From Courtside to Boardroom: The Winning Strategy with Activity KPIs

Activity KPIs - Key Performance Indicators

I promised to continue to write underlying elements of the "S-Curve Strategy Framework" and I am doing so. Last article was covering "Operational Goals - Economical, Social and Environmental" driven by - Vision Statements Defined by Mission and Culture which we covered all before. Now we go into the next element of the aspirations pyramid top down to

Activity KPIs - Key Performance Indicators (like Game statistics)

I said before, "Business should be thought of as an infinite game" -inspired by Simon Sinek- when it comes to defining its purpose and mission. Yet it also consists of finite games in, time-bound, and having scores that define winning or losing vs. the vision of the business and operational goals, which we covered before. If business is also a finite game, some game statistics must influence the chances of winning and losing. These are Key Performance Indicators (KPIs) of Key Business Driver (KBDs) activities in business management.

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Activity Key Performance Indicators (KPIs) serve as powerful tools when defined carefully. They offer quantifiable insights into short-term performance, leading to learning, correcting, and mastering what matters to deliver operational goals sustainably. These metrics act as game statistics, reflecting key business drivers (KBDs) that influence organizations' strategic Triple Bottom Line (TBL) goals.

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Activity KPIs play a pivotal role in facilitating continuous improvement within an organization. Drawing a parallel with sports games, these metrics provide a statistical overview akin to measures like the percentage of time a team possesses the ball or the number of shots on goal. Understanding the importance of these KPIs is essential for businesses aiming to enhance their performance dynamics continuously.

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In his book "The Lean Startup," Eric Ries emphasizes the importance of identifying and measuring metrics aligning with a business's goals. One of the key aspects of this process is identifying the key business drivers - the factors that have the most significant impact on a company's success - and tracking them through activity KPIs (key performance indicators) to measure progress towards those goals. By doing so, businesses can better understand the specific actions they need to take to achieve their objectives and make more informed decisions about resource allocation and strategic direction. This approach is particularly effective for startups and other businesses that are still in the early stages of growth, as it allows them to be more agile and responsive to changing market conditions which is very much in line with the Sigmoid Curve philosophy in strategy crafting by putting more emphasis on KBDs and KPIs for an entity in its inception phase.?

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In his book "Good to Great," Jim Collins stresses the significance of identifying and tracking key performance indicators (KPIs) that align with a company's overarching strategy and vision. These KPIs serve as quantifiable metrics to measure progress and inform decision-making processes towards achieving the organization's goals. Collins believes that KPIs should be carefully chosen to reflect the most critical aspects of a business's success and monitored regularly to ensure that the company stays on track towards achieving its objectives. By adopting this approach, businesses can gain greater insight into their operations and better align their efforts with their long-term goals.

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This must be working in real games like sports then no?.

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The Golden State Warriors is a prime example from NBA of how aligning key performance indicators (KPIs) with strategic objectives can create a powerful synergy that drives success in the sports. The team has achieved remarkable results using KPIs that measure individual and team performance, including five NBA championships and six conference titles since 2015.

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The Warriors' success on the court can be attributed to their focus on KPIs that align with their strategic objectives. For instance, the team has improved its shooting percentage from 47.8% in 2014 to 49.1% in 2019, which has resulted in a higher number of points per game. Additionally, the team has increased its assists per game from 27.4 in 2014 to 29.4 in 2019, which has led to more open shots and better passing. Moreover, the team has increased its total rebounds per game from 43.6 in 2014 to 45.5 in 2019, which has resulted in more second-chance points and fewer turnovers.

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Is it not the same in business? Tracking KPIs to improve sales performance will lead to more sales via more sales calls/person/day, higher closure rates/call, higher sales amounts/call etc. They will also lead where to focus on the capability building to maximize the sales.

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Off the court, the Warriors' success has led to increased revenue, fan base, and overall brand value. The team's merchandise sales have increased significantly since 2014, with the team ranking first in merchandise sales in the 2018-2019 season. Furthermore, the team has a strong social media presence, with over 17 million followers on Instagram, 11 million followers on Twitter, and 11 million followers on Facebook. This strong social media presence has allowed the team to engage with fans, increase brand awareness, and attract new sponsors.

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Aligning KPIs with strategic objectives can create a powerful synergy that drives success in any industry; sports or consumer goods. The Golden State Warriors' success on and off the court is a testament to this strategy, with the team achieving impressive results by focusing on KPIs that align with its strategic objectives.

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As an operator, I have also experienced many times over the power of having the right KPIs to drive business growth in unprecedented ways.

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I was the commercial operations director of the Procter & Gamble in Turkey in charge of all category product portfolio. Our category portfolios were consisting of multiple brands and product types with usually with one product type of the brand being the heavy lifter in terms of market share and household penetration and other product/s of the brand being not as strong. For example, we had a market leader diaper brand but our wipes under the same brand name were not even close. Same for our hygienic catamenial pads and daily peds. Same for our manual toothbrushes and toothpaste etc.

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Our Key Business drivers in-store were Distribution, Availability, Pricing/Promo competitiveness, and visibility on and off-shelf in displays and retailer leaflets, and we were tracking all of them in forms of KPIs so does everybody else.

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In strategy crafting for my business unit I was looking for activities as KBDs which others can not or will not do as we do.

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So, I decided that this brand/portfolio scale represents a huge trade-across growth opportunity to sell our brands as a system and design our promotion plans accordingly.

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We had a portfolio scale advantage vs our competition which we were not leveraging enough. We updated the whole brand in-store fundamental standards of all relevant brands with adding updated promotion and merchandising guidance on how to execute our “regimen selling” strategy and trained all category and channel sales teams on the subject.

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Apart from this but also helps this initiative, was making our in-store standards as KPIs that we use to evaluate our sales and in-store merchandising people in their quarterly and yearly performance reviews.

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Basically, the guidance was having a certain portion of all brand promotions designed centrally to have regimen selling and ALL in store merchandising to be supporting “Regimen Selling” for those respective brands. Meaning a brand had to make X% of their promo spending as a system offer. This might be a discount on the total offer or as a free product where we want to drive HH penetration and trial. Comes to instore merchandising, the guidance was with or without a regimen promo on it whenever the heavy lifter product is on display or on the retailer leaflet, we would try to piggy bag and display the product that we want to support next to it.

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As a result of this dedicated effort supported with "regimen" selling KBD also tracked as KPI and focus of the sales team, these products that we supported with very limited investment (RoI multipliers were off the roof) more than doubled their HH penetration and market shares in less than 2 years. And this idea was reapplied in other geographies and brands of the company not only in promotion or merchandising but also as product innovation ideas.

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Some other examples of KPIs that today's most succesful companies are using to deliver their (triple bottom line) TBL operational goals, their growth/ESG/DEI vision and in-line with their timeless purposes.?

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Amazon's Customer Obsession Metrics:

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1. Percentage of orders with one-click purchase.

2. Average time taken for order processing.

3. Customer feedback response time improvements

(Source: Forbes, 2021)

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Zappos' Employee Metrics

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1. Employee satisfaction (happiness) index

2. Internal promotion rate

(Source: Harvard Business Review, 2019)

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So what can companies do to enhance Activity KPIs thus results of their strategic objectives?

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a. Continuous Improvement

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1. Frequent monitoring, analysis, and defining of KBDs and related KPIs, preferably in activities that you can and will do but others cannot or won't.

2. Identifying and implementing growth opportunities signaled by KBDs and KPIs

3. Encouraging experimentation and data-driven decision making using KPIs

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b. Hiring and Training for unique value-driven competences

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1. Aligning recruitment strategies with needed KBDs and KPIs to build unique competences that others can not or will not as fast.

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2. Developing targeted training to address areas requiring improvement in these unique competences.

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3. Reinforcing scorcarding on KBDs and KPIs focusing few per person (5 Rocks)

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c. Leveraging Technology for Activity KPI Management

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Data Management Tools

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1. Centralized data (high quality and quantity) storage systems on cloud solutions powered with AI.

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2. Database management software.

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3. Electronic data-gathering (e.g., IoT sensors, smart equipment)

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Visualization and Analytics Software

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1. Real-time dashboard-based visualization tools powered with predictive analyses, reasoning and creative recommendation power of GenAI. (Think about your sales operation can see the KPIs driving their respective part of business and their contribution to total in real-time with prioritized recommendations from their co-pilots)

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2. Statistical process control (SPC) software connected to BIG DATA

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3. Predictive analytics and machine learning competencies across the strategic objectives of the entity

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In conclusion, the strategic implementation of Activity KPIs resembles managing game statistics to improve short-term performance. Aligning these metrics with long-term TBL goals and focusing on continuous improvement, strategic hiring, and technological leverage can propel organizations toward sustained success in today's dynamic business environment.

We will move to Integrated Strategic Pillars as of next article.

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Cheers,

C.Firat Caliskan