At our Innovation Summit in New York City, Tradeshift’s VP of Apps Business Development, Ron Volpe, sat down with Laura Bissmeyer, Director, Global Supply Management at Corning, Deana Denton, IT Strategist at Corning, Debra Powers, Enterprise Financial Operations Director at Best Buy, and Vania Agrey, Accounts Payable Manager at Best Buy, to discuss the role KPIs play in their business.
Here are five key takes on how they’re deploying KPIs to measure, motivate, and drive change within their organizations.
1. Deploy both tactical and strategic KPIs
You can measure everything your team does in an infinite number of ways, but if you don’t want to spend all your time updating KPI spreadsheets, you must be selective. Our panel discussed how selecting metrics is a fine balance between selecting tactical KPIs that measure team performance and strategic KPIs that align with broader business outcomes. In accounts payable, for example, teams must always track core metrics such as time taken to approve an invoice. But if the company is aiming to improve cash flow, it would also be wise to track metrics that show how AP impacts this area.
Unfortunately, sometimes the best marks of success are ones that can’t be measured. And while those success markers are valuable, the panel advised that teams be realistic and set KPIs they know they can measure with the data they have.
2. Allow your metrics to tell a story
KPIs do more than track progress, they tell stories of success, of failure, and of the impact teams have on their enterprise. But far too often teams lock these stories away in stagnating presentations that get dusted off once or twice a year. And that’s just a waste.
To be effective, make them visible, said the panelists. Then you can use them to underpin internal discussions and set targets. This drives focus, makes people responsible for their work, and helps develop a culture of continuous improvement.
And making them visible to the rest of the organization helps amplify the story across the enterprise. This will not only drive transparency, it will also start promoting interesting conversations with senior management and other key stakeholders. This brings in a diversity of thought that often leads to surprising and innovative outcomes.
3. Ensure your metrics evolve with your business
It’s imperative that KPIs within the enterprise evolve in step with your evolving business, goals, and strategies. There will always be perennially important metrics: for example, AP must always track invoice approval times.
But in a turbulent world where disruption is the new normal, business leaders must think outside the box and challenge their organization in order to ensure they remain competitive. And that means looking at what metrics are most important to thrive in a digital world—the same KPIs that made Hilton successful aren’t the same that make Airbnb successful. The advice from our panel is to get creative, don’t just follow the status quo and measure the same metrics everyone else does. Think about how businesses are changing and set metrics that point towards those changes.
4. Keep experimenting
The most innovative businesses don’t set KPIs as targets to reach, they set them as targets to exceed. Our panelists all agreed that when a target KPI is hit, you must then challenge the team to go further. This is how you push a team to be innovative and keep pushing that bar higher, they said.
Raising targets and expectations doesn’t just motivate and force people to get creative, it also drives real business value. For example, Debra from BestBuy explained how she’s never satisfied with being the industry standard. “We’re constantly looking to be better than best in class,” she said. “This is so we can deliver customer excellence no matter what.” They explained that this lets them make changes quickly and absorb a slight deterioration in performance whilst still knowing that they’re outperforming their competitors.
5. Don’t live and die by KPIs
KPIs are immensely powerful, but if used incorrectly they can also be restrictive. This is especially true when it comes to innovation. KPIs are great for tracking incremental improvement towards process excellence, but they’re not great when challenging the status quo. That’s because when there is no precedent it’s near impossible to set an accurate target.
That being said, you can’t kick off a project without KPIs, so how do the panelists approach this challenge? All agreed that the best method is to set KPIs you want to hit but with the understanding that the project’s success doesn’t rest solely on hitting them. “It’s ok to fall short of initial targets when doing something radical,” said one panelist. “As long as the project is heading in the right direction it’s okay. You’ll hit and exceed the targets eventually.”
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