Indicators & KPIs

9 09 2009

In a recent Wired magazine article “American Vice: Mapping the 7 Deadly Sins,” (The original was in the Las Vegas Sun’s One Nation, Seven Sins) a group from KSU students did a great job mapping data geographically.  While in no way is the data perfectly accurate, but in the same way it is a logical indication of behavior.  You can spend time arguing the merit of the work, or spend that same time debating the implications of the information.  Either way, it is a rather entertaining visual display of information.

In the business world, we struggle from trying to be perfect, or perhaps afraid of not being completely accurate.  Indicators do not need to be perfect, they just need to trigger a discussion by highlighting the potential of an issue.  The downside is that when we try, we often try to find indicators for everything (spandex rule) and “a point in every direction is like no point at all” (Harry Nilsson, for those who like eccentic music).  Too many indicators and we spend too much time on data collection and visualiztion with no time for analysis and discussion.  The point is to discuss information.

External & Market Indicators

25 02 2009

One item most organizations struggle with is leveraging external indicators. Early last year, the price of gas created a chain reaction. Most companies cost of goods sold increased to where they were forced to raise their prices as their margins eroded.  

Even if we do that, we typically do not have a systematic way to incorporate the learning into a business process. What we would need is the ability to understand the external indicators, know of potential sources for the information, and work these into ongoing environmental scans.  

What is the value of understanding how the consumer price index impacts your revenues? What happens if you were able to move before your customer in terms of supply chain interruption? In some cases, this could mean millions to your top or bottom line. There are a number of organizations that knew the market was struggling in 2008, but did nothing to prepare.  And a number of those names will never be the same (GM, AIG, Circuit City, etc).

When is the last time you did a formal environmental scan, discussed the results, and put new actions into place?