When creating dashboards, I've considered:
- Relevance of data to stakeholders
- Suitable visualization methods
- Actionability of highlighted metrics
- Decision between exploratory or explanatory format for clients.
However, a dimension that has been overlooked is: Why does the stakeholder want a dashboard in the first place.
As a result in this post I'm going to explore two potential business uses/needs for a dashboard: Operational, and Strategic.
Operational Dashboards:
The term "Operational" signifies activities, processes or functions directly related to the day-to-day running of an organization or system. These are the things that keep a business open on a day to day basis.
Operational dashboards should be made to track current performance on KPIs
Operational dashboards benefit from being more specific and detailed, staying relevant to a particular department or process, enabling users to enact direct action to defer any recent or oncoming issues.
The following stakeholder typically find more value in an Operational dashboard:
- Department Heads
- Middle Managers
- Operations Managers
So how could I approach an operational dashboard?
A good place to start is to understand and focus on the business process or segment the dashboard will pertain to. Using KPIs allows managers to get an overall understanding of day to day performance, but also exploring relationships between key metrics will allow them to preempt issues on the horizon. It is also a good idea to include de-aggregated values to allow for more granular understanding of the operation.
In short:
- Identify current performance
- Compare this to expected or desired performance (maintaining a narrow focus, thinking only a few months on either side)
- Figure out what contributes to under or over performance, to allow direct action to rectify issues.
- De-aggregated values allow a deeper view of what is happening on a day to day.
So Operational Dashboards are all about enabling stakeholders to have a clear view of a specific department or process. To do so department specific metrics are essential. Below are three examples to start you on your way, as well as a resource which contains many more.
Sell-Through Rate:
This shows how much of available inventory has sold as a monthly percentage. This can be used in retail businesses to assess whether inventory levels are too high or too low. If the value is high, it could indicate a need to lessen demand through increasing pricing for example.
Sell-through rate = (Quantity of sales in month/Month beginning inventory) x 100
(For more inventory specific metrics: https://www.netsuite.com/portal/resource/articles/inventory-management/inventory-management-kpis-metrics.shtml)
Customer churn rate:
This shows the rate at which customers stop doing business with a company and is useful for signalling any potential issues with the product or service offered. Though depending on the business model some churn is expected.
Customer churn rate = [(Customers at start – customers at end) / Customers at start] x 100
Capacity utilisation:
This shows of a total resource available, a company uses. It can provide insights into efficiency, productivity, cost management, competitiveness, and investment decisions for businesses.
Capacity utilization = (Capacity used / Total capacity available) x 100
(This website has an extensive list of department specific metrics for you to explore and get inspiration from)
Strategic Dashboards
The term "Strategic" points to the long-term planning and decision making processes within an organisation. Strategic activities involve setting goals, identifying resources, assessing competitive environments and determining the best course of action to acheive desired outcomes over an extended period.
*There is overlap here as operational goals often work towards a companies strategic goals, and strategic goals make use of operational resources/data to be established. *
They track long-term organisational strategies (we will explore how to do so later in this post). They should also focus on measuring progress towards a or a set of goals allowing for adjustment of actions based on progress towards the target.
The following end users would benefit from a Strategic dashboard:
- Executive Management
- Senior Managers
- Business Development Teams
So how could I approach a Strategic dashboard?
One way to approach it is the OKRs methodology.
OKR stands for Objectives – Key results and is a goal setting framework.
The Objectives are qualitative and represent what you want to achieve or improve and the key-results are the measurable outputs that will lead you to this desired objective.
If you want a more in depth introduction I recommend this link.
This could be used as an overarching framework when designing a dashboard for a stakeholder who will use it for more broad goal tracking, Tracking the performance of "Key-Results" should always be linked back to the main objective.
It is very important to communicate with the end user to get a clear understanding of their end goals as well as the key results that they deem important to get there.
Establishing the goal of your dashboard (Strategic and broad, or operational and concentrated) will help you have a clearer understanding of what it is you want to enable your end users/ stakeholders to do and empower you to deliver an output that hits the mark.
Hopefully this post has helped you begin to understand the difference between operational and strategic outputs as well as the types of measures that contribute to each. As well as why it’s important to make a clear decision (operational measures play into strategic goals but still empower operational stakeholders to implement direct action.)