Data-driven tips: looking back

Number three of the data-driven tips for 2023 is looking back. In this blog, Data Strategy Leader Louis de Roo tells you more about the drawbacks of only looking back and how leading KPIs can help you with this.

KPIs

For many organizations, KPIs are the way to keep management or the board informed about how the company is doing. KPIs tell us whether we have achieved our goals, whether profit, revenue and costs are on track and whether our company's results are in line with its objectives. Organizations that want to work in a more data-driven way therefore often start by automating and digitizing their KPIs and the associated reporting, expecting this to open the door to a more data-driven approach.

Unfortunately, this method has a major drawback: your approach does not really change. Most KPIs within organizations are 'lagging KPIs': measurements that look back after the action and report on the results. And although those past results sometimes do tell you something about what might happen in the future, by looking back you keep your focus on what has happened.

Drawbacks of looking back

The drawback of looking back is of course that you are more occupied with the results achieved and less with the decisions you still have to make. When you drive a car, your rear-view mirror is less important than your windshield. So why would you only want to look back when steering a company?

Looking back with your KPIs is not really 'data-driven' working, but rather 'data-controlled'. You only use the insights from your data after the fact, which means you base your decisions on data only indirectly. And while there is of course nothing wrong with wanting to know whether you have achieved your goals and delivered good results, the real value for your organization lies in making the right decisions for the future.

Leading KPIs

So we need to look for KPIs that give us the information earlier in the process to make the right decisions: 'Leading KPIs'. By taking measurements earlier in the operational process, we can also adjust and intervene more easily when one of the decision factors in our process changes. Generating this kind of insight used to be very difficult, because instead of one clear KPI you suddenly have to work with many more variables. But this is precisely one of the areas where we can benefit from the available amount of data and the smarter, faster ways of generating the right insights from it.

Fitting leading KPIs into your decision-making process does not happen automatically: as with any new way of working, it is important to realize that this is a significant change, and that it will take some time to translate the intuitive knowledge within your organization into data-driven decisions. It is therefore wise to let your company get used to this gradually, and above all to check with your employees whether your new data-driven decisions also deliver the desired results. This not only creates support within the organization, it also mobilizes the knowledge and experience within the organization to help think about the right KPIs on which to base data-driven decisions. So that in the end you can also verify, looking back, whether your data-driven decision was the right one!

Ready to get started with KPIs?

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