The Art of Focusing as a CEO: How to Balance Strategy and Execution
Setting the right focus is a critical skill for CEOs and business owners, especially in the post-pandemic era, where the business environment is more uncertain and complex than ever.
In this digital era, they need to foster a digital culture that encourages experimentation, collaboration, and agility, create a learning organization that supports continuous improvement, knowledge sharing, and talent development. They need to ensure that technology is aligned with the business goals and priorities, and they also need to communicate effectively and transparently, build trust and rapport, and foster a sense of belonging and purpose.
To meet these expectations, CEOs need to measure and constantly improve their performance.
Setting KPIs (Key Performance Indicators) is a crucial first step for any CEO or business owner who wants to measure and improve their performance and achieve their strategic goals.
KPIs are measurable values that show how well you are doing in different aspects of your business, such as revenue, customer satisfaction, employee engagement, etc. KPIs can help you track your progress, identify strengths and weaknesses, and make data-driven decisions.
There is no one-size-fits-all approach to setting KPIs, as different businesses may have different objectives, priorities, and challenges. However, there are some general steps and principles that can guide you in creating effective KPIs for your business. Here are some of them:
Start with your vision and mission: Before you set any KPIs, you need to have a clear understanding of your vision and mission as a CEO or business owner. What is the purpose of your business? What are your core values? What are your long-term goals? Your vision and mission will help you align your KPIs with your overall direction and values.
Define your strategic objectives: Next, you need to translate your vision and mission into specific, measurable, achievable, relevant, and time-bound (SMART) objectives. These are the outcomes that you want to achieve in a given period of time, such as increasing revenue by 10%, reducing customer churn by 5%, or launching a new product by the end of the year. Your objectives should be aligned with your vision and mission, and reflect your key priorities and challenges.
Choose relevant KPIs: Once you have your strategic objectives, you need to choose the KPIs that will help you measure and monitor your progress towards them. A good KPI should be relevant to your objective, quantifiable, actionable, realistic, and timely. For example, if your objective is to increase revenue by 10%, a relevant KPI could be monthly revenue growth rate. A bad KPI would be something that is not directly related to your objective, such as number of website visitors or social media followers.
Set targets and benchmarks: After you have selected your KPIs, you need to set targets and benchmarks for each of them. A target is the desired value that you want to achieve for a KPI in a given period of time, such as 10% monthly revenue growth rate. A benchmark is the current or historical value that you use as a reference point for comparison, such as the average monthly revenue growth rate of your industry or competitors. Setting targets and benchmarks will help you evaluate your performance and identify gaps and opportunities for improvement.
Monitor and review: Finally, you need to monitor and review your KPIs on a regular basis, such as weekly, monthly, or quarterly. You need to collect and analyze data from various sources, such as financial reports, customer surveys, employee feedback, etc., and compare them with your targets and benchmarks. You need to identify what is working well and what is not, and what are the root causes of any deviations or problems. You also need to communicate your results and insights to your stakeholders, such as board members, investors, employees, customers, etc., and solicit their feedback and suggestions. Based on your findings and feedback, you need to adjust your actions and strategies accordingly.
Some common mistakes to avoid
Ensure that while setting the KPIs, the KPIs are linked to your strategy. If your KPIs are not relevant to your strategy, you may be wasting time and resources on measuring things that do not matter and benefit your business.
KPIs should be selected based on their relevance, not their availability or popularity. Measuring too many things and the wrong things can lead to information overload, confusion, and distraction.
You should distinguish your KPIs from other data that may serve other purposes, for example, operational, financial, or compliance data. You should also categorize your KPIs according to different levels of your organization, such as corporate, departmental, or individual KPIs.
KPIs should have clear definitions, formulas, and sources of data. They should also have realistic and attainable targets based on historical or industry benchmarks.
Moreover, KPIs are not static or fixed. They should be reviewed and updated periodically to reflect changes in your strategy, environment, and performance.
To avoid these mistakes, you should consult and collaborate with your stakeholders when setting your KPIs.
You can use a framework or a tool to guide you in creating and managing your KPIs. You should review and refine your KPIs on a regular basis. You should check if your KPIs are still relevant to your strategy if they are measuring the right things, if they are providing useful and accurate information, and if they are driving positive change in your business.
You should also celebrate your achievements and learn from your failures.