It is generally accepted that only a few key performance indicators have a large influence on profitability – but defining those metrics and understanding how they interact with each other is difficult.
L.E.K. has developed a seven step Dynamic Performance Management (DPM) approach, which helps businesses to address this problem and create opportunities to increase profit by over 30%.
The DPM framework enables organizations to identify their most critical operational metrics and link them together in an economic matrix that calculates future cash flow and profitability. Systems are set up to capture and analyse the required data, allowing senior management to make informed decisions about the strategy, organizational structure and culture of the business.
In this Executive Insights, Partner Peter Smith presents a detailed explanation of each step in the process and explains why realigning the business on just a few KPIs can stimulate transformative change.