Have you heard about Key Performance Questions? You’re probably familiar with KPIs (Key Performance Indicators) but how much do you know about what comes before KPI creation? Defining the requirements that KPIs have to fulfill is the foundation of a strong reporting system.
As the old saying goes, “If you can’t measure it, you can’t manage it!”. With this in mind, we need to have a clear understanding of what we’d like to measure and our strategic purpose in doing so before we begin to manage indicators.
Key Performance Questions (or KPQs for short) are an important development in the field of performance management in data-driven organizations. KPQs help to clarify the information required to create meaningful KPIs, which consequently allow organizations to make wiser decisions based on their most strategic indicators.
Formed as a precise, forward-looking and open question that directly relates to a strategic objective, KPQs allow executives to clarify what information they will need access to in order to work towards reaching their objectives. Additionally, KPQs can facilitate communication between these key decision makers and those who will be responsible for both collecting data and constructing the frameworks within which it is presented to each relevant stakeholder.
In this article we’d like to highlight some of the benefits to bridging the gap between KPI creation and defining strategic objectives using Key Performance Questions. Our hope is that they will allow you to easily understand why certain indicators should be measured and encourage more performance-based dialogues in your organization.
Here are just some of the great benefits you can gain from using suitable questions:
People are naturally curious, however as adults we often spend more time focusing on ‘How’ and rarely ask ‘Why’.
While understanding how your audience engages with your message is highly useful, this alone won’t encourage you to increase engagement which may be an objective directly tied to larger organizational goals such as increasing revenue. Understanding why this is important to your brand and how it impacts on your objectives, however, will.
Whether you’re just getting started, or you are a seasoned digital marketing analyst, it’s pertinent to understand exactly why you are measuring what you are to be able to extract value from your metrics. Questioning why serves as an effective means to arriving at the core of your problem. While statements alone may be dull and uninspiring, questions can really prompt you to think about the big picture.
All too often, organizations are so eager to put their data to good use that their efforts only backfire when they fill their report with long lists of disconnected vanity metrics. Having a clear structure to your strategic objectives from the get-go, however, will enable leaders to ask themselves “Are we currently measuring everything we need in order to answer our key performance questions? and what is the most useful information we can collect in order to answer these and manage performance?”
The reward for taking your time and starting with KPQs will be relevant and crucial performance indicators. Additionally, KPQs will provide context and background for your performance data, further strengthening your reports. These questions help facilitate internal discussions and guide you through the decision-making process.
For instance a common KPQ could be ‘Are we generating acceptable Net Profit results?’ Here we are not simply measuring Net Profit, but also analyzing it in context – of course our KPI should in this case be accompanied by information on what we mean by ‘acceptable’. The subtle but considerable difference here is that we are not only investigating the value assigned to the KPI, but also its performance compared to our objective.
So don’t be afraid to ask questions, even if you don’t know the answer yet, KPQs will help you identify the indicators that will allow you to truly measure business performance.
We’d love to hear your opinion. What obstacles have you faced during the definition of your key performance questions? How have KPQs influenced the creation of your KPIs and reports?
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