One of the most common questions I hear is “Should I have this KPI?” The answer is found by asking another question. Is this KPI an IPA? I know IPA is not everyone’s cup of tea, I mean, pint of beer, but it’s a helpful association when choosing key performance indicators for your dashboard.
I’ll explain what I mean by ‘IPA’ in a moment, but let’s establish a few fundamental concepts first. A dashboard should always be clear, easy to understand and to the point. Every metric displayed should assist you in answering the question - Do I need to take any action now? In order to achieve this, you need to qualify or test each KPI before you start investing your time and attention on it. This is where the IPA rule comes in handy.
What is the IPA rule?
1. Important - Is this KPI important? Does this matter? A good way to test this is by asking “Who would complain if this KPI is underperforming?” If the answer is nobody, I strongly recommend you remove it pronto.
2. Potential improvement - Does this metric have improvement potential? Or is this a problem that needs to be improved? If the answer is no, you can consider removing it from your dashboard.
3. Authority - Do you have authority or means to improve this KPI? If you can’t change the results, don’t worry about tracking it. Maybe you do have the authority (or partial authority), but cannot guarantee the results. This can get tricky. We could spend a whole separate blog post discussing it, but for now I suggest keeping it on your dashboard to stay informed as you assist the individuals who directly impact the results.
Exceptions to the IPA rule
As any good rule, the IPA has some exceptions since it doesn’t answer all the questions. The most common exception to this rule is when a KPI is Important but lacks improvement potential. For example, a manufacturing manager might have a KPI of zero workplace accidents. Even if the department hasn’t had a single accident and therefore cannot improve the KPI, it’s still critical to keep the metric on the dashboard.
How do your KPIs measure up to the IPA rule? Take a few minutes to evaluate what metrics should be on your dashboard and don’t be afraid to declutter. Always vet new KPIs so that at any given time you can confidently answer the question “Do I need to take any action now?” You’ll be amazed by the transformative power of relevant, clearly communicated data.
What other helpful tips have you discovered for determining the most essential KPIs?