Learn how using process indicators can help in Strategy Execution Platform from your company and in the pursuit of continuous improvement.
In the current context of high competitiveness and the need to make strategic decisions very quickly, companies must not only monitor their operational results but also ensure their alignment with business strategy. This strategic management needs to be put into practice in a way that ensures the company's success, by correctly using strategy evaluation and control systems, as well as constant monitoring and re-evaluation of the operations of the entity or public body.
To this end, it is necessary to define a dashboard of indicators (an important part of strategic management) that can provide important information for the continuous improvement of the organization's processes. For Almir Mendes, director of AMCorpBrasil, Deming's quote says it all: “You cannot manage what you do not measure. You cannot measure what you do not define. You cannot define what you do not understand. There is no success in what you do not manage,” he quotes. He explains that without indicators, it is not possible to manage an organization. “It is an essential element in any organization to facilitate the decision-making process. To manage an organization, whether private or public, it is necessary for managers to have a dashboard, and in it, a set of indicators monitoring performance and indicating the path to be followed,” he reveals.
According to Renan Chagas, director of Grow up Consultoria e Gestão Empresarial, “the indicator is directly related to a goal to be achieved, it's how you measure,” he emphasizes. According to Chagas, the indicator reveals whether the company has achieved the goal or not, and how much was left to achieve it.
Measuring results should provide the company with useful and quick information for more assertive decision-making, helping to define priorities and directing processes at all levels, from top management to the operational level. For this reason, the creation of indicators must be carefully thought out so that they really reflect what the company wants to monitor. According to Chagas, when the indicator is created, there must be an understanding of a cause and effect relationship. “Creating a result indicator, one that is directly related to a target, is easier, because we measure the end result. But imagine I have a sales volume target. Then I need a trend indicator. For example, if I have a history that shows I need to make 100 visits to make 10 sales, I have to track the number of visits to predict the number of sales. Based on this prediction, you can follow up even before you have the final result,” he explains.
Mendes completes by saying that the first thing to consider when creating an indicator is that they must show what you really want to measure in the process or project. “There must be consistency in the indicators, in their collection, and in their application. The first thing is consistency. So that later, with this information, you can make a decision,” he states.
It's natural for indicators to also go through a learning curve, where their adherence and effectiveness can be tested, allowing them to be adjusted over time. Chagas warns that there isn't a right number of indicators to be used; this depends on each type of business and the chosen management model. “The number of indicators depends on the organization's strategic map. Once the strategic map and objectives are established, then it's possible to define the indicators. We recommend at least one indicator per strategic objective,” he reiterates.
The creation and measurement of indicators bring with them some challenges, such as defining the indicators that best suit the business, the difficulty of measurement, breaking down cultural barriers, among others. For Mendes, the biggest challenge is overcoming organizational culture. “The hardest part is changing the culture. In several organizations where I've implemented dashboards, even at the management level, the concern was: will they now see everything I do in the company? Then you have to explain that no, the focus is on improving the organization's processes,” he comments.
Chagas agrees that organizational culture is the biggest challenge. “In my opinion, the challenge lies in the maturity and discipline of the management group to manage indicators through critical analysis. More than measuring, it's important to sit down periodically to analyze these indicators and think about improvements. This discipline is lacking in organizations. There's a tendency to stay in the operational and forget to reflect on the organization's strategy,” he states.
In general, indicators alone do not have all the answers for a company's strategic management, but the combination of various indicators, monitored simultaneously, compensates for deficiencies and generates a satisfactory amount of information for evaluating the organization's direction, whether public or private. The best way to organize these indicators and visualize the answers they provide is by consolidating them in software that records and stores information in a computerized environment, facilitating data collection and generating a history of the organization's progress.
