what’s the story behind my KPIs?
Through virtual and in-person workshops around the globe, we have taught tens of thousands of people how to communicate effectively with data. This series captures some of the noteworthy questions we hear during those sessions—and our answers.
I’m designing a dashboard that will contain key performance indicators (KPIs). How do I know what the story will be behind them?
This question piqued my interest, as I have an extensive background in reporting. Key Performance Indicators (usually shortened to “KPIs”) are an essential part of any business, but they don’t appear fully-formed from thin air. There is a process involved in developing and building KPIs, and it’s only once a KPI is in production that it can (potentially) be a useful tool for finding insights. Those insights may eventually become part of a story, but we can’t know what that story is before the KPIs are created in the first place.
So, to answer this question as fully as possible, let’s dive a bit deeper into the process of building a KPI from the ground up.
What is a KPI?
The term “Key Performance Indicator (KPI)” is commonly used to describe a metric that provides a view into performance. KPIs can:
provide targets for teams to strive for;
set milestones to gauge progress; and
offer insights that help people across the organisation make better decisions.
A KPI’s journey begins with the request to create it, usually from a colleague who is looking to track an important element of their business.
If you are the dashboard designer, then this is the time to gather as much information as possible about the goal of the KPI. This will likely mean conversations with the requester to identify their specific needs. Understanding these requirements fully will also make the process of creating the KPI more efficient.
Building a KPI
Once those requirements are fully understood it’s time to begin gathering the data needed for the KPI. At this point, many factors need to be considered. For instance:
Is historic data required in order to provide a trend?
If there is a goal, is it constant or changing over time?
Do run rates (the average amount achieved to date) and required run rates (how much needs to be delivered in the remaining time) need to be calculated?
Is there a projected value or forecast to consider?
With KPIs often being part of regular reporting, getting the data structure correct at this point (with an added bonus of being able to automate it) will avoid the need for arduous repetition in the future. Indeed, creating a KPI will require many of the skills an analyst possesses. Sourcing data, cleaning, structuring, designing, and creating the final output are all required. Significant time is often spent in these various phases.
Publishing, reviewing, and maintaining a KPI
Finally, the big day arrives, and the KPI is published…but it still isn’t providing a story behind what it's showing. That's where you come in!
It's at this point that a critical (and often overlooked) element of analysis comes in: explaining the KPI. What is this metric telling us? What recommendations or actions should be proposed? This part is important to include, even in a regular report or dashboard.
Once the KPI is live, plan time into the production process to review the output, and to explain the data to an audience seeing it for the first time. It's tempting to fall into the habit of publishing regular content without providing an explanation of what it's showing. As a minimum, allocate time to take note of two or three key points of interest to your audience.
Yes, it's possible your audience will view these metrics for themselves. “Self-serve reporting” has become a buzzword in recent times, and while it does enable direct and the benefit of faster access to information, consistency across teams with “one single truth” and increased capacity for the technical teams, audiences seeking their own answers do run the risk of making incorrect assumptions. You will likely know the data better than most, so use that knowledge to educate them.
As your products mature and become familiar and commonly used, spend time reviewing KPIs to ensure they remain relevant. I have built many KPIs that were deemed crucial at the beginning of a performance year. Attention was paid; action-oriented discussions were held; and yet, these meetings, over time, became stale as the KPIs lost their relevance. Priorities change frequently in any business. Ensure KPIs and accompanying reports are as agile.
In summary, while we don’t know what the stories are going to be behind our KPIs before they are built. By seeking input before and during development to understand the motivations behind them and then, once they are live, spending time reviewing them we can explain those outputs and bring them to life for our audience.
Check out these additional resources for more on ways to help explain your data: