Imagine a manufacturing plant aiming to maintain operational excellence while facing potential safety hazards every day. In such a scenario, tracking key performance indicators (KPIs) such as production efficiency and output is needed for assessing performance. However, without considering key risk indicators (KRIs) like workplace incidents or equipment failure rates, the plant may overlook critical safety concerns until they become costly disruptions or accidents.
Integrating KPIs and KRIs enables the plant to proactively manage both performance and risk and ensure smooth operations while prioritizing employee safety. Overall, this integration is essential for promoting ongoing improvement and awareness of risks within the organization.
The KPI Institute defines KPI as a measurable expression for the achievement of a desired level of results in an area relevant to the evaluated entity’s activity. KRI is a measure used to evaluate the likelihood of an event’s probability and consequences that could exceed the organization’s risk appetite and significantly harm the success of the organization.
While most organizations rely heavily on KPIs, rooted in historical data, these may offer limited insight into future threats. KRIs modify the narrative by beginning with a proactive framework for risk management and developing measurements around prospective pitfalls in the future.
Improving risk management
Utilizing both KPIs and KRIs would provide a more systematic approach to risk management compared to relying solely on KPIs. For instance, within the supply chain context, KRIs may cover aspects, such as supplier performance, reporting accuracy, and emerging industry trends. This gives the organization a clear picture of all possible hazards and enables it to foresee and handle issues before they have an adverse effect on operations. Here are the overarching benefits of using KRIs in risk management:
Proactive identification: With KRIs, organizations can proactively detect potential risks before they occur. For example, by monitoring supplier performance to anticipate supply chain disruptions or analyzing industry trends to predict market shifts, organizations can minimize possible harm. This proactive approach enables early intervention and allows the organization to implement preventive measures.
Root cause analysis: KRIs encourage delving deeper than immediate events to identify the underlying root causes behind potential risks. For example, rather than simply reacting to a decrease in supplier performance, KRIs can signal organizations to uncover the reasons behind it, whether due to internal issues, external market forces, or other factors. By addressing root causes, organizations can develop more effective risk management strategies and prevent similar issues from recurring in the future.
Decisions based on data: Integrating risk assessment into current data streams allows organizations to make informed decisions in real-time. By leveraging KRIs and building alerts or other KRI-based solutions, organizations can access timely and pertinent information to guide decision-making processes. For instance, by monitoring relevant data points, such as financial indicators, organizations can quickly identify emerging risks and take appropriate actions to manage them. This allows organizations to be resilient and agile in the face of uncertainty.
Implementing KRIs
Organizations must understand the relationship between risk and performance to improve cross-functional collaboration and incorporate risk concerns into business decisions. For the integration to be successful, KRIs should be reported and communicated effectively. To create KRIs and corresponding mitigation plans, the individual who oversees the Enterprise Risk Management (ERM) process should work with the risk owners. The “risk owners,” who can effectively oversee their business units in line with their individual units’ risk goals, are the main benefactors of KRIs.
Risk owners must evaluate KRI data pertaining to risks that impact their units on a frequent basis. It is important to acknowledge that the different methods for reviewing KRI data also depend on an organization’s functions. In addition, successful identification and implementation of KRIs also requires a structured approach with the following key steps: identifying key metrics, assessing gaps, improving metrics, validating and setting trigger levels, and establishing a risk control plan.
Harnessing the power of KRIs alongside KPIs emphasizes the link between successful risk management and successful organization outcomes. This encourages a proactive attitude to risk, in which mitigating risk is viewed as an investment in accomplishing corporate objectives rather than as a cost.
Nawaf Al Omari boasts over a decade of experience in optimizing teams and driving project management success. He excels at forecasting staffing needs, resource management, and fostering collaborations, with a 40% increase in stakeholder satisfaction. Prioritizing data-driven decision-making, he is adept at mitigating risks, tracking KPIs, and achieving cost reductions. Nawaf is strongly committed to delivering results and operational excellence.
The popularity of sustainability has surged in recent years, causing organizations to grapple with balancing short-term profits with long-term sustainable practices. This has led to concepts like shared value and corporate social responsibility, with companies aiming to create economic and social value while reducing their environmental impact. The movement has sparked active efforts, with social innovators, policymakers, investors, and academics all striving to measure sustainability.
In today’s world, companies must move beyond outdated economic metrics and adopt KPIs that consider the triple bottom line, including social, economic, and environmental aspects of their operations, all while promoting sustainable human well-being.
However, sustainability is a constantly evolving concept that adapts to context and cannot be measured with a single yardstick. The balance between social, economic, and environmental considerations is crucial to achieving sustainability. It is like walking on a tightrope, requiring constant adjustments to maintain equilibrium in a changing world. Each context requires a unique approach, with varying weights and measures for different factors. Customized solutions are needed that address stakeholder needs while maintaining long-term balance, as a one-size-fits-all formula won’t work.
About the Expert
• As a Managing Director, Teodora leads development initiatives to support and enhance the organization’s strategic plan and manages the development and growth of the MENA branch of The KPI Institute.
• An expert researcher, consultant and practitioner with six years of experience in the deployment and implementation of KPI Management Frameworks.
• Pursuing a PhD. in Management on the topic: Rethinking the Performance Management Systems to ensure organizational sustainability, Lucian Blaga University, Romania
• Postgraduate Program in Entrepreneurship and Venture Creation, ISCTE Business School Lisbon, Portugal
• Master’s Degree in Project Management, Romanian-German University, Romania
Key performance indicators (KPIs) have been the north star guiding business strategy for decades. These criteria measure not only sales and revenue but also customer satisfaction as well as employee engagement.However, as the business landscape continues to evolve at an unprecedented pace, the need for deeper insights and more agile measurement arises. This is where the potential of generative artificial intelligence (GenAI) shines, opening doors to a new era of KPI innovation.
GenAI goes beyond automation to produce entirely novel content. It is a creative catalyst, opening up unprecedented possibilities for KPI innovation. Forget rigid, one-dimensional metrics. Powered by GenAI, KPIs become fluent, adaptive, and poetic, capturing not only the whats but also the whys and what-ifs.
Reimagining KPIs for exponential growth
From static to dynamic: GenAI is capable of integrating dynamic KPIs, meaning they can evolve alongside the company that uses them. KPIs also fit seamlessly into a changing market, with trends and strategies naturally shifting along the way.
Unveiling the unseen: Traditional KPIs often fail to hit the nail on the head by overlooking key, intangible factors that could affect performance. GenAI, however, can delve much deeper. With the help of GenAI, it is possible to determine brand sentiment before a particular campaign is launched, anticipate employee engagement within remote teams, or even predict customer turnover before it happens.
Personalized insights, enhanced action: Data mountains no longer need to be intimidating.GenAI transforms data into personalized narratives, crafting stories tailored to individual stakeholders. Sales teams can access actionable insights, marketing managers can monitor real-time customer sentiment, and CEOs can explore what-if scenarios for strategic foresight. This data-driven storytelling fosters informed decision-making and ignites action across the organization.
A practical guide to unlocking GenAI’s potential for KPI innovation
To effectively utilize GenAI tools like Gemini and ChatGPT for KPI innovation, follow these guidelines:
Define goals and challenges: Clearly articulate objectives, whether uncovering customer sentiment or anticipating market shifts.
Frame specific prompts: Use concise prompts such as “generate potential KPIs for measuring brand sentiment on social media.”
Provide relevant context: Enhance responses by furnishing background information about your industry, business model, and existing KPIs.
Experiment and refine: Iterate prompts, rephrase questions, and provide feedback to improve AI understanding.
Collaborate with experts: Involve human expertise in evaluating and implementing AI-generated insights.
While GenAI’s potential for KPI innovation is undeniable, it thrives on synergy, not substitution. The point is this: human guidance is essential. Act now, invest in your future, and become a master of the new KPI era by enrolling in The KPI Institute’sCertified KPI Professional course.
Technology reshaped work, communication, collaboration, and task automation, driving enhanced productivity and increased internal efficiency, as indicated in a 2022 overview of digital transformation in business. One of the results of digitization is the creation of workplace super apps. A 2023 Infopulse articlestates that the term “super app”was defined in 2010 by BlackBerry founder Mike Lazaridis as “a closed ecosystem of many apps.”The concept has since gained more prominence through Chinese super products like WeChat and Alipay.
The evolution from single-purpose to multipurpose applications introduced a versatile solution—the aforementioned workplace super app—that seamlessly integratesessential tools and features for both office-based and frontline employees. As highlighted by AgilityPortal in a 2023 article, organizations adopt super apps to enhance workplace productivity.
Practical application of workplace super apps
As highlighted in a 2023 article by Kyanon Digital, a super app can offer creative solutions that can be customized to fit multiple industries’ needs. This is apparent in the case of how Aruba Networks, a leading technology solutions provider, actively pursues innovation and creativity to enhance operations. During its 2022 annual conference, the company showcased its forward-thinking approach by seamlessly uniting both in-person and remote attendees, including employees from Aruba Networks and external participants. This remarkable achievement was made possible through their partnership with CXApp, a renowned provider of event and workplace management solutions. CXApp offered a versatile, all-in-one event management platform—a super app. This customized, multipurpose app had a host of useful features (see Figure 1).
Figure 1. Top features of CXApp’s event management platform | Source: adapted from CXApp, 2022
The indoor navigation feature ensures that in-person participants would not lose their way within the extensive event space. For virtual attendees, there was a virtual innovation zone designed to replicate the immersive 3D experience of the in-person version.
Also, an exclusive activity stream was available solely to attendees, providing a platform for content sharing. Participants were encouraged to provide instant feedback via surveys for each session, contributing to the continuous improvement of the event’s offerings.
Moreover, the gamification feature aimed to boost interactivity by offering participants the opportunity to win prizes. All of these features meant that each attendee enjoyed a personalized agenda, ensuring that their experience was catered to their unique interests.
Measuring the performance of workplace super apps
How can leaders determine if implementing a super app truly yields positive outcomes? By evaluating its performance using specific metrics.
As emphasized by Brightscout,key performance indicators (KPIs) are commonly employed to measure how well web and mobile applications perform. Since a super app includes multiple apps within it, KPIs can also be used to clearly quantify how well a workplace super app is performing and contributing to business goals.
Monitoring KPIs helps evaluate the company’s performance before and after implementing the workplace super app. For instance, tracking employee engagement indicates their involvement in daily tasks, and enhancing it through live chat, gamification, and the automated meeting scheduling features of the super app can speed up response times. Moreover, when the workplace super app operates efficiently, planned downtimes are reduced. This surplus time enhances the likelihood of projects meeting their deadlines and reduces the time taken to address business partners’ needs due to synchronized project progress. Consequently, with increased employee efficiency and performance facilitated by improved engagement through the super app, revenue generation experiences a significant boost.
Managing workplace super app risks
While workplace super apps provide various advantages within the business realm, they also entail certain risks. Multiple articles (Baskaran, Supraja, et al., 2023;Ota, Fernando Kaway Carvalho, et al., 2023;Vinit, Choudhary, 2023) suggest that one of the most prominent risks involves data security and privacy issues. To address these issues, organizations can implement adequate security measures, such as code obfuscation, encryption, and runtime application self-protection (RASP), with the help of an expert, as suggested by Guardsquare.
Before choosing to implement a workplace super app, business leaders should carefully consider its benefits and potential drawbacks. For organizations already utilizing a workplace super app, employing KPIs is recommended to accurately evaluate its performance.
Acquire the necessary tools, skills, and knowledge to effectively measure performance using KPIs by enrolling in The KPI Institute’s C-KPIs Professional Certificationprogram.
The lifecycle of a Key Performance Indicator (KPI) is a dynamic process involving definition, recalibration, and—sometimes—abandonment. From establishment to practical application and ongoing evolution, KPIs undergo several steps to effectively measure performance, and prioritizing data reliability at every stage is crucial to achieving their intended purpose.
The foundation of reliable data
The first stage of the cycle, KPI selection, may seem simple, but it is a complex process intertwined with various interdependencies and calibrations with the organization’s objectives.
Establishing data reliability should start from this initial step, and involving employees as primary sources for KPI selection is an effective approach. Their valuable knowledge about the data generated from their activities enhances the reliability of the selected KPIs. Additionally, considering data availability and reliability as criteria for the selection further enhances overall data trustworthiness.
KPI documentation plays a pivotal role in ensuring reliability. Adopting a standardized documentation form establishes a solid foundation for rigorous and dependable data collection and reporting. This approach provides clear guidelines for defining KPIs, including unambiguous calculation formulas, ensuring that the collected data accurately reflects the intended purpose of each KPI.
Establishing dependable data collection
During the activation of KPIs, data reliability depends on the meticulous consideration of data sources, robust data-gathering methods, and the establishment of a strong governance structure. It is imperative to utilize trusted and verified data sources that are up-to-date, accurate, and aligned with the KPIs being measured. Accountability for KPI data should be established by clearly designating KPI owners and data custodians. Furthermore, adopting a standardized data collection process that incorporates technology-driven solutions significantly enhances accuracy.
Communicating meaningful insights
The analysis and reporting of KPIs are significant in ensuring the correct organization and communication of data to key stakeholders. Errors in data analysis have the potential to result in misleading insights, which can have negative effects on decision-making. Therefore, correctly identifying relevant KPI content and conveying meaningful insights derived from KPI data to various stakeholder groups within the organization is essential.
Continuous improvement
Finally, data reliability can be enhanced through the process of refreshing KPI documentation. This ongoing effort involves recalibrating KPIs after their initial establishment and customizing them for optimal use.
Attention is given to both the content of the KPIs and the standardization of their format. Standardizing KPI content establishes uniform guidelines and criteria for measurement and reporting, ensuring data reliability and consistency. This step refines the measurement and reporting processes, facilitating accurate and dependable data for decision-making purposes.
Monitoring KPI data reliability: The role of the Data Custodian
The Data Custodian is critical in upholding the reliability of data. They actively participate in the design of performance data collection, receipt and storage, processing, analysis, reporting, dissemination, and even archival or deletion of data. They implement measures to validate and verify the accuracy, consistency, and completeness of the data. This involves conducting regular data audits, resolving discrepancies or anomalies, and implementing data cleansing processes to ensure data integrity.
To evaluate the reliability of KPI data, the Data Custodian can monitor % KPIs with reliable data. This metric measures the number of reported KPIs that contain reliable and trustworthy content out of the total number of KPIs reported, according to smartKPIs.com.
In conclusion, to succeed in a data-driven world, organizations must prioritize data reliability along the KPI lifecycle. By implementing the strategies and practices discussed above, organizations can unlock the true potential of their performance measurement systems and empower stakeholders with reliable insights for better decision-making.
