cholesterol levels or a body mass index. And then every KPI needs a target where you say this is what good looks like. This is where I would like to get to. So the target here could be benchmarks that you're trying to achieve around blood pressure that you say, we want I want to have a blood pressure of a 120. I want to have cholesterol levels of under 200. I want to have a body mass index that sits between 18a half and 25 and so on. What is really important that these are concept are distinctly different and they have different purposes. The goal defines the objective, and the measures help you to track whether you're delivering on your objective, and your target says this is what good looks like in terms of your KPIs. For me, there's a real danger that we muddle these up in our organization. So it's suddenly the KPIs itself become the target. So, for example, if your target is to improve health, but, actually, the measure is weight, and this then becomes the target, then you very quickly could achieve this doing the wrong things. Like, you could fast. You could take tablets to lose weight really fast, but this is not improving your health. It's just tackling 1 of the KPIs that you're using to track it. Or let's say you want to increase sales in your organization, and you know that your emails are driving lots of sales. So 1 of the KPIs that you use is that you want to see your email list growing. And, again, you achieve this KPI, but the problem is that you have just acquired lots of new, new email, but they were not particularly well targeted, and therefore, the sales didn't actually increase. So by making it clear that there's a difference between goal, KPI, and target, we can avoid some of those dysfunctional consequences that often happen when we assume that the KPIs are that goal is in itself. So we have a goal, a KPI, and a target, and we need to keep them separate. Another really important concept to understand when it comes to KPIs is the difference between leading and lagging indicators. And they're basically they basically means that 1 is looking backwards and the other 1 is looking forward. So it's a bit like driving your car. When you look out of your windshield, these are the leading indicators. And if you drive and you look into the rear view mirror, those are your lagging indicators. So lagging KPIs include things like revenue, profits, customer, or employee, turnover rate. These are things that tell you what happened in the last months and the last quarter, so they are lagging, whereas leading indicators are forward looking. Things like your sales pipeline, your employee engagement, your social media engagement, because they are leading indicators that will lead to maybe increased profitability and other lagging indicators in the future. And the slightly confusing thing is that sometimes indicators can be both depending on where they are. So this is why I've introduced the smart strategy board because, ideally, you want a mix of leading and lagging indicators in your organization. So at the top, if you're measuring financial results, those are always lagging indicators, so your revenue, your profits, and so on. Customer satisfaction is also, a a lagging indicator. But, actually, if you think about this, customers and their engagement, their satisfaction can also be a leading indicator for future performance. Employee engagement can be a leading indicator for better quality and therefore better customer satisfaction. So depending on where they are, they can be both. But you don't really have to worry about this as long as you are using tools like the smart strategy board to identify objectives across the different layers of your organization. And then you will have some leading indicators. So usually the ones you think back of the tree model that I've given you, the roots are always the leading indicators. The trunk can be a bit of both, so the leading indicators in the roots can hopefully be leading indicators for the trunk. And the trunk, so your operational internal process metrics will hopefully be leading indicators for for customer satisfaction and market measures, and those will hopefully be leading indicators for financial performance. So very simply, 1 is looking forward, the other one's looking backwards, but they when we look somewhere inside in the middle of the organization, they can be both depending on how we look at it. 2 more phrases that you very often hear about in relation to KPIs are intangible and tangible. So here I want to explain what is the difference between them. Basically, this idea started in the late 19 eighties, early 19 nineties when companies move from measuring all the things that they could easily count like financial metrics, things like revenue, net profit, and operating expenses, inventory levels, production outputs, like the number of units produced for employee head count. So these were tangible measures I can grab. I can understand. There's some physicality to them. What companies then realize real realize is that it's not just those measures we need to keep an eye on. We also need to look at some of the more intangible components. The things I can't papers. So lagging KPIs include things like revenue, profits, customer, or employee, turnover rate. These are things that tell you what happened in the last month, in the last quarter, so they are lagging. Whereas leading indicators are forward looking. Things like your sales pipeline, your employee engagement, your social media engagement because they are leading indicators that will lead to maybe increased profitability and other lagging indicators in the future. And the slightly confusing thing is that sometimes indicators can be both depending on where they are. Indicators and Measures 00:43:01 - 00:44:56 So this is why I've introduced the smart strategy board because, ideally, you want a mix of leading and lagging indicators in your organization. So at the top, if you're measuring financial results, those are always lagging indicators, so your revenue, your profits, and so on. Customer satisfaction is also, a a lagging indicator. But, actually, if you think about this, customers and their engagement, their satisfaction can also be a leading indicator for future performance. Employee engagement can be a leading indicator for better quality and therefore better customer satisfaction. So depending on where they are, they can be both, but you don't really have to worry about this as long as you are using tools like the smart strategy board to identify objectives across the different layers of the organization. And then you will have some leading indicators. So usually the ones if you think back of the tree model that I've given you, the roots are always leading indicators. The trunk can be a bit of both, so the leading indicators in the roots can hopefully be leading indicators for the trunk. And the trunk, so your operational internal process metrics will hopefully be leading indicators for for customer satisfaction and market measures, and those will hopefully be leading indicators for financial performance. So very simply, 1 is looking forward, the other one's looking backwards, but they when we look somewhere inside in the middle of the organization, they can be both depending on how we look at it. The things I can't easily touch. So things like customer satisfaction, brand and value is often measured by brand recognition, reputation, because they are the measures that will lead hopefully to more profitability and and longer term, financial health of the organization. Things like intellectual property is is another typical intangible component. So the value of a company's patents, their trademarks, their copyrights, their knowledge, employee engagement, organizational culture. So these are software components. But very similar to what we talked about before, as long as you apply the smart strategy, template that I've given you, then you will automatically have areas that that cover some of these intangibles because we will look at the roots and the trunk, and all of these are already looking at some of the more non tangible elements of your business. In the previous section, we looked at the difference between intangible and tangible indicators. And very closely closely related to this is the difference between quantitative and qualitative KPIs. So quantitative are the things I can count. Quantitative vs Qualitative KPIs 00:45:02 - 00:47:49 So these are software components. But very similar to what we talked about before, as long as you apply the smart strategy, template that I've given you, then you will automatically have areas that that cover some of these intangibles because we will look at the roots and the trunk, and all of these are already looking at some of the more non tangible elements of your business. In the previous section, we looked at the difference between intangible and tangible indicators. And very closely closely related to this is the difference between quantitative and qualitative KPIs. So quantitative are the things I can count. So they are numbers like your financial results, like your customer satisfaction score, and so on. Qualitative KPIs and qualitative metrics are things that are not numbers. So I could include star ratings in this. So if you look at a hotel that has 1, 2, 3, 4, 5 stars or a star reviews on websites, customer reviews, and so on. Or they can be completely qualitative in terms of a a written review of your business, of your products on websites, for example. I don't particularly like the distinction between quantitative and qualitative measures because, basically, what happens is that you can turn any qualitative measure into a quantitative measure. So this distinction is not really that useful. So for example, I could I could take all the written reviews of my products and services that I can find online and on social media, and I can run analysis tools on it. And they can do they can then assess the sentiment of these. Are they positive, negative? And these can be scored. So I can turn anything that is qualitative into a quantitative measure, into a quantitative score, and this is getting easier than ever before. So it's important to take this to keep this in mind that you want a balance. But again, the framework that I've provided will hopefully help you do exactly that. How many KPIs should a company have? This is 1 of the most frequently asked questions I get, and it very much depends on whether you are designing a performance framework for your entire organization. And if you do this and you follow the process so far, and you develop your smart strategy board, you identify your strategic goals, so you might have between 10 15 strategic goals, then you identify the questions for each of the goals that you want to have an answer to. So you you could end up with sometimes 2 or 3 questions per goal, and then you will have indicators that will help you answer your questions. And they can again be between 1 and 3, sometimes more depending on how complex the question is. So these can add up, but for me, the number is not really that important. So for me, the sweet spot, if I look at an entire organization, something in the region of between 3045 seems absolutely fine. Very often, organizations create indices as well. So they are bringing together a number of different in more detail later. However so if you're now looking at your own KPIs or the KPIs of your department, they should be going down because if we look looking at the entire organization, there will be some financial KPIs and some customer related KPIs, some operations KPIs, some people related KPIs, and so on. If you're now working in the HR department, again, you would then identify your goals, and they will hopefully be fewer than your 10 to 20, maybe between 510. So the same is true when you look for your personal KPIs or your your, your team KPIs. So my recommendation is to aim for around 3 to 5 strategic goals that are hopefully aligned with the company goals. And then for each of them, you then identify the questions and indicators. So you will have a smaller number, something more closely to to 10 indicators. Hopefully, that's useful. Explosion of Data and Its Utilization 00:52:27 - 00:54:38 Basically, over 90% of all the data that exists in the world today was generated in the last 5 years, and this is only going to go up. We expect this, the amount of data that we have in the in the world, to double, probably every 2 to 3 years for some considerable years to come. And this means we can measure things completely differently. We can pull in external data that might already exist. So we can, for example, track activity. So if you are, selling books, I sell books. And and, for example, I now get feedback from Kindle on how people read my book, which pages they're reading, and and this never existed before. So suddenly, you get feedback of how do they consume your content? Do they read this chapter by chapter? Do they get in an hour? Do they read this from cover to cover? And so we have this granular data available on reading, on listening to music, on on on pretty much any activity. So if you are delivering digital services or if you deliver, products that have a digital component, again, you can track this. If you're selling cars, suddenly, you can understand how people are using it. If you're selling washing machines, you get customer data back on, how often they use this, what cycles they're using it. So this is the what we can refer to as the Internet of Things that more devices now include computer chips and those computer chips are and sensors are collecting and transmitting data. If you think what all the smart devices we now have now have from smart watches to smartphones to smart home speakers to smart everything. And all of this is giving us more data that we can access and use. And we have completely new types of data, things like photographs, all the text data on social media, all the reviews, video data on TikTok and Instagram. All of these new sources of data, and because we now have really powerful AI tools and analytics tools, we can analyze this. So for example, if you were if you are Coca Cola and you want to understand, the sentiment of what people are posting when they're, posting videos on TikTok or Instagram, on YouTube with a Coke product in their hand, I cannot do this because I can use machine learning algorithms to automatically detect the patterns of the of the Coke brand and the product, and then I can automatically assess the facial expressions of those people in the videos. And are they happy? Are they sad? And this can then be automated, the entire analysis of this. There's just that 1 example of of how the new types of data, this massive explosion in data, all the sensors and and and connected devices that we now have gives us new ways to measure and track what we need to understand. Performance Tracking Evolution in Retail 00:54:44 - 00:58:34 Let's look at an example of how the way we track and monitor performance is changing and evolving and how we can use the latest data and technology to improve the way we track performance. This example comes from a supermarket, and they basically realized that 1 of the key factors that would influence how customers feel about their shopping experience was how long they have to wait in line at the checkout. So the longer the wait times, the lower the overall shopping experience score. So they then introduced a new goal, saying we want to reduce the amount of time people spend in line. And because this was a new strategic goal, they now needed to track this and introduce KPIs and metrics. So the very first iteration of this was basically where they asked their checkout supervisor. So the person looking after all the TILs running around trying to help them sort out problems and so on, they asked them to every hour to note down how long the lines were. And you can see how flawed this process is because we all know that they are super busy people, that sometimes they forget to do this, and quite often, they realize that people are just making up the numbers at the end of their shift. Or even if you're measuring this very, very precisely every hour, the problem with this is that you might miss peaks and troughs in between, and that this was a very retrospective way of collecting this data because you would have to analyze it, report it, and by the time you get the data, you can't really do anything with it. So they realized very quickly that this wasn't the right way to do this, so they introduced a new way where they basically integrated the measurement into the checkout process. So the checkout operator would get a message on the till after each customer transaction is finished, simply say how many people are in the line, and they could simply go on to 3, 4, count them, and type in the number. So that was better because now you had a real time way of assessing it much more, reliably, and you could react to this. So now you could have an alert saying, okay. The line's getting too long. We need to get a few people off the brakes and onto the tills. So that was a better way of measuring it, but the problem is it just made the job of check out person this little bit more boring because it just adds another administrative task and step. And this is something we need to consider when we do performance measurement systems that we don't want people to spend all day long recording stuff, measuring it. So whenever possible, we want to automate this. We want to use some of these modern ways of tracking performance. And the next way they were measuring it now was using sensors. So they installed sensors a bit like the mercury sensors that you have in your house. They installed them over the tills, and they would automatically basically measure how many bodies are in line, how many people are in line. So this was now better. You didn't have the problem that that check on people who got distracted from their job and just had to do another task, and you could automatically count. That slight problem with this wave measuring was that, it sometimes over counted it. So if you have a family of 5 arriving with just a tiny little basket of shopping, it would count 5, people in the line. So, again, they said we can do this better. So the next wave was to use the CCTV cameras that they already have in store. So all of their stores have CCTV cameras covering pretty much the entire floor. And they now realize that instead of just recording this on a local hard drive, we can stream all of this data to a cloud, and then we can use artificial intelligence, patent recognition tools that help us track customers. And not only customers, but also do they have just a basket? Have they got a whole shopping trolley? How many items are in this trolley? Which are all really important factors to determine how long the wait might be because it could be just 2 people in the line, but they all have massive amount of shopping, or there could be 10 people in the in the line with just a few, items in their baskets. So, again, this tool became super powerful because it gave them, a really good way to estimate queuing times in real time using video analytics. And it gave them so much more because they could now use pattern recognition only to understand the lines and how long they they were. They could get a complete analysis of how shoppers would use the shop. And so the the footfall analysis almost came for free with this new system. And for me, this is a a great example to showcase the capabilities that we now have using AI, using camera and video data to improve the way we track and measure performance. In the previous section, we looked at the key components that make a good KPI. Key Points IMPORTANCE OF KEY PERFORMANCE INDICATORS (KPIS) Explanation: KPIs are vital tools for organizations to measure their progress towards strategic goals and make informed decisions. They serve as navigational aids, similar to how sailors use navigation tools, to guide organizations towards success. Key points: KPIs help organizations chart a path towards success and stay on course. They must be aligned with the organization's strategic goals. KPIs have evolved with technology, allowing for real-time data analysis and decision-making. Organizations need a clear strategic plan before they can effectively use KPIs. PRACTICAL APPLICATION OF KPIS Explanation: The course provides a foundation in the practical application of KPIs across various industries, teaching how to select, align, and use KPIs to measure and improve performance. Key points: Learn to identify the most relevant KPIs for your organization. Align KPIs with strategic goals for effective performance measurement. Best practices for tracking, analyzing, and reporting KPIs are covered. Common challenges and pitfalls in KPI implementation are addressed. STRATEGIC PLANNING AND KPIS Explanation: Strategic planning is the first step in effective KPI implementation, where organizations define their goals and the metrics that will measure their progress towards these goals. Key points: Establishing a clear strategic plan is essential before leveraging KPIs. KPIs should be designed to measure progress towards strategic objectives. The course provides tools to link strategy with performance measurement. LEARNING AND IMPROVEMENT THROUGH KPIS Explanation: KPIs are not just for measurement; they are also tools for learning and continuous improvement, helping organizations to adapt and refine their strategies. Key points: Use KPIs to learn from performance data and inform strategic decision-making. After-action reviews and regular check-ins are important for discussing progress. The course emphasizes the importance of acting on KPI data to drive improvements. BALANCED MEASUREMENT AND MANAGEMENT Explanation: Organizations often struggle with balancing the creation of strategic plans, the measurement of performance, and the management of performance based on KPIs. Key points: Too much focus on measurement without linking to strategy is common. Effective KPI management involves measuring fewer, but more important, things. The course aims to smooth out the process of strategic planning, measurement, and management. STRATEGIC GOAL SETTING AND PERFORMANCE FRAMEWORKS Explanation: Strategic goal setting is the process of defining what an organization aims to achieve, and performance frameworks are tools used to map these goals and track progress towards them. The Balanced Scorecard is an example of such a framework. Key points: Strategic goals should be mapped into a performance framework to align with the organization's strategy. Performance frameworks can be based on models like the Balanced Scorecard, which includes financial, customer, internal process, and learning and growth perspectives. The apple tree analogy illustrates the different layers of an organization, from visible products/services (apples) to supporting processes (trunk and branches) and foundational elements (roots). SMART STRATEGY BOARD Explanation: The Smart Strategy Board is a tool developed to integrate the best elements from various performance management frameworks into one, helping organizations map their strategic goals effectively. Key points: The Smart Strategy Board starts with identifying the organization's purpose and ambition. It includes panels for customers, finance, internal operations, and resources, each with specific strategic goals. The board also considers competition and risk, identifying challenges and potential risks that could impact the organization's performance. LEADING AND LAGGING INDICATORS Explanation: Leading indicators predict future performance, while lagging indicators reflect past performance. A balanced mix of both is essential for effective performance management. Key points: Leading indicators, like employee engagement or sales pipeline, can forecast future success. Lagging indicators, such as revenue or customer turnover rate, provide insight into past performance. A performance framework should include both types of indicators to provide a comprehensive view of organizational performance. TANGIBLE AND INTANGIBLE ELEMENTS Explanation: Tangible elements are physical and measurable aspects of an organization, while intangible elements are non-physical factors that can significantly impact performance, such as culture or skills. Key points: Intangible elements like organizational culture, leadership style, and IT systems are crucial for performance but are not easily measured. Tangible elements include products, services, and financial metrics. A performance framework should account for both tangible and intangible elements to fully understand an organization's capabilities and needs. KEY PERFORMANCE QUESTIONS (KPQS) Explanation: KPQs are open-ended questions that help organizations identify their information needs and determine what they need to know to manage performance effectively. Key points: KPQs should be developed for each strategic goal to guide the selection of relevant KPIs. Effective KPQs are open-ended and trigger a search for answers, such as "How well are we delivering service to our customers?" KPQs help focus on the most critical aspects of performance and avoid collecting unnecessary data. CASCADING STRATEGIC GOALS Explanation: Cascading strategic goals involves breaking down high-level organizational goals into more specific, actionable objectives for different departments or units within the organization. Key points: High-level strategic goals may be too broad for individual departments, necessitating the creation of more detailed and relevant goals for each unit. Cascading ensures that all parts of the organization are aligned with the overall strategy and understand their role in achieving it. The process should be dynamic, allowing for regular updates and adjustments to the goals as the organization and its environment change. KEY PERFORMANCE INDICATORS (KPIS) Explanation: KPIs are quantifiable measures used to evaluate the success of an organization, business unit, project, or individual in achieving key objectives. Key points: KPIs should be directly linked to strategic goals and provide insight into performance. Each KPI should have a clear target that defines what success looks like. The selection of KPIs should focus on outcomes and value rather than just activities or outputs. DATA-DRIVEN PERFORMANCE MEASUREMENT Explanation: The explosion of data availability and advancements in technology have transformed how organizations can measure and track performance, allowing for more granular and real-time insights. Key points: The vast amount of data generated in recent years can be leveraged to create more precise and meaningful KPIs. Modern tools like AI and machine learning can analyze both quantitative and qualitative data to provide deeper performance insights. Organizations can use technology such as sensors and video analytics to automate data collection and analysis for real-time performance tracking. Given the comprehensive nature of the video script, outlining a mind map for this course on KPIs requires a structured approach. Here’s a detailed breakdown for the mind map, organized in a way to facilitate understanding and further exploration: 1. Course Introduction Overview of KPI Course Objective: Managing Performance Focus Areas: Data to Insights Data Storytelling Best Practices in Data Visualization After Action Review & Performance Improvement Meetings 2. Analyzing Data & Reporting Insights Importance of Structured Analysis Tools: Click, Power BI, Tableau The Need for Exploration Paths and Dashboards Example: Walmart's Data Cafes Role of AI in Analytics From Pull to Push Information Systems Future Trends: Voice Recognition Interfaces 3. Effective KPI Reporting Moving from Information Dump to Insightful Reporting The Challenger Space Shuttle: A Cautionary Tale Learning from Journalism: The Art of Summarization 4. KPI Reporting Template Strategic Goal & Performance Questi