January 2007

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article was first published in the Eastern Daily Press' 'The Business'  on 17 January 2007</I></div> <bR> <div> <B>Decide what's really important in your business</B></div> <bR> <div> Like many of you, I suspect, I find much of today's business jargon both silly and annoying.  I cringe at old favourite phrases like `singing from the same hymn sheet' and recoil at current choices like `thought grenade (apparently referring to explosive good ideas!).  Being encouraged to `think outside the box' merely makes me want to box someone's ears.  Equally, I'm not a great fan of TLAs - three letter acronyms - but there are two of them that are worth thinking about in any business.  Frequently used by consultants or managers in larger organisations, they might seem a bit prescriptive, but I believe they can help bring clarity and focus to the running of smaller businesses, too. CSF and KPI: Critical Success Factor and Key Performance Indicator - two `management speak' mouthfuls that can actually make the difference between success and failure.  </div> <bR> <div> Just think about it for a moment:  what few, really critical things need to happen if your business is to prosper?  What actions, if done well, will result in you achieving what you desire?  Or, what specific tasks, if performed poorly, would lead to unsatisfactory results?  These are the sort of questions you need to ask yourself in order to define a few meaningful CSFs.  I'm not thinking about something woolly like “to increase sales” or “to improve manufacturing output”.  Developing useful success factors requires a quite detailed examination of the organisation - the sort of analysis and questioning that many business owners rarely seem to make time for.  For example, you might need to think about what actually drives improved sales in your particular business.  Is it ensuring that a constant flow of innovative new products is made available to your customers, or might it be repeat business from existing customers?  For the first, an appropriate CSF might be “an excellent new product development process” and for the second, you might choose “a class-leading customer retention strategy”.</div> <bR> <div> Then, after you've defined a few relevant Critical Success Factors, you'll need to consider what specific measures will allow you to monitor progress and provide evidence of success - Key Performance Indicators.  So, in the example above about a new product development process, one KPI might be the number of new product ideas brought to market each year, and another might track the proportion of sales represented by products introduced in that period.  It's also helpful to focus some of the KPIs in a company facing manner rather than customer facing.  In this case, a company facing KPI would be the number of innovation ideas coming forward from your staff.  For the customer retention CSF, an appropriate KPI could be the average customer tenure or perhaps the percentage of the total customer base that stopped trading with your business in a given period.  </div> <bR> <div> Whatever measures you choose, they should pass the `SMART' test:  be Specific, Measurable, Achievable, Relevant and Time-bound.  Then, instead of merely mouthing meaningless jargon, you can actually use KPIs to manage, monitor and assess the effectiveness of your business in making your Critical Success Factors a reality.  Try it - the process of defining what really matters in your business is worth a lot in itself.</div> <bR> </td> <td valign="top" width=180 BGCOLOR="#CC3333" TEXT="#080000"> <bR> </td> </tr></table></body>