Speech by Alexander Ozharovsky, Director of Projects and Programs at SBER, at the IV annual All-Russian Forum on Project Management PROJECT MANAGEMENT FORUM 2024, held on June 26-28 in Moscow.
Alexander Ozharovsky has been managing projects, processes and products for 27 years. His professional portfolio includes more than 350 implemented projects, including for the Russian Government Office, the Accounts Chamber, the Ministry of Economic Development, Sberbank, VTB, Alfa-Bank and other organizations. He teaches at 7 different universities and 3 business schools. Co-author of 3 GOSTs on project management.
Goals, objectives, criteria, metrics, indicators, KPI, OKR - how to put them in order
When working with any goal, task, metric or indicator, it is important to understand that each of these elements has its own specifics and role in management, and their relationship and interaction are of great importance in achieving the success of a company or organization.
The method and interpretation of the connection of just three chains gives rise to a whole variety of approaches and tools:
Goal setting logic: task – result – effect.
Measurement logic: metric – KPI – OKR.
Decomposition logic: level-1 – level-2 – level-3.
To start working with metrics you need to:
Classify all elements and agree on terminology with the team.
Understand that goals and metrics exist at every level of the organization's pyramid.
Realize that working with metrics can have a significant impact on your business.
See the difference between a goal and an objective, a goal and a metric.
Goodhart's Law: "If you make a metric a goal, it ceases to be a good metric."
The goal is what we want to achieve, where we are moving.
A task is something that can be “accomplished” or “done.”
There are customer metrics at all levels of the organization, and they are among the most important. The approach to developing a metrics system is made taking into account product and project logic. It is necessary to link goals, objectives, metrics and other elements at each level of the organization.
How KPIs differ from metrics:
There are usually many more metrics than KPIs.
Achieving or failing to achieve a KPI always leads to certain decisions.
Metrics do not always have a target value, but KPIs always have a target value or range.
A little bit about classification and types of metrics
In the process of project and business management, there are many metrics that help evaluate the effectiveness of work and the achievement of set goals. However, it is important to remember that each metric has its own specifics and application.
For example, at the business level, when economic indicators such as turnover and profit are important, some metrics are used. And at the product level, when it comes to deadlines, budgets and quality, others are used. Client metrics are NPS, CSI, LTV and others. Operational metrics are about deviations from the plan or team workload. Process metrics operate with efficiency, turnover, rhythm.
The classification of metrics can be built from on page seo service corporate goals to specific projects. Each management level has its own specific metrics.
Customer metrics are among the most important, and most company health metrics are related to them. For example, such as NPS or LTV. Correct work with metrics can change the understanding of the business and lead to new results.
Is a "metrics tree" always necessary?
The metrics tree is a powerful tool for assessing the performance of a company or project. It allows you to build a cascade of metrics from corporate goals to specific tasks and results, structure and link different metrics, including personal ones, at different levels of the hierarchy.
Building a metrics tree should not become an end in itself. Sometimes this approach is ineffective and difficult. It is more important to remember something else:
You need to be careful in choosing metrics and maintaining their balance.
Metrics should be related to the goals and objectives of the company or project.
Only measurable and relevant metrics work well.
The most important ones are customer metrics such as NPS, CSI, LTV and others.
It is necessary to link metrics at each level of the hierarchy.
Goals and metrics must be clearly defined and understood.
Company health metrics can be key to assessing the success and stability of an organization.
When choosing metrics, you shouldn't go overboard with their number.
Review of approaches and cases of cascading metrics
There are different approaches to cascading metrics, using different models of operations management and value creation strategies. But in any approach, the first thing to do is to correctly formulate the goals and objectives, and to understand the differences between metrics, indicators, criteria, and other elements.
Alexander Ozharovsky is sure: you can't be afraid to experiment and test different approaches to metrics. This is the only way to find the optimal solution - the one that suits your company.
To better understand how our ideas about metrics may differ from the real picture, Alexander recommends conducting a simple but effective test.
To do this, after the weekend, while your head is not yet loaded with corporate and personal KPIs, you need to try to remember and write down all your goals and metrics, without looking anywhere or checking anything. You need to write down on paper only what is in your head. And then ask your subordinates to write down what goals and metrics they think you have. Now all that remains is to compare both results. Even in the most “advanced and correct companies,” the coincidences do not exceed 10%.
This experiment once again confirms that working with metrics requires constant training and development in order to be able to see the real picture of changes occurring in the business and promptly adapt your strategy in accordance with them.