And many people I’ve talked to told me that this is nonsense (at least at first sight). On top of that, they told me the complete opposite and explained why KPIs are everything but not necessary at the moment. Very often, I heard that the pandemic situation had turned their business upside down. Therefore, they concentrate on safeguarding revenues, cutting costs, etc.
And this —of course— isn’t wrong. However, I firmly believe that KPIs unleash their full potential when sailing through stormy seas. And in most of the discussions, I could convince my discussion partner about the facts behind the statement “why KPIs are more important than ever.”
3 Reasons Why KPIs Are Now More Important Than Ever!
Reason #1 — KPIs Are A Should-Have In Good Times And A Must-Have In Bad Times
I always like to use a metaphor to explain it. Imagine a wealthy person — let’s call him Jeff— with a monthly income that is steadily growing. Jeff’s income is much higher than his monthly expenses. Jeff does not necessarily need financial KPIs (of course, you wouldn’t call it KPIs in private life). Jeff doesn’t need to track precisely where he spends money or how to save money. Jeff would be wise to do so, but it isn’t a must. We can consider it as a should-have.
Now, due to a crisis, Jeff’s situation has changed. He —unfortunately— lost his real money, and his monthly income dropped massively. He now has to track precisely where he spends his money to manage his month financially. Monitoring and tracking “KPIs” suddenly became a must-have to lose control entirely.
I think the duplicate accounts for companies. In times of growing markets and profitable business, KPIs are essential to improve further and enhance. However, I consider it a should-have.
But when everything went south —similar to Jeff’s situation— KPIs are a must to keep control and manage the situation.
Reason #2 — KPIs Serve As Fixed Stars In Unprecedented Times
Corona hit the world with an incredible and unthinkable impact. And “Unprecedented” is probably the most frequently used word at the moment.
KPIs, in my opinion, are one of the (RARE) essential tools a company can rely on right now. The right KPIs help companies monitor, manage and control the situation in the best possible way. Undoubtedly, a company probably needs additional KPIs than in pre-COVID time. Or companies have to adapt current KPIs to match the needs of the current situation.
Indeed, every company has to define its right set of key performance indicators, which assists at the moment. There’s no one-size-fits-all. But: The right set of KPIs captures the essence of a situation perfectly and helps make the right decision. Especially during turbulent times with news every second, KPIs help to fade out noise and concentrate on the relevant facts and figures.
Reason #3 — Importance Grows On The Way Back To Normal
The above-mentioned becomes even more relevant when you think about the long and winding road back to the new normal.
Fortunately, there is more and more news about companies that re-start their operations. Nevertheless, we are at the beginning of both a new normal and long-lasting process.
At the moment, no one knows how everything’s going to develop in the following months. Are we going to face a second wave? Which companies are going to survive? What about new regulations?
The only thing that is clear from my perspective is that we face a dynamic situation. And the word “unprecedented” will continue to fit the situation for the following months.
That’s why I think KPIs are important and must play a vital role in every company that wants to control the situation. For every company that plans to act instead to react. And every company that intends to make decisions based on facts instead of gut feelings.
Similar to the current situation, the upcoming months will require a modified set of KPIs. That set of KPIs will be a mixture of previously standard KPIs, recently added, and additional ones that help to assess each particular situation.
Accordingly, I’m super-convinced that companies that can adapt KPIs perfectly and seamlessly to each situation will make better decisions and win the race in the long run. And if you now to know more about how to improve your KPIs, you should head over to this blog post: 5 Essential Best Practices To Elevate Key Performance Indicators (KPI)