In order to understand the business problem, it is necessary to understand the goal of a project or a business (the latter is easy, it is always about making money). As a consequence, there is a hierarchy consisting of
- Business Goals
A goal is where you want to go or what you want to achieve. It is important to define SMART goals, where goals are specific, measureable, attainable, realistic and timeable:
- Business Goal: Revenue of 1.000.000€ in 2018
- Reduce the Cost per Order to 5€ by Q3/2018
- Increase Website Conversion Rate to 2% by Q3/2018
- Increase qualified visits to 10.000 unique daily visitors in Q2/2018
- qualified unique visitors/day
Goals, KPIs and Metrics are often confused (and everytime this happens, a sweet beautiful unicorn dies). A good way to remember the difference is a journey:
- You want to go drive from Hannover to Hamburg and arrive before 3 pm. This is your goal.
- KPIs are time, speed and maybe GPS coordinates (are you on the right way)
- Metrics are km/h and time
Sometimes, only KPIs are defined but no goals or KPIs are disconnected from goals. In this case, all numbers are great because there is no goal. Or, as Seneca said, If one does not know to which port one is sailing, no wind is favorable.
Next: The Holy Trinity of Data