Trying to find the right strategic KPIs can feel like getting lost in a maze.
Often it is hard to see what is most important, to understand what the real meaning is, and to know what the organization is trying to achieve.
There are many different ways that organizations structure their strategic plan, and this structure has a profound impact on whether the strategic performance measures or KPIs will be meaningful, useful or simply a waste of effort.
Let’s use this excerpt from a municipality’s strategic plan as an example:
Strategic Priority area: Transportation and Mobility
Objective: To be a fully connected and integrated community, the City will undertake initiatives to improve the municipal road network, support the development of transit and increase cycling and pedestrian infrastructure.
Result: Improve local road network.
- Develop the Traffic Management Strategy
- Advance Johnson Road from Forest Street to Plantation Street
- Coordinate Johnson Road missing link
- Advance Extension from Highway 37 to Judgment Road
- Deliver Carrington Road Widening
In this example, we can see four parts to the structure of this organization’s strategic plan: strategic priority areas, objectives, results, and key activities.
Now, the municipality also wants to add a fifth part: performance measures (or KPIs) but what parts should be measured?
The fact is that most strategic plans are rarely measured well.
A study done by PuMP® founder Stacey Barr estimated that only 6% of organizations have meaningful strategic KPIs. Research shows that the following common mistakes are the main causes of this low rate of success:
- Goals written with fuzzy language and corporate jargon (what Authors Donald Watson and Stacey Barr call weasel words), instead of clear and measurable language
- Too many goals, often bundled together, instead of a ruthless prioritization of what really matters most
- Too much focus on actions, instead of a sharp focus on results or impact
Organizations often turn to popular advice and frameworks for help, but too often these common frameworks do not provide any practical and helpful methods to improve how organizations can design more meaningful measures.
For example, common strategy management frameworks such as OKRs or the Balanced Scorecard, though helpful in many ways, don’t provide practical step-by-step approaches to design and use better performance measures.
Our municipal leaders in our example above asked this question: “At the strategic level, would we need performance measures for each key activity?”
Our response would suggest that to measure activities would be a mistake if the organization wants more meaningful measures.
The mistake we need to fix first is the focus on activities.
Actions in strategic plans are sometimes called strategic initiatives, change initiatives, key activities or milestones. You might call them something else, but they, basically, describe the tasks, projects or actions that the organization assumes will achieve the results they want.
However, if we measure activities, we just end up with milestones such as “Complete the task by a certain date”. Milestones are not performance measures at all, but simply provide information that focuses us on project management. If we want to improve how our organization performs, we must focus on something else beyond activity. We must focus on the impact we want and the results we want to achieve.
If the municipality just measured their key activities, they would likely end up with project milestones that are important for knowing if you manage projects well, but not for measuring if you achieved the impact you wanted from your projects.
Example of milestone measures (which are not organizational performance measures):
- Develop the Traffic Management Strategy, measured by “Completion of the TMS by December 2019”
- Advance Johnson Road from Forest Street to Plantation Street, measured by “Kilometers of road completed”
- Coordinate Johnson Road missing link, measured by “Stakeholder acceptance of missing link proposal”
It’s hard for many people to understand that results are different than activities.
Accepting the difference is the first step we must take if we truly want more meaningful strategic KPIs that convince us we’re making an impact that matters – impacts such as better fulfilling our mission, making our vision a reality, serving our customers better, or improving our governance.
The municipality we use as an example made a mistake in how they structured their strategic plan. The mistake is not that they have:
- Strategic priority areas, which others might call strategic themes or pillars
- Objectives, which others might also call goals
- Activities, which others might call Strategy Execution.
The mistake the municipality has made is in their result, “Improve the local road network”. This is not a result. It’s an umbrella action, or even a project name, that sits above their key activities.
The most meaningful measures come from measuring results.
The clues for what is most meaningful to measure are found in the parts of our strategic plan that describe objectives, goals, outcomes or impacts. Sure, they might need some rewording to become more easily measurable, and this is in fact where we need to start.
The municipality will get more focus – and better measures – by rewording their objectives so they have more measurable results, which answer the question, “what do we want to achieve?” in plain language.
For example, one of the municipality’s objectives is “To be a fully-connected and integrated community, the City will undertake initiatives to improve the municipal road network, support the development of transit and increase cycling and pedestrian infrastructure.”
Pause here, and take a moment to re-read the above objective. Can you find the result they really want to create? Can you observe what they want to really achieve?
Take the step to find the results implied by or embedded in your plan’s goals or objectives.
The words that leaders choose for their goals or objectives often mask the true meaning. With the PuMP® Blueprint, the process helps you dig deeper into the true meaning with five Measurability Tests. These tests help you clarify and improve the wording of goals or objectives to focus on impact.
In our municipality example, it appears that the result they want is “to be a fully-connected and integrated community”. However, “fully-connected” and “integrated” are both weasel words. The municipality needs to take this first step and unpack the real meaning of these words.
- “Fully-connected” might mean that people can more quickly get where they want or need to go. If this is the case, then one measure might be about transit times and a target to reduce them on average
- “Integrated” might mean that people can use any number of modes of transport to get from one node to the next node along their journey. If this is the case, then one measure might be about the average number of transport mode changes or stops required for journeys and a target to reduce them
Of course, they might mean something completely different; only the strategic leadership team of the municipality will know the answer; but when they define it through purposeful strategic conversations, they will know exactly what they need to measure to arrive at a useful set of strategic KPIs.
Do you want more meaningful strategic performance measures? Download the white paper, “Measure What Matters”.
The PuMP® Performance Measure Blueprint was created by Australia’s performance measure specialist Stacey Barr. Louise Watson of Adura Strategy is Canada’s Official Partner and Licensed PuMP® Blueprint consultant.