Presentation Script for KPI for Business Strategy
I will be presenting about KPI for Business Strategy.
Summary of the video
KPI is an abbreviation of Key Performance Indicator. These indicators are very crucial when it comes to business strategy. The author of the video starts by giving six practical tips to successfully identify and develop the right KPI set for a strategy. The KPIs are always related to the goals of the business.
The author explains the six tips, and these are the tips I learned from the presentation video.
The first one is Identifying the goals. This is very key since the KPIs depends on the goals to see the progress made.
The second one is limiting the volume. The author clarifies that it is good to make sure that one determines the amount being focused.
The third one, as per the author of the video, is going for the recurring KPIs. It is essential that across a larger organization, when you have different units, the KPI set is aligned across other business units. So, one can compare the success between those units.
Forth is consistency KPIs. It is vital that across a larger organization when you have different units is that the KPI set is aligned across other business units. So, you can compare the success between those units.
The fifth is making sure you have the right mix between leading, and lagging indicators is the fifth essential tip discussed by the author of the video. For example, lagging indicators like crossing a finish line in a marathon measure success that you cannot influence anymore. A leading indicator predicts success; it will help you change decisions and actions still to reach the finish line. Lagging indicators lead in most of the organizations consisting 98% lagging indicator and only 1% leading indicators.
Lastly, the author says one must make sure the aims for efficiency. If it takes too much time to collect data for KPIs, it will soon stop so, go for a straightforward approach for information collection, and need a complete ERP system to get the data it might not be worthwhile to track in the first place.
Theories and Applications
This section will discuss two theories related to the KPI for business strategy, goal-setting theory, and organizational theory.
One is the Goal-setting theory. This theory directly relates to the KPI for business strategy since the KPI is related to the organization’s goals. Ewin Locke, in the year 1991, put forward the theory of motivation. When goals are set in an organization helps to estimate the efforts and the direct employees, the direction they are supposed to take to achieve those goals. Goals motivate the employees since they look forward to completing the set goals. Some employers award employees upon attaining the set goals (Lunenburg, 2011).
The goal-setting theory has the following features that are related to KPIs. The goals should always be specific and clear. Good performance and greater output are associated with clear and specific goals that address an issue directly. Secondly, the goals should be realistic and challenging. There is no need to set goals that can be achieved or the ones that are very easy to accomplish since they do not require much effort. The challenging goals put more pressure on employees to do more research on the project, hence quality output. However, goal participation makes it more acceptable; employee goal participation is not desirable.
The goal-setting theory has been applied to the KPI for business strategy in a case study at an Aerospace Manufacturing Facility. The top management involved planning, designing, measuring, and implementing the effectiveness of continuous improvement. The management is very crucial on making sure the set goals and objectives of the facility are achieved by keeping in track of the KPIs
The second one is organizational theory. An organization consists of many people working together to achieve a common goal (Christensen et al., 2020). The organization theory study focuses on the performance, tasks, and success, among other areas making it essential on the KPI for business strategy. Organization theory has been applied to draft goals that are used in KPI for business strategy. The fact that an organization consists of many employees and even shareholders, all the people involved must share the common goal for the organization’s success.
My thoughts
These two theories discussed above major on goals that are much used in KPI for business strategy showing that KPIs depend on goals set by an organization. Key Performance Indicators are fundamental in any organization that would see itself succeed in any project the organization undertakes. Most of the time, when KPIs are used and applied well, the organization will achieve the goals set. The business strategy involves the formulation and implementation of the goals and objectives set by the top management in an organization. This calls for the need of KPIs, which help determine the progress on the implementation and ensure the success of the significant goals. This makes the KPI for Business Strategy an exciting topic to major on since the KPI, and the business strategy is closely related. From my perspective, interacting with the two is a good move because each one of them will make the other simple to understand and implement the goals set in an organization.
As I conclude, I would like to put a question, since KPI for business strategy is vital for business strategy, is it a MUST for every organization to use KPI for business strategy?
References
Christensen, T., Lægreid, P., & Rovik, K. A. (2020). Organization theory and the public sector: Instrument, culture, and myth. Routledge.
Lunenburg, F. C. (2011). Goal-setting theory of motivation. International journal of management, business, and administration, 15(1), 1-6.