Yesterday, one of our great partners asked for some information about why we consider KPIs so important and why they are the cornerstone of our software. I figured it was time to really walk through this answer in detail and share our thoughts publicly. Off we go...
The main underlying value of using KPIs is their ability to compare apples to oranges. This can't be emphasized enough.
KPIs are the fundamental basis for assessing the performance of an organization along any dimension, not just operations. A CEO cares about safety, profit, quality, efficiency, environmental and regulatory measures. Each of these measures uses different terminology and every individual measure within each category has its own units of measure, min, max, high, low, target (sometimes) – all different.
BUT, as soon as you make a single measure into a KPI, it is essentially “dimensionless” in that it can now be compared to every other KPI you have. It doesn’t matter if KPI 1 is Production Rate in mlb/hr and KPI 2 is Lost Time due to Accidents in days. Once they are KPIs they each can be seen as “Good” or “Not Good” and are now easily rolled up into an overall summary of how things are going across all dissimilar measures.
This is a qualitative rollup of quantitative data. Most execs care primarily about whether things are OK or not, and how they should be ready in case the phone rings and it is the EPA asking about their emissions at XYZ plant. They are going to know something is amiss at XYZ and how bad it is well before that phone call happens and without a single MEETING or phone call to the plant.
Visual KPI is uniquely positioned to deliver BOTH this qualitative executive view as well as the drill-down “what the hell is going on” type of analysis done by subject matter experts who are normally on the receiving end of phone calls from these same execs. Having the deep-dive data at their fingertips allows overworked and thinly stretched SMEs to be in many places at once, and still make fast, data-driven decisions based on the true details coming from the asset in question.
Organizations are all understaffed, and the normal behavior of humans when tasked with too much work, not enough time and an ever-dwindling quality of life and/or life balance is to simply do the minimum required for each task. The inevitable onset of humiliation and self-loathing which accompanies the knowledge that we are not doing our best work will eat at their soul and make them hate the company forcing them to be “check box” automatons just trying to work their daily task list to zero before another days starts with an all-new task list.
We can save them, their families, their jobs and cut down on turnover and employee dissatisfaction. In fact we can restore humanity to its once optimistic and confident self! By creating corporate transparency through pervasive use of real-time, finger-tip available KPIs we can eliminate finger-pointing, reduce or eliminate status meetings, increase confidence in decisions made, reduce second-guessing, eradicate “information is power” cults of oppressors and increase corporate profits, customer satisfaction, regulatory compliance, safety and efficiency all without firing a single round or burning down a single building!
The secret is to tap all normally opaque data, craft the right KPIs out of all this shapeless unstructured chaos (Big Data, M2M and IoT being great examples), give the right data to the right people when they need it and at their fingertips, get out of their way and let them run the processes and assets the way they ALREADY KNOW how to do it. It’s not like the management wants to tell them HOW to do things, they just need to tell them WHAT result they are expecting. It’s the operations folks who REALLY know how to run things, and in the absence of ambiguous and contradictory demands from above, they can make their company a better place, with better results for all.
As a natural consequence, the corporation of the future will be a true meritocracy, with almost complete transparency of operation in every dimension listed before – financial, environmental, operations, safety, quality, compliance. Visual KPI and KPIs in general allow an enlightened company to truly empower its employees by GETTING OUT OF THE WAY. KPIs in every department ensure that every person KNOWS how they will be measured and rewarded. The result is a top-down driven strategy of WHAT and a bottom-up driven implementation of HOW. It is the only way to corporate nirvana.
P.S. If that isn't a strong enough case or you want to see it from a functional level as well, here are some other benefits of using KPIs and Visual KPI:
- KPIs require almost no training to understand. KPIs have color, status and immediate meaning. On the flip side, analytics tools, data source specific tools and historian tools are ideal for admins, analysts and trained experts, but you wouldn’t just put that same depth of data or tools in front of executives or field staff - they just need answers. This also means you can put KPIs in front of a much larger group of users. Not just the data gurus or trained experts, but anyone who might benefit or be able to assist.
- KPIs provide the ideal basis for great alerting, or alerting in a common, scalable and understandable way.
- In a mobile setting (and really every setting nowadays), speed and clarity are everything. Having KPIs on a screen instantly draws your eye to the problem or opportunity and lets you zero in without having to sift through numbers.