We are all used to KPIs that are measured in real things, such as clicks, orders or £s. Such KPIs are specific, tangible and usually highly measurable. They are great for measuring the fine-grain detail of business performance but often not so great for measuring strategic change.
The broad sweep of strategy often involves change to organisational culture, customer centricity, innovation or evidence-based decision-making – things that don’t have handy SI units for measuring them.
Dimensionless quantities are used widely in maths, physics, chemistry and economics and are also known as bare, pure or scalar quantities. Well known examples include π (Pi – the ratio of a circle’s circumference to its diameter) and e (Euler’s number – the base of the natural logarithm) as well as ratios, proportions and angles.
Dimensionless KPIs are typically proportions indicating how close a set of goals are to their targets. Let’s consider a hypothetical example of innovation. In order to be more innovative, we need to develop ways to:
- capture more innovative ideas,
- screen those ideas and selecting the most viable,
- rapidly prototype these viable ideas,
- test those prototyped ideas,
- evaluate the tests and
- invest in the commercial development of those that tested well.
Each of these 6 goals can have targets (e.g. a target number of innovative ideas per month, a minimum proportion of captured ideas that are deemed to be viable ideas etc). At any point in time, progress towards these targets can be measured. Given a period of time over which performance is being measured (e.g. a 3 month or 12 month period), the level of progress achieved can be translated into ‘proportional progress’ – what proportion of the change expected over the specified time period has been achieved so far? And if we have proportional progress for each of the 6 goals leading to greater innovation, we can aggregate them to give a single measure of progress towards innovation.