Key Performance Indicators
Key Performance Indicators (KPIs) are the critical (key) indicators of progress toward an intended result. KPIs provide a focus for strategic and operational improvement, create an analytical basis for decision making and help focus attention on what matters most.
Managing with the use of KPIs includes setting targets (the desired level of performance) and tracking progress against that target. Managing with KPIs often means working to improve leading indicators that will later drive lagging benefits. Leading indicators are precursors of future success; lagging indicators show how successful the organization was at achieving results in the past.
A part from the more general benefits of “more efficiency” and “resource optimization”, a gap analysis can help to identify very specific areas for improvement, and provide guidance towards actionable steps for improving processes, products, services, or anything that is being examined within the framework.
If improving performance is about identifying and breaking down problems into well-defined, discrete steps, then the gap analysis is a tool that helps companies to figure out the right steps they need to take, faster.
A gap analysis can also be used to augment performance, even when there are no obvious inefficiencies or problems. By evaluating performance with a gap analysis, the focus is placed on attributes like performance level, productivity, and employee competency.
In contrast with the future-facing tendencies of risk assessment, gap analysis is focused on the now. It seeks to examine the current state of affairs and align them with business goals and objectives.
Fundamentally, the gap analysis is a means of understanding why a company isn’t performing at its peak potential. What factors are stopping the company, person, team, product, or process from achieving their maximum capacity, and how can it be fixed?
Similar to the principles of continuous improvement harnessed in frameworks such as the Deming cycle or Six Sigma, the results of a gap analysis will most often take the form of a documented report, the results of which will be used to inform decisions intended to improve or optimize the subject of the analysis.
S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.
Strengths and weaknesses are internal to the company (think: reputation, patents, location). You can change them over time but not without some work. Opportunities and threats are external (think: suppliers, competitors, prices)—they are out there in the market, happening whether you like it or not. You can’t change them.
Existing businesses can use a SWOT analysis, at any time, to assess a changing environment and respond proactively. In fact, I recommend conducting a strategy review meeting at least once a year that begins with a SWOT analysis.
New businesses should use a SWOT analysis as a part of their planning process. There is no “one size fits all” plan for your business, and thinking about your new business in terms of its unique “SWOTs” will put you on the right track right away, and save you from a lot of headaches later on.
Six Sigma Projects
Six Sigma strategies seek to improve the quality of the output of a process by identifying and removing the causes of defects and minimizing impact variability in manufacturing and business processes. It uses a set of quality management methods, mainly empirical, statistical methods, and creates a special infrastructure of people within the organization who are experts in these methods.
Each Six Sigma project carried out within an organization follows a defined sequence of steps and has specific value targets, for example: reduce process cycle time, reduce pollution, reduce costs, increase customer satisfaction, and increase profits.