Working with KPIs I – Taking Stock


Recent posts at this blog have focused on managing a mix of structured/unstructured work and assessing progress toward meeting Case Objectives.

Once an organization is taking steps to ensure that Case Objectives are supportive of strategy, the question that arises is “how do we know that all of this effort is supportive of the ‘right’ strategy?”

The facts are organizations rarely know whether their strategy is “right”.

We went through a similar discussion on how organizations know whether their “best practices” really are “best” and the answer was whatever practices you have and are using are “best” until you find a way to improve these.

With reference to a paper on operational issues called “Closing the Gap between Strategy and Operations” (BPM minikonferanse (Den Norske Dataforening, May 6th, 2014, Bergen, Norway), what is needed to “complete the big picture” is an orderly process for  formulating strategy, setting strategic goals/objectives, defining KPIs to assess progress toward strategic goals/objectives and conducting periodic performance reviews.

All of this is going to take five (5) blog posts, starting with “Working with KPIs I   – Taking Stock”, to be followed by:

Working with KPIs II   – Formulating strategy
Working with KPIs III – Setting Goals/Objectives
Working with KPIs IV – Defining KPIs
Working with KPIs V  – Measuring Performance

Our starting position for “Working with KPIs I – Taking stock” will be to inventory all corporate assets:

Capital, Access to Capital, Land, Plant, Equipment, Tools, Staff, Suppliers, Current Products, Products under Development, Competitive Position, Patents/Knowhow, Partners, Customers . . .

One possible approach to organizing these is to build a tree structure as shown. The approach taken acknowledges that the entire focus of the organization is on preserving and enhancing Competitive Advantage.

Working with KPIs I

A reasonable classification for existing assets that accommodates breakaway from the traditional practice of arriving at a monetary value for each asset consists of the following:

A01 Essential
A02 Revenue Generating (quantitative)
A03 Revenue Generating (qualitative)
A04 Cost Incurring

Data attributes per asset include Class of Asset, Description, How used, Maintenance Responsibility, Out of Service Consequences, Value\Replacement Cost.

If you have a corporation that has invested in 3D Printing, the equipment would be classified as “A01 Essential” (i.e. a protected asset).

Materials needed for 3D Printing would be classified as “A04 Cost Incurring”.

The QA function within the organization would similarly be classified as “A04 Cost Incurring” unless a decision is made to staff up to be in a position where QA contracts with other organizations, in which case you might want:

a)      one strategy relating to the preservation and enhancement of 3d Printing where QA is classified as “A04 Cost Incurring”.

b)      one strategy relating to the outside contracting of QA services where a sub-set of the QA function is classified as “A02 Revenue Generating”.

with a sub-classification of:

B01 In use
B02 Not in use
B03 Tagged for sale
B04 Tagged for re-deployment
B05 Tagged for donation
B06 Tagged for disposal

Asset classification sets the stage for “Working with KPIs II   – Formulating strategy”.

As will be demonstrated in “Working with KPIs II   – Formulating strategy”, corporate assets do not typically map 1:1 to corporate strategies.

We will find that several assets will be needed to support each distinct corporate strategy and, in the case of most strategies, there will be a need for a sharing of assets.

The need to share interlinks strategies and impacts prioritization of strategies.

Stay tuned for “Working with KPIs II, III, IV and V”).

About kwkeirstead@civerex.com

Management consultant and process control engineer (MSc EE) with a focus on bridging the gap between operations and strategy in the areas of critical infrastructure protection, healthcare, connect-the-dots law enforcement investigations, job shop manufacturing and b2b transactions. (C) 2010-2017 Karl Walter Keirstead, P. Eng. All rights reserved. The opinions expressed here are those of the author, and are not connected with Jay-Kell Technologies Inc, Civerex Systems Inc. (Canada), Civerex Systems Inc. (USA) or CvX Productions.
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