KPI or more popularly known as Key performance indicator is a business metric used to evaluate factors that are vital to the success of an organization and/or a team. It is a measurable value that demonstrates how effectively a company or a team is achieving key business objectives and goals. KPIs differ per organization and/or teams; business KPIs may be net revenue or a customer loyalty metric, while government might consider unemployment rates or socio-economic progress. Similarly, team KPIs could be Quality, operational excellence and people development.
A good KPI:
A good KPI should act as a scope or an opportunity, helping you and your team understands whether you’re taking the right path and steps toward your strategic and business goals. To be effective, a KPI must:
1. Be applicable to your business or team objective.
2. Be well-defined and quantifiable.
3. Be crucial to achieving your goal. (Therefore, key performance indicators.)
Types of KPI: There are two broad categories of KPIs:
• Internal KPIs – These KPIs are internally used by team members to measure and optimize their performance. Internal KPIs don’t need to be business bottom-line impacting.
• External KPIs – These are the KPIs we report to clients/senior management and use them to create strategic and tactical businesses changes.
The”big picture” view: Leaders and managers understand that they need information on the key dimensions of performance and that this can be achieved by distilling them into the vital KPIs. With the right KPIs managers can have a more focal and objective view of the key aspects of their business or teams and can measure effectiveness and performance accordingly. At a “bigger picture” level, organizations are applying KPIs at Business intelligence (BI) level to gauge business trends and advise tactical and strategic course of action. Before an organization defines top level KPIs, the following should be clearly defined:
• A clear business objective for the process.
• Quantitative and qualitative measurements.
• An active approach to finding and remedying organizational variances.
As a business owner, developing key performance indicators (KPIs) needs to be a priority. If you want good results, you have to focus on understanding how your business is doing against the performance measures you have set up. Here are the Top 5 KPIs for businesses owners to consider:
Cash Flow Forecast
Business owners perform regular cash flow forecasts so they can identify problems in the early stages and make any necessary adjustments.
This is the most obvious and easiest metric of all to measure. If your company is not making money, something needs to change.
High conversion rates indicate that you’re doing something right with your initial exposure, and that people like your product enough to become active users.
Inventory turnover measures the number of times inventory is sold or used in a given period of time, and is valuable because it reveals a business’ ability to move goods.
Life Time Value (LTV)
A key indicator to consider for any business i.e. an estimate of how much one customer is worth to your company. How much will a given customer spend over the course of their time using your product or service?
There have been times when business owners have faced the challenge of improving and optimizing an ongoing process or a business activity. In typical business environments, entrepreneurs generally come across situations where they have to analyze their current situation or business and compare it to the desired or future state.
In simple terms, gap analysis is the comparison of such actual business states with potential business state or performances. This analysis can yield a lot of insights into an organization’s performance and functioning. This simple tool helps businesses identify the gap between your current situation and the future state that they want to reach, along with the tasks that businesses need to complete to close this gap.
Compared to other business analysis methods, Gap analysis is more organic, quantitative and conceptual in nature, using traditional Excel sheets or flowcharts. It gives the analyst (or business owner) more freedom in choosing what to focus on. In management theory, if an organization does not make the best use of current resources, it may produce or perform below its potential. At a root level, Gap analysis identifies gaps between the optimized allocation and integration of the resources, and the current allocation level. Such analysis is generally done at the operational or strategic level of any business.
Here are the steps followed in a typical GAP analysis:
• Recognize the existing business process
• Find the existing outcome
• Identify the desired outcome
• Pinpoint the process to achieve the desired outcome
• Identify Gap i.e. the difference between the actual and the desired performance, Document the gap
• Develop the means to fill the gap
• Improve and prioritize Requirements to bridge the gap
Such GAP analysis should be done carefully and objectively to realize any potential gains. Gap Analysis is useful at the beginning of a project or process, especially when developing a Business Case , and it’s essential when we identifying the tasks that need to be completed to deliver the project.
According to a new survey, small businesses in the United States are expecting a more proactive and practical approach from the government. They are looking for measures that could help them grown and become more secure.
According to the U.S. Chamber of Commerce, Small business owners sent the U.S. government a clear message: Only 11 % said they would appreciate the government lending them a helping hand– instead, they said they would like it to take action on a variety of issues ranging from energy to immigration to taxes.
• Taxes: Close to 79 % of small business owners said they support tax reform and 52 % said they would like that tax code to be less complex, so that new business owners could comprehend taxes policies and planning methods and use it more effectively.
• Immigration: One of the most critical and hot topics of discuss! 66 % of small business owners said they believe that immigration reform will “help strengthen the U.S. economy and increase America’s global competitiveness by bringing in new tax revenue and establishing a market based employment system.”
• Energy: 80 % of small business said they do not think the government is doing enough to “keep gas prices low, increase domestic energy sources, or develop an energy policy that supports American jobs.” In fact, 77 % see high energy prices as the “biggest threat” to their business. Which in turn is directly associated with manpower planning and transportation and freight costs.
• Health Care: 71 % of small business owners said the health care law makes it harder for them to hire more employees. Due to the employer mandate, 32 % of small business owners said they plan to reduce hiring and 31 % plan to cut back hours to reduce their number of full time employees.
Howard Hughes, a man who possessed versatile skills and interests: a man who was once considered to be one of the wealthiest men in the world was known as an American business man, investor, aviator, film maker and a philanthropist. Born in Texas on December 24, 1905, Howard showed great aptitude in engineering from an early age. At the age of 12, Hughes was identified as being the first boy in Houston Texas to have a “motorized” bicycle, which he had built himself from parts taken from his father’s steam engine.
Hughes moved to Los Angeles after his first marriage in the year 1925, where he hoped to make a name for himself making movies. His first two films, Everybody’s Acting (1927) and Two Arabian Knights (1928), were financial successes, the latter winning the first Academy Award for Best Director of a comedy picture. Hughes spent US$3.8 million to make the flying film Hell’s Angels (1930). He produced another hit, Scarface (1932), a production delayed by censors’ concern over its violence and gore.
Aviation and Airlines:
Hughes was a lifelong aircraft enthusiast and pilot. He is known to set many world records and commissioned the construction of custom aircraft to be built for himself while heading Hughes Aircraft at the airport in Glendale.
Near-fatal crash of the XF-11:
Hughes was involved in a near-fatal aircraft accident on July 7, 1946, while piloting the experimental U.S. Army Air Force reconnaissance aircraft, the XF-11, over Los Angeles. An oil leak caused one of the propellers to reverse pitch, causing the aircraft to descend sharply. He tried to save the craft by landing it at the Los Angeles Country Club golf course, but just seconds before he could reach his attempted destination, the XF-11 started to drop dramatically and crashed in the Beverly Hills neighborhood surrounding the country club.
At an early age of 30, Hughes started showing signs of mental illness. He is said to have suffered from acute OSD (oppressive compulsive disorder) and chronic pain. There was a time when Hughes told his aides that he wanted to screen some movies at a film studio near his home. Hughes stayed in the studio’s darkened screening room for more than four months, never leaving. He survived exclusively on chocolate bars, chicken, and milk, and relieved himself in the empty bottles and containers. Throughout this period, Hughes usually sat fixated in his chair, often naked, continuously watching movies, reel after reel, day after day.
Hughes died on April 5, 1976, on board an aircraft owned by Robert Graf and piloted by Jeff Abrams, en route from his penthouse at the Acapulco Fairmont Princess Hotel in Mexico to The Methodist Hospital in Houston, Texas.
He is said to be the most influential & iconic business and aviation figures of the 20th century.
Albert Einstein was a theoretical physicist, philosopher, author, and is perhaps the most influential scientists to ever live. He published many scientific and non-scientific works and is popularly known for his explanations & research on the Quantum theory. He is considered the father of modern physics and has influenced many modern day entrepreneurs. Here are a few business lessons to learn from Einstein:
Curiosity is the key
Ask yourself this question: What piques your curiosity? What makes one business to succeed and the other to fail? Always searching for the right mix or the right answer is what drives a business owner. The pursuit of your curiosity is the secret to your business.
Use the power of Imagination
Imagination is everything. It is more important than knowledge. Are you using your imagination in your business? It is always important to remember that imagination pre-plays your future. Are you exercising your “imagination muscles” daily? Einstein once said, “don’t let something as powerful as your imagination lie dormant”. Imagination gives birth to innovation.
It’s simple: Time + creating value = SUCCESS
Don’t waste your time trying to be successful, spend your time creating value: value for your customers, value for people and value for society. If you’re valuable, then you will attract more business and therefore more success.
Through sheer determination and perseverance you can break all boundaries! Are you willing to persevere until you get to your intended business goal? Are you willing to be focused with a clear cut objective and mission? Do you have the tenacity, courage and will power to sail through tough times? A business built on the core values of determination and perseverance becomes the ultimate gainer in prospective.
Be more present
There is a popular saying: “Any man who can drive safely while kissing a pretty girl is simply not giving the kiss the attention it deserves.”
Learn to be present where you are; give your all to whatever you’re currently doing. Multitasking is a killer to productivity and innovation in any business. Focused energy is like burning power, and it’s the difference between success and failure of any business or business owner.
Gone are the days when business and leadership relied on the information, where knowledge, expertise and technical skills where king. We are now entering a whole new world: an age where the right brain rules the left, the age of creativity and concept.
Considering the speed of change and the complexity that results from it, we need to go beyond just knowledge or expertise. The top businesses of the future will excel at creative problem solving and different ways of thinking and ideation — blending seemingly diverse things together for better solutions, using allegories to explain new ideas for which no framework yet might exist.
In an age where creativity is key; here are a few points to remember:
1. Strategic Imagination or dreaming with purpose: The current business world is so deeply entangled in their busy work schedules that their ability to think and plan long term has diminished. Future businesses of the conceptual age need to learn to actively imagine future possibilities and create scenarios to act on them.
2. Provocative Inquiry or the ability to ask unsettling questions: The power of transformation lies on our ability to ask questions that make us rethink the obvious. To make people stop and think, businesses need to ask better questions. Questions should encourage curiosity and motivate minds that can create new ideas and think “out of the box”.
3. Creative problem solving or the use of best practices from unexpected sources to create fresh solutions: Business should always keep their minds open for new and fresh ideas. Dependability of management or executive teams would diminish our possibility of searching for innovative solutions. A holistic approach would motivate critical thinking and would open the dam for ideas from all possible sources.
4. Contingency and resilience: In a world where change is inevitable, a PLAN B or C or D is utmost critical. In addition businesses will also need to demonstrate tenacity and courage in the face of barriers. Leaders who are fearless will surely give their organizations a competitive edge in the Conceptual Age.
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