Yes, I know...
There are already a million other blog posts out there telling you about metrics and KPIs, their differences and what you should measure. But perhaps not as many written specifically for mining company CEOs.
Right off the bat, let’s put a different spin on it; I’m sure you already have data galore at your disposal, but the question is:
As the CEO, are you tracking data that’s relevant to you?
For simplicity, let’s think of metrics as measures you use to track the progress and success of a certain area of your business, while Key Performance Indicators (KPIs) indicate how well you’re progressing towards some of your strategic objectives.
You may have seen the following graphic. Originally in the form of the DIKW pyramid, this has evolved to include Impact.
Why is impact important?
Because impact is what you are setting out to achieve with your strategy and business plans.
Most mining companies we have dealt with have more data available these days than they know what to do with. Quite literally. But the issue is that if they don’t measure the right things it will be just that to them – data. And data in and of itself does not provide insight.
“If your Business Intelligence system doesn’t allow you to join the dots, all you have is data.”
So, let’s start with the end in mind:
What is the impact you are wanting to achieve? As the CEO, it’s probably about impressing your shareholders.
However, if you just measure the impact you are trying to achieve, you will have to wait until the end of the respective business cycle (month, quarter, year) before you know whether you’ve achieved it or not (lagging indicators).
What we need to do is to track some of the steps that get us there (leading indicators). Traditionally, we measure our mining physicals, like tonnes of ore moved, metres underground developed, metal produced, etc.. But again, by the time these outcomes have eventuated, the race is over and you will have missed that business cycle.
What you need is more leading information, or better still, predictive insight.
There are several mental models to choose from as to what you should measure in between. You could approach it like the Business Model Canvas does. It includes thinking about your value proposition, your customers and suppliers, costs and revenue, and so on.
Or, you could think about it in light of Porter’s Value Chain.
Another popular choice is a Value Driver Tree (VDT) model, which requires someone to make a mathematical twin of your operations and is great for scenario modelling.
These are all good models!
However, as the CEO, the buck for producing an effective business strategy and successfully executing it stops with you. You do not personally execute it so you are somewhat removed from that phase. So Instead, you need to have eyes on the execution’s progress and not be flying blind until it’s actually done – or not done, as it’s too late in the game to correct!
Let me propose a different mental model for your metrics
Use the ‘Strategy to Bank’ model to challenge your current measures and help you identify new leading and even predictive ones
If you walk through the steps from top to bottom, you will spot some differences from other models.
Most people will read it from top to bottom, but it may make more sense to read it from the bottom up. Starting with the end in mind (impact) you can ask yourself: “Exactly, what are the impacts we are seeking? What are the preceding steps leading to those impacts?” As the CEO, you will see that you ‘own’ both the first and last steps: Strategic Intent and Impact.
But beware of falling into the abdication trap. Without successfully completing the steps inbetween Strategy and Bank, the Strategic Intent will not be fulfilled completely. You must delegate these steps and continue to monitor them. This is where the right metrics and KPIs come in.
The main advantage of this model is that it outlines what some might call ‘softer’, less tangible steps required to achieve your desired impact. They may be less tangible for some people but no less important! Understanding the ‘Strategy to Bank’ process can help you identify some KPIs like these:
Some examples:
- Hopefully, you are using something like the Balanced Scorecard framework. In mining we often see Kaplan & Norton’s classic four perspectives (Financial, Customer, Internal Processes, Organisational Capacity) replaced with five more mining-specific pillars (Zero Harm, People & Organisation, Operations, Growth and Financial Outcomes). Your targets and measures need to include not only what it should look like when you get there but measuring progress against your strategic initiatives. Not breaking these down into tangible, time-bound milestones and tracking them is one of the most common issues we see in the field!
- To achieve your strategic impact, you need people whose values are aligned to it so you may need to modify your current values (if that doesn’t make sense, read how Uber’s values have had to change to suit its changing strategies and operating models).
- Have your company values been defined/updated and communicated in line with your strategy?
- Required Behavioural Competencies (for definition see graphic) must be informed by the strategic intent and updated – have your updated values been used to inform Key HR Metrics? Are you tracking them? How about Employee Engagement? Are you taking it seriously enough?
- Are you tracking overall capability scores and progress/compliance to personal and/or team development plans & performance appraisals?
Conclusion
There are a bunch more KPIs in the operational aspects of your business, but what I want you to takeaway from this article is that your people are the ones executing your strategy. They need to fully understand it, be capable of executing it, have the necessary tools and processes to do so successfully and be held accountable for doing it. These are some of the things you want to start measuring and tracking.
