Simplicity really works. How to keep strategy translation and KPIs simple.
During this period, many affiliate businesses are busy drawing up and finalizing plans for next year. The goals and strategy have been determined, and now it comes down to making this meaning for everyone within the affiliate business. One of the most common techniques for this is making a strategy map with KPIs, whether or not linked to a model.
A good strategy map tells ‘the story’ of the company. A story that makes clear what is important and in which the KPI’s scores indicate how you are doing on these important things. That story only motivates when people who read/hear it:
- Understanding (head);
- Wanting to go for it (heart) and
- Understand what they have to do there (hands).
In short: a story that unambiguously connects your goals and strategy with people’s actions that take place within the affiliate business. “Hey, that’s about me !!”
That sounds quite complex. And that is exactly what many businesses (or the hired consultants) make of it. Google “strategy map,” and you will get pages full of strategy maps like this one:
Very complicated strategy maps packed with KPIs as an impressive result of months of hard work behind closed doors. In almost all cases, ‘the story’ of the company disappears completely, with the result that such strategy maps lose their credibility. Nobody cares about it anymore, let alone people do something with it!
It can be different. Based on the belief that simplicity really works, you can also keep strategy translation small and simple. And it looks like this:
This is a real situation of an existing, quite large company. Only the name and industry have been changed. Over a period of more than 6 months, this company has managed and improved its performance based on these 5 KPIs.
Were more KPIs possibly relevant? Did the MT also look at other figures and reports? Sure! Only the focus remained on these 5 as they told Flash’s most current strategy story. The online market performance was on the MT table every week, and the performance in this market had to increase.
The figure above is a ‘KPI train’, and it tells a mini strategy story. A KPI train has 4 features:
- It connects strategic objectives that are currently current with actions within the company;
- It makes an explicit connection between Result and Process indicators;
- It is the link to the customer (you are viewing Customer-to-Customer processes);
- It is the link to the people who work within the processes.
It is beyond the scope of this article to go into detail about Flash’s strategy. The elaboration below examines the link between result and process indicators in the case of Flash.
Growing in the online market was the single most important strategic goal for Flash. It was the only way to achieve the desired profit level. Hence the 2 results KPIs in the boxes’ Ultimate goal’ and ‘Growth goal’.
This is, of course, not enough. Because you cannot steer a company on the basis of financial KPIs alone. Immediately the question follows: What exactly does Flash have to do to grow online sales?
You then need more information: information from the Customer-to-Customer processes related to the spot market. These indicators are the second part of the KPI train. And this second part is the most important part of the KPI train because it touches the ‘moments of truth’ for result improvement:
- As mentioned, the process KPIs form the connection to both the customer and the people within the business;
- And it is in the employee-customer and employer-employee interaction where the actual performance takes place;
- So if you as a business really take performance improvement seriously, you must have information about the quality and results of these interactions;
- Without this information, performance management and, therefore, performance improvement is impossible!
- Flash’s customer-to-customer processes have been analyzed based on the following question:
Where do we need to excel to get the necessary online sales from the market in the Customer-to-Customer process?
- The answer was at both the start and the very end of the process and translated into two process indicators for Sales and one for the administration.
Flash has started this with great success. For the first time, management, sales, and administration sat at one table to discuss how they could do things better in the online market. On that table were simple reports in which the scores and trends of the KPIs were made visible. After a somewhat awkward start, the results quickly turned in the right direction.
The general director summarized the process nicely:
- “I now have 100% more insight, with only 20% of the data that I had to dig through before! The story behind the data is always immediately clear to us!”
The salespeople were also pleased with this way of working:
- “It is simply very nice to immediately see the effect of the work you are doing every day. And especially when you see that things are getting better. That motivates enormously! “
And that is exactly the intention!
It is, therefore, possible: to manage a company based on 5 KPIs. The KPIs must connect the current objectives strategy, customers, and people.
And keep it simple even if it is difficult because: Simplicity really works!