KPI’s Point in the Right Direction!

Why You Need to Think about the ‘Elastic Bands’ inside your Business. How KPI’s can Point your Team in the Right Direction!

By Paul Latham, CEO of In-Cube-8 LLC |

I have previously highlighted (see my blog dated April 29th, 2014) how the concept of ‘elephant sandwiches’ can be used to help educate the team and drive the implementation of long-term strategic change.

However, teams will not thrive and survive on ‘elephant sandwiches’ alone! They need to be pointed in the right direction – they need the right ‘elastic bands’ in place!

‘Elastic bands’ refer to those processes established inside a business that drive consistent team behavior. The key component of those ‘elastic bands’ are known as KPI’s – the measurements used by a business to ensure that a particular process has been followed / is working properly.

Ultimately those measurements should lead us towards evaluating our business (or individual) performance. What are our definitions of success?

Let’s look more carefully at ‘elastic bands’

Most businesses measure things (often for long forgotten historical reasons). What is not (often) understood is that whatever you measure will influence team behavior (both for good or bad). This is the flip side of ‘what you measure you can manage’.

In the example illustrated (above) we are measuring ‘X’ and ‘Y’. Everybody knows they are measured (by the boss) – so they must be ‘important’. ‘X’ and ‘Y’ strongly influence team behavior. They create a ‘line of tension’ (just like an elastic band).

Now say the boss also wants to concentrate on ‘Z’ (in the illustration). ‘Z’ is not measured – it’s something considered to be ‘difficult to measure’ (e.g. ‘establish customer needs first’).

What typically happens is that while the boss is watching that team member – they will do ‘Z’. They stretch the line of tension (see red dotted line in illustration) to ‘Z’.

However, sooner or later the boss looks away (attention is diverted). Unless ‘Z’ is measured (as a KPI) what will normally happen is that team behavior will revert to the norm (the ‘X’ – ‘Y’ line of tension) and ‘Z’ will not happen (consistently or properly).

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To overcome this, business owners must decide what matters inside their business (definitions of success), and think about what team members should be doing – and then measure them (establish KPI’s).

In this way they create new ‘elastic bands’. Perhaps ‘X’ and ‘Y” are no longer relevant to the way we do business today? Perhaps we should be measuring something completely different, for example, ‘A’ – ‘G’ in the illustration above.

In which case ‘A’ through ‘G’ are what we should be measuring. They are our KPI’s. and they point our team in the right direction. They point the team towards their definitions of success (in the illustration):

  • Follow the process
  • Generate revenues
  • Delight the customer

You need to really think about the existing ‘elastic bands’ inside your business. Think about your definitions of success and use the right KPI’s to point your team in the right direction.

By Paul Latham, CEO of In-Cube-8 LLC |

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