What do desired business outcomes and KPIs do with a reasonably complex road intersection? Both are tied together by Lewis Carroll’s quote, “If you don’t know where you are going, any road will get you there.” If you don’t know the desired business outcomes you are responsible for achieving, there is a strong chance your KPIs will not help you get there.

Definitions

Before we start to figure out where and how we are going, we should ensure we are all talking in the same language.

Desired business outcomes

These are the highest-level objectives of a business or business unit.

There are two categories of desired business outcomes; your customers and your company. While they are very different, you must not prioritize one over the other. It would help if you worked on achieving both simultaneously, or you will fail on both fronts.

It’s just like the now-famous work-life balance. Going overboard on either prevents you from achieving long-term happiness!

Some examples of desired business outcomes for your business:

  • Profit
  • Customer value-added
  • Shareholder value-added
  • Customer retention rate
  • Upsell and cross-sell

And some examples for your customer’s business:

  • Cost reduction
  • Equipment uptime
  • Create peace of mind for the buyer
  • Permit innovation

Key performance indicators (KPIs)

These are the internal goals and objectives that must be achieved to deliver the high-level desired business outcomes. For a business unit, you can think of them as the unit’s desired business outcomes.

Examples:

  • Sales
  • Gross margin
  • CSat and NPS
  • Productivity
  • Employee retention
  • Employee training
  • Accounts receivable
  • The vendor suggested cost reductions

KPIs are more granular than business outcomes; there will be many more of them because each unit and department of a business will have its own set, and each KPI supports one or more desired business outcomes. Also, both desired business outcomes and KPIs must be “smart”:

If your metrics are not specific enough, they will be meaningless. Here are two examples of the same metric:

  1. We will implement a new field service management system this calendar year.
  2. By October 1, 2019, we will have successfully opened over 100 tickets in Mize Smart Blox, dispatched engineers and parts as necessary, closed at least 75% of the tickets, and invoiced our customers automatically from SalesForce.

Statement 2 is a winner!

Meeting your goals

The secret sauce of meeting your business’s and customer’s goals is ensuring that all your combined internal metrics are necessary and sufficient to achieve your desired business outcomes. You may have some KPIs that do not support the current year’s desired outcomes, but they lay the groundwork for the future year’s planned results. On the other hand, if you did your planning correctly, then every significant step in the plan will be measured using one or more of the agreed KPIs.

Also Read: 9 Reasons People Fail To Renew Service Contracts

Every organization in the company should own one or more KPIs that roll up to support a customer or company-desired outcome. For example, floors must be swept at a specific frequency and cleanliness level to provide a safe and welcoming environment for the employees because the workplace condition impacts employee morale and motivation, affecting internal work and ultimately impacting business outcomes.

When to start or update what you already have

If your business runs on a calendar year basis, then you are about 25% of the way through the year. And if you have not created desired business outcomes and KPIs, then fear not. You can take the first pass at this process in the coming month, and you will have about 67% of the year remaining to track the indicators and see how helpful they are in helping accomplish the business’s objectives.

Suppose you think you did a good job planning for this year. In that case, I strongly recommend that the business leaders review the company’s desired outcomes and the outcomes they plan to help customers accomplish to ensure they are attainable. Remember that in 7 or 8 months, you can detect and fix many troubled projects. And if you do not fully achieve the outcomes, you will still be better off than if you did nothing and got surprised at year-end.

About Middlesex Consulting

Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders.   Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing,  Customer Experience, and Engineering. If you want to learn more about how we can help your organization understand desired business outcomes and KPIs, please get in touch with us or check out some of our free articles and white papers here