AI-enriched KPIs can help companies boost performance and better align operations with core business goals.
Copyright: mitsloan.mit.edu – “Build Better KPIs With Artificial Intelligence”
To tackle the age-old challenge of aligning operations with core business strategy, savvy business leaders are using artificial intelligence to help use and develop key performance indicators.
AI-enriched KPIs, known as smart KPIs, can better guide organizations toward key business goals. Smart KPIs paint a more detailed and accurate picture of what’s happening in the business: They provide predictive insights and situational awareness that can help organizations improve performance and foster better coordination among corporate functions.
A global survey of more than 3,000 managers conducted by MIT Sloan Management Review and Boston Consulting Group found that executives across industries are using AI to enhance how KPIs are prioritized, organized, and shared while also improving KPI accuracy and predictive capabilities.
Survey respondents who said their company had used AI to prioritize KPIs were 4.3 times more likely to have seen improved alignment between functions than those who had not used AI.
The research team identified three types of smart KPIs:
Smart descriptive KPIs synthesize historical and current data, serving up insights on past and current performance while providing context on critical gaps. The results are more effective KPIs and a better understanding of KPI relationships.
Smart predictive KPIs anticipate future performance and provide visibility into potential outcomes while highlighting preemptive actions that will mitigate risk or expand opportunities. For example, General Electric is using smart KPIs to analyze order pipelines to identify opportunities for increased future orders.[…]
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