As long as there have been fish, human beings have been fishing. Initially our efforts were probably pretty basic consisting of a net, a line and a stick! Over time we progressed to small boats and were able to search for fish further afield. By the 16th century fisherman had much larger boats capable of going to sea in search of bigger and bigger catches. Initially the ships would set out using little more than a compass, a sextant and some “inside knowledge” passed down generations of fishing families. If they were sailing at night they would use celestial navigation techniques and plot a course by the stars in order to arrive in the right vicinity. When the fisherman arrived at the fishing grounds they would cast their nets and hope for the best.
Modern fishing however is very different. Huge trawler, capable of travelling enormous distances and processing the fish on board are also technology rich, using high tech navigation systems and GPS. Although ship building technology helped, what really transformed fishing into the lucrative industry we see today was access to relevant information that allowed fisherman to know where they were on the ocean, where the fish were, where they would be tomorrow and when to cast their nets for maximum yield. Fishing has used KPIs to improve revenue and performance for centuries and business must do the same if they are to prosper in an increasingly competitive world.
Just as GPS helps fisherman to navigate the ocean and find the fish in enough numbers to make money and be successful KPIs, if used effectively, can help business leaders navigate the often treacherous waters of business to make better evidence-based decisions and implement their chosen strategy successfully.
Centuries or even decades ago an abundance of fish made success possible regardless of navigation tools. But that is no longer the case. And the same is true for business. Business must also go further – not just physically to new markets and territories opened up by globalisation but they must go further across the board including improved customer experience, quality control and efficiency. KPIs make that possible because they shine a light into the business to see what’s really happening.
Business needs a way to assess where they are and whether they are on or off course again their strategy. They need to be able to correct quickly and adapt to the changing conditions of the market. The days where good enough was good enough and competition was minimal so everyone prospered regardless of quality or customer satisfaction are long gone. If you want to succeed in a fiercely competitive market you need a way to measure progress (or otherwise) in real time not just after the fact.
And this pressure to perfect our business navigation tools is only going to intensify as we get more and more access to more and more data. Again the fishing analogy is useful in understanding the implications of this explosion of data. If a fisherman is competing for fish in a lake, the information he needs is finite and restricted to information about the lake. But once he goes to sea the amount of possible data he could or should have access to increases exponentially.
Most modern businesses compete globally. Within those businesses and within those markets the amount of information we now have access to is truly mind-boggling. Behind closed doors many business leaders are already stressed about the quantity of data they already have but don’t have adequate or meaningful access to. And that’s not even considering the proliferation of new data, new formats and increasingly sophisticated analytics techniques. The right KPIs can however cut through the oceans of data that exists, could exist or should exist so you can get timely access to the nuggets of wisdom that you need to make better decisions and improve performance.
Business experience matters and clearly you will need to make decisions when all the facts are not available but KPIs provide a vital decision support tool across the business that can reduce those occasions and minimise error and anxiety. Essentially KPIs allow you to measure performance accurately which in turn allows you to:
- learn and improve
- Report externally and demonstrate compliance
- Focus effort and monitor output
If your business doesn’t have or use the right KPIs then, like the fisherman of old, you are effectively casting your nets and hoping for the best. And without the right KPIs to navigate the swelling oceans of data that already exist you can so easily find yourself all at sea.
This article is published in collaboration with LinkedIn. Publication does not imply endorsement of views by the World Economic Forum.
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Author: Bernard Marr is a Best-Selling Author, Keynote Speaker and Leading Business and Data Expert.
Image: A pair of flip-flops are left on a small wooden boat. REUTERS/Damir Sagolj