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Knowing the three different types of key indicators will increase your performance.

A few years ago, one of Europe’s largest car insurance company did a survey of the dashboards in the 15 best-selling cars. The survey identified 99 different dashboard indicators. How many of the 99 indicators are the same in all 15 cars? The answer surprises most people – only 12 indicators are the same.

Then, the insurance company did more research with its customers – car drivers.

First, they looked into the most basic warning lights, e.g. engine, oil, battery. And they asked drivers to explain what the warning lights mean. Significantly, 46% of drivers – be careful who drives you; that’s almost half! – did not know what the basic warning lights mean.

Second, when that 46% had problems with the car, they continued driving with the warning lights on for 12 days (on average), which doubled their car repair costs. That, of course, multiplied the costs for the car insurance company.

Ignorance is widespread when it comes to data
Ignorance increases costs. In this case: repair costs. Clearly too many drivers do not understand the key indicators. Perhaps the car manufacturers are giving us too much data. More to the point, do all these indicators improve drivers’ decision-making capability? This research suggests it doesn’t.

The managers behind the steering wheel of change initiatives in global companies like to talk about key success indicators. Other managers on change projects spend a lot of time coming up with fancy dashboard designs. But underperformers – like those drivers – either have too much data or don’t understand what the data shows. And it’s more frequent than you think.

Every week, I talk to global managers who don’t understand what their basic indicators mean. And it’s a domino-effect: the people they lead in other countries understand them less. Everyone confuses everyone else in a fog of confusion.

Without clarity, collaboration suffers. And poor collaboration across global business units means poor product quality and bad customer service.

The three types of indicators
One reason global managers struggle is they don’t distinguish between three types of indicators.

Type 1 are indicators which are relatively easy to measure. Examples are the number of units produced per shift (in production), bank account balances (in finance), inventory delivery times (in supply chain) and number of users logged-in (in IT). Type 2 are indicators are harder to measure, include brand awareness or brand loyalty (in marketing). The level of subjectivity increases.

Type 3 are indicators which are best used in combination. Ask people what makes them happy: money, friends, job security, health. The core answers are the same, although no single indicator explains happiness completely. But a handful can explain about 80% of what makes somebody happy.

The trick in global companies is to involve managers in other countries and local functions in the selection of Type 3 indicators. Change processes are all about implementing new, better behaviours. By involving local managers, you make sure everyone understands the key success indicators. So, collaboration naturally increases. Motivation and engagement also increase. And the indicators tend to be used more consistently and accurately, so decision-making is better and faster.

In short, we make sure that global managers are part of the “56%” who know what their indicators mean and can confidently, competently steer change.

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