Prioritization is one of the most important roles of a leadership team. With too many projects competing for limited resources it’s critical to make the right choices on choice on what, and what not, to pursue.
We’re used to forecasting value that lends itself to financial indicators like Revenue, Net Present Value, Internal Rates of Return, Market Share, and so on. Most organizations have a rigorous and consistent approach to financial forecasting. Does your organization have the same discipline when it comes to valuing benefits that don’t readily lend themselves to financial measures? Do teams struggle to express overall project value in purely financial terms? Are financial projections overly optimistic?
If you answered “yes” to any of these questions, using Key Value indicators can help.
What’s a Key Value Indicator?
Key Value Indicators measure the value of program benefits that don’t readily translate to a direct financial value. While related to Key Performance Indicators (KPIs), KVIs are forward-looking and intended to forecast future non-financial benefits. KVIs are primarily used when evaluating “should we do it?” while KPIs measure how well we are doing.
The individual Key Value Indicators are weighted based on organizational priority to create an overall program KVI. These are some common KVIs:
- Competitive Advantage
- Industry Landscape
- Talent Development
- Program Key Value Indicator Score
What are the organizational benefits?
Putting in place a Key Value Indicator framework:
- Creates an agreed organizational approach to valuing non-financial benefits
- Results in more realistic, and achievable, financial projections
- Benchmarks allow programs to be compared, and measured, across the organization
- Allows leadership to make better decisions:
- Balances financial and non-financial benefits
- The consistent evaluation framework highlights overly optimistic assessments
Using KVIs is a mindset. It’s an approach organizations, in whole or in part, can take to make better decisions. And like Key Performance Indicators, the definition and implementation is specific to your situation and to your needs.
A2K helps organizations make better decisions by implementing solutions that bring structure to qualitative assessments of value. Our predictive modeling and Key Value Indicator solutions bring organizational discipline to forecasting and measuring implicit value.