You're crafting a strategic plan. How do you identify the key KPIs using data analytics?

I have learned through experience that one can identify and validate meaningful KPIs that effectively measure progress toward strategic plan by following these 3 distinct steps while leveraging data analytics: 1. Narrowing down and prioritising most critical KPI’s against strategic objectives. 2. Defining specific targets and thresholds for each critical KPI. 3. Regularly reviewing and refining KPI’s to ensure they remain relevant and effective. 4. Consider using data analytics tools for better KPI identification which may include: - Spreadsheets (e.g., Excel) - Business intelligence software (e.g., Tableau, Power BI) - Statistical software (e.g., R, Python) - Data visualization tools (e.g., D3.js, Matplotlib)

In my experience, the very first step is to understand what are the most critical KPIs, the real "needle movers" - those few measurements that can dramatically change the direction of your strategy. The other important definition that you have to take into account is lagging vs.leading indicators. Leading indicators by definition will give you insights into your lagging indicators. In a way, it's a early warning system for your strategy, whereas lagging indicators are typically things that are the outcome of executing your strategy. A great example is the number of leads is a leading indicator for your revenue, a lagging indicator.

Data analytics plays a crucial role in this process. By analyzing historical data, you can identify patterns and trends that highlight which metrics are most closely tied to your desired outcomes.

1. Clearly define the overarching business objectives of your strategic plan. 2. Collect Relevant Data: Gather historical data from sales reports, customer feedback, website analytics, and operational metrics. 3. Based on the business objectives and historical data analysis, determine the critical success factors that are essential for achieving the goals. 4. Employ predictive analytics to forecast future trends based on historical data. 5. Analyze how your data and potential KPIs stack up against industry standards and competitors. 6. Involve stakeholders from different departments to ensure that the selected KPIs are relevant and actionable across the organization. 7. Establish clear targets and benchmarks for each KPI

We should derive strategies from data. When data analysis drives strategy, a solid rationale, a clear strategic path, and effective models for execution and monitoring tend to be the results. Areas of analysis include customer behavior and preferences, positioning and pricing options, and setups of manufacturing, logistics, and retail networks. Simulating alternative scenarios helps us to identify the most promising choices, e.g., the most cost-efficient network design to deliver on our product and brand promise in dynamic times. The metrics that we are using for strategic decision-making should also be a valuable contribution to the sets of key performance indicators (KPIs) to follow through on the implementation and impact of our choices.

Another important aspect of the finding in KPIs is understanding what data you actually have available. You may want to measure revenue at the product level, but if you don't have that information readily available in your system, it's really not a good KPI. I would also recommend that you look at the KPIs that can be automated, meaning that the data can be automatically captured and delivered to a dashboard. It doesn't make any sense if you spend more effort trying to measure the data than actually generating the results behind the data.

Muchas veces nos volvemos locos y establecemos muchísimos KPI´s. Debemos tener los imprescindibles y tener la mente clara, que los KPI pueden evolucionar al igual que la empresa. Lo importante es identificar los básicos y los siguientes, preguntarte los 5 porqués (esta técnica fue desarrollada en la década de 1930 por Sakichi Toyoda, un mecánico que siempre buscaba formas de mejorar la eficiencia de su trabajo). para que lo necesito y si logro contestar, lo incluyo como nuevo KPI

What I have been doing for the last decade or so is to always set my KPIS in terms of from/to/by. This is simply establishing your current baseline for the KPI, then defining where you want to end up having that KPI post strategy implementation. And then finally, defining the date by which you will reach the future state. There are other methods to establish your targets, but I believe this is the simplest, most effective way to understand where you are and where you want to be.

One of the key decision criteria is to make sure that your KPIs can be measured automatically by the systems that you already have. This is very important because this will allow you to automatically feed a dashboard where you can review your KPIs whenever you want. Not only that, but by putting them in a dashboard, can then make the KPIs accessible to all of your stakeholders so they can self serve and understand where you are vs. meeting your targets. This is a great way to minimize the effort and also maximize the transparency.

The ultimate goal of measuring is to be able to then make adjustments. Don't stop in creating these dashboards with KPIs. Were you need to end up is understanding that you may need to change your strategy if the numbers are saying that you're failing. You may also need to adjust your strategy if the numbers are saying that you are surpassing your targets. Either way, you have to look at the numbers if you want to have an effective strategy and be able to quickly adapt to changing conditions.

I think the framing of this question is a bit off. If you're leading an initiative, you should have a business-driven perspective on what *output* KPI you are trying to move. This is not the product of some analysis. Then, there is the question of what *input* or intermediary KPI(s) you need to monitor in order to move the output KPI. This question can be informed by data and analyses. Partner with analysts to understand what data is currently available. Don't start a project, turn to an analyst, and say "hey what should we track?" You as the business leader should have an idea about this.