KPIs Archives - Growability

Projects have slowly been replacing operations for businesses since the eve of the 20th century. Operations largely deals with the managing of an organization while projects involve performance improvement and changing the organization.

Projects allow for quicker, steadier growth of new products and technologies. To take the most advantage of projects, your organization needs to know how to pivot and manage projects effectively.

Our Growability Model shows you how projects can impact your business.

Listen to EP30 The 12 Step Growability Model Overview™

Forward looking companies see the opportunity in quality project management. This is an often overlooked skill set but can separate you from the competition.

If you’re ready to increase productivity, streamline processes, and improve project outcomes, you need to consider these 3 things from our Growability BATTLE Plan™.

1. organization benefit

What is the overall purpose of this project and is there a direct line to a benefit for the organization? One of the skill sets a manager needs is the ability to discern a Return On Investment (ROI).

Projects are going to cost personnel and resources. You want to get the best bang for resource use and not every project proposed is worthy of investing. This should be the first and most prominent question asked before you even consider pushing the project forward.

2. teams, tools, techniques

Who are the main characters and what are the main tools used for this project? You need to identify a project lead, the supporting team, and every tool, technology, or resource required for completion.

This planning phase of the project should be as precise and salient as possible. After all, this is where you extract the majority of project timelines and costs. The better you are here, the easier it will be to keep the project on a tight timeline and budget.

Project creep is real.

Loosely articulating the resources needed for a project may lead to a slow, creeping increase on those resources if not properly managed or maintained. Before you realize it, your project is beyond time and beyond budget. This didn’t happen overnight.

Incremental or nearly imperceivable changes can modify project timelines, budgets, and resources slightly. But, if the trend continues, you can end up with an inverse ROI. Good project managers need to understand all parts of the project process so they can speak to slight changes.

🚩 A major red flag for an organization is a project lead or manager who cannot answer basic questions about project progress. This includes timeline, budget, personnel, and other resources. If you have this issue, you need to consider alternatives to managing the project.

We cover some strategies to consider here on the podcast where we cover 5 Things You Should Prune from Your Business.

3. End results

How do you know this project succeeded? Take time and attention to identify and properly describe the various KPIs (key performance indicators) and KPDs(key performance determinants) for this project. These are the goals your team are striving to achieve. Improperly or loosely defined KPIs and KPDs can spell disaster for your project.

We cover the best practice for determining KPIs and KPDs in your organization and projects in Episode 47 Key Performance Indicators.

Results reflect expectations. If they don’t, you need to look into the internal and external factors that influenced the project scope and its execution.

The full battle plan

There are more things to consider when managing projects. Contact us to access to our full 6-step Growability BATTLE Plan™.

There are two huge reasons that businesses fail. They either measure the wrong things or fail to measure at all.

Metrics are critical to businesses but oftentimes the wrong things are measured or things are measured inappropriately. This is why every business owner must know two critical measure terms: Key Performance Indicators (KPI) and Key Performance Drivers (KPDs).

KPIs and KPDs

Simply put, KPIs are the result of what actually happened while KPDs affirm the action that brought about the KPI.

Now, it’s critical to recognize that KPIs are things you measure, not goals. It’s just data. In fact, many may have heard the term KPI and stray as far from it as possible but when you realize it’s just data, it’s not only less scary…it’s incredible.

The more you understand about measurement the more you’ll love it. The things I measure improve and the things I don’t decline. So, if I want to improve anything at my business or anything in my life, I need to measure.

All About the Honey

Let’s look at honey, as an example. Honey would be the KPI and bees the KPD. KPIs are quantitative values that demonstrate how effectively a company is achieving its objectives . We can see how much honey was produced and within what timeframe. KPDs are the activities necessary to produce the KPI results. Bees are the KPDs because they produce honey.

Now, it’s nice to know that these measurements exist but you need to understand them both more fully so they’re practical and applicable to your business. KPIs and KPDs are not only helpful pieces of data, they are critical ingredients to your success.

There are three KPIs that should be measured: purpose, production, and profitability.

Purpose, Productivity, and Profitability

There are three Purpose KPIs. The first Purpose KPIs look directly at the customer base. They tell you how many customers you serve and how well your product or service improves the life of the customer. The second purpose KPI is about human investment and this deals more with the charitable opportunity the organization has. The third Purpose KPI measures the impact the company has on your family.

There is a simpler way to understand the Purpose KPIs and that is by answering each of these questions for your organization:

What do I want to measure in terms of the quality of life I bring to my customers? (customer)

What do I want to measure in terms of charity I can bring into the world? (charity)

What do I want to measure in terms of the impact that this will make on my family and future generations? (family)

Productivity KPIs measure reality. If I walk into my garden and don’t see any vegetables, it could be that I have the wrong soil, it didn’t rain, or I neglected to plant seeds. When you look at productivity there are three things that typically end up on the KPI sheet.

Cash flow, profit-loss statements, and customer volume makeup profitability KPIs. Cash flow concerns the amount of money that came in while profit-loss statements track both income and expenses and are composed of 3 factors:

Money

New Jobs

Current Customers

Once you’ve established how much money you have coming in as well as the quantity of new jobs compared to your existing customer base, you can better understand the dynamics of your organization.

Bread and Butter

The bread and butter of your company are your customers that keep your business in existence. If I have 12 different product lines but six of those produce 80% of the income, these are my bread and butter customers. These bread and butter customers for your line of profitability, the activity that yields actual gain.

Once you establish profitability, you want to look at profit margins. Profit margins is income divided by revenue. So, if I want to get a full picture of profitability, I need to examine all of my product or service lines. This makes more sense if we go back to the example of 12 product lines.

Profit Margins

Each product or service line will have a profit margin so I sell let’s say a shoe on 1 and make a 10% profit margin, I keep 10 cents on every dollar but on product two I have a 40% profit margin, I’ll get to keep 40 cents for every dollar.

But, this data only tells a one-sided view. We need another view of the numbers and this is where overhead comes in. Overhead is the amount of resources associated with running a business. If overhead was 50% last year that means for every dollar spent, I kept 50 cents. My next thought would be how can I get my overhead from 50% to 49% so I can keep 51 cents for every dollar spent.

All of this makes more sense within the context of a business model. Listen to the 12 Step Growability Model and invest some time listening to that series. You will walk away with practical steps you can take to improve the systems in your organization.

Participation Trophies and Score Cards

Imagine playing basketball except we decided to not keep score. Everyone is going to get an award no matter the outcome. By taking away the score, you’ve deflated the motivation. If I don’t have a score, what’s the point? I mean we can play for fun, certainly but when it comes to business no one should go to work for a participation trophy but that’s exactly the culture we breed when we decide to not measure KPDs.

Excellence isn’t an accident. Excellence is built on processes and performance. Companies can’t win using participation trophies; they need excellence and to build excellence they need to be able to measure everyone on the team. For myself and everyone in the organization to see what it takes to win, I have to build a scorecard wherein I answer at minimum these three questions:

What was the expected result?

What was the actual result?

How does this connect to my KPIs?

Keeping Score

Score cards provide valuable feedback for everyone on the team. They can use the data to edit their flow and productivity. Your team can look at the data from projects, quarterly earnings, productivity output, or any other set of metrics to help determine the best path forward. It also helps incentivize the work. People can actually see what impact their work has on the whole.

Organizations win based on their processes and feedback. Score cards combined with dashboards give everyone the upper hand. If you want to grow your business so you can reach points of excellence, learn what to measure, and how to communicate that in the best way, you need to contact our team.

Tag: KPIs

Use This Battle Plan to Manage Projects