Welcome Professionals…
…thank you for your encouraging feedback on issue TNF #006. This seemed to hit an important topic and raised some reactions. My key recommendation is to be fully dedicated to the value creation process rather than getting too focused on perfect end results.
I would like to make this idea more tangible today.
“What gets measured gets done” is a phrase that every top management consultant knows by heart. But what are the appropriate KPIs, if we want to concentrate on the value creation process appropriately?
I believe that in many cases, our clients and also ourselves pick the wrong metrics when it comes to value creation. We choose results-related KPIs that have us focus on end results with strained anticipation instead of dedicating our full energy to the value creation process.
Let me give you an example. Oftentimes, the overall business targets are transferred directly into KPIs for day-to-day operation. A consulting company has an overall revenue and billability target so it is broken down to individual revenue targets by consultant and then into a monthly run-rate, a weekly billability rate and so on. So far so good.
The problem begins, when the individual consultant takes a narrow focus on his/her weekly billable hours and revenue goals. The revenue KPI is to a certain extend a derivative of the value creation work. But it is not directly linked and certainly not directly proportional. When we stare at results-related KPIs that are not fully under our own control, it takes away our attention to what really matters in value creation.
If we want to concentrate on the value creation process, we need to define metrics that are linked to this process. KPIs that we as individuals or as a team have fully under control. We want to measure and control the action that will – most likely – have a positive impact on our final business targets like revenue and profit. Examples for these KPIs could be
- Quality of work
- Number of new target clients contacted
- Research productivity
- Client satisfaction
- etc.
As a consequence, I allow myself to be judged only on KPIs that I have fully under my control and that are linked to my personal value creation process. Only from time to time, I check back if it also fits with my revenue goals. What I discover then most of the time is that I need more patience. And that a lot more hard work is required. 🙂
Let me know what you think,
Malte
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