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One of the most valuable, basic business principles is measuring progress toward your vision, but jargon can sometimes get in the way.
Are you measuring goals, objectives, or Key Performance Indicators (KPIs)? Sometimes we hate the jargon so much we don’t even like to think about it.
You should only hate the following questions if you don’t know how to answer them:
Once you know how to answer them, you will love it whenever anyone asks. It’ll be like talking about your pet, child, or favorite sports team. And in a sense, your business or organization is all of those things.
Let’s break each question down.
“Vision” is easy. It’s simply how you see things, ideally, in the future. It isn’t really measurable, and doesn’t even consider how you will get there.
But it’s important because it defines an ideal destination. If you don’t know where you’re headed, you can never lay out a purposeful path forward.
Forget about asking, “Where am I?” Without a Vision, you will constantly ask yourself, “Where am going?”
Don’t be afraid to dream big. Your Vision is personal. Make it what you like. There are many great examples of Vision statements out there. Do a little research for the sake of example, but don’t try to replicate anyone else’s. Make it uniquely your own.
Goals are big, lofty things. They are more of an end result or destination that in-and-of themselves, are immeasurable – beyond answering the question, “Are we there yet?” or “Did we make it?”
As an example, a Goal to “create a successful business” has no key real measurable component because “successful” isn’t defined. What does “success” mean?
Is it to make a certain profit every year or attain a specific number of customers? In what timeframe?
A goal is supported and measured by the achievement of a series of well-defined Objectives.
But before we can talk about Objectives, let’s discuss KPIs.
In it’s simplest form, a KPI is a measurable value. It is a component of a well-defined objective.
For example “Gross Profit” is a KPI. It is something you can (and should) measure. By itself, “Gross Profit” doesn’t represent an Objective. A fully defined objective includes more information, such as a target and a due date.
There is a common, if not overplayed, acronym that describes the characteristics of a well-defined objective: SMART.
A SMART Objective is:
“Increase 2017’s Annual Gross Profit 10% over 2016’s Annual Gross Profit by December 31, 2017,” is a well-defined Objective that includes the measurable KPI (Gross Profit) as well as additional, specific information.
It also supports the Goal to create a successful business.
Don’t just use Goals, Objectives and KPIs to measure how you’ve done or to set next year’s plan. Use them to take corrective action throughout the year.
Review them monthly or at least quarterly with an analytical eye to determine any required course changes. Avoid the temptation to review and react to them daily or weekly. You need more time than that to know if what you are doing is working, or if it needs some modification.