Using AI to Build KPIs

MIT Sloan Management Review, in conjunction with Boston Consulting Group recently produced a fascinating report on how businesses are using AI to build KPIs and enhance performance. The report highlights that for businesses involved in digital transformation, leading companies are “not just using AI to enhance performance but to redefine it by challenging long held-assumptions about the drivers of business success”. This blog post will summarise the article but also highlight some low-cost methods for small business to harness AI to build better metrics and ultimately enhance business performance.

The Report

The MIT Sloan report principally  talks to the employment of AI to enhance a company’s utilisation of Key Performance Indicators (KPIs). Companies that revised their KPIs with AI saw significant financial benefits, improved outcomes, and enhanced decision-making capabilities. Most importantly, AI was helping companies identify critical relationships between various KPI silos, for example, sales based KPIs and marketing KPIs. All managers know the inter-play between the two functions is important, but it can be challenging to find the relevant data. Utilising AI can ultimately help businesses build and measure more effective  KPIs to drive performance

The report provides four key ways businesses can practically utilise AI for measuring KPIs.

Creating “Smart KPIs”: By enriching KPIs with AI, companies can develop three types of smart metrics:

1. Descriptive KPIs: Synthesis of historical and current data to provide insights on what happened or is happening.
2. Predictive KPIs: Anticipate future performance by providing the AI suitable data to extract reliable leading indicators.
3. Prescriptive KPIs: Recommend actions to optimise performance and suggest corrective measures

• Enhancing Design of Existing KPIs: Organisations can harness AI to rethink KPI design and ensure alignment with strategic objectives. AI can reveal critical interdependencies among different KPIs, identify patterns that humans might overlook, and recommend pre-emptive actions to mitigate risks or leverage opportunities. The report provides a high-level example of an online marketplace drawing data from their e-commerce platform. The system was able to develop a scoring system incorporating merchants and customers that ultimately lead to better matching of customer requirements to merchant demand.

• Creating New KPIs: AI can not only propose but also design novel KPIs that offer strategic and operational value. The report provides an example that any business can harness; utilising ChatGPT prompts to generate several novel KPI’s that can be applied to your specific circumstances. In the examples provided, the company was able to provide sufficient context to ChatGPT to elicit a range of previously under utilised KPIs that may produce better results for their requirements. It was also able to re-prioritise their existing KPIs based on prompted data.

• Establishing relationships between KPIs. The report highlights companies that were able to characterise key variables such as strategic outcome variables, operational drivers and contextual factors around their existing KPIs. They could then use these categories to interrogate the AI to discern clearer relationships between the KPIs. Using AI reduced the overwhelming amount of data that existed, allowing hidden variables and patterns to emerge.

Recommendations for Small Business

With 97.3% of all businesses in Australia being characterised as small businesses, some of the data insights referenced in this report may be viewed as out of reach. However this is not the case. The proliferation of applications leveraging various AI models is immense and its only growing.

Here is one practical way a company can use a $20 (USD) subscription to ChatGPT to build a viable tool for generating effective KPIs:

• Step 1: Subscribe here to ChatGPT and sign up for a Plus account. You will need a credit card but there are no lock-in fees.

• Step 2: Create your own custom GPT. Harnessing the power of GPT 4, you can create customised mini-GPT’s that utilises your specific data to drive answers. We are also excited that ChatGPT now allows you to ‘opt-out’ of using your data to train their models. This new feature will be provide some additional protections against such attacks as prompt injections.

• Step 3: Upload relevant data to the knowledge base. Its here where you can upload current performance data alongside industry benchmarks or information regarding competitors. Contextual information about what KPIs your currently using will also be useful.

• Step 4: Train and query the data. Once you have your mini-GPT established, you can use specific prompts to help the GPT understand the data available. Once cued, you can start to interrogate your data, relationships between certain KPIs and relationships to benchmarks. You can also ask GPT to analyse data available outside your GPT via Bing to draw in additional KPIs, benchmarks and statistics to help you build out new approaches or measurements.

This data isn’t static. Where the real power of this approach can come into play is utilising available APIs to interface with applications such as Google Sheets. With advanced capabilities within ChatGPT and your cloud-based software, you can actually build scripts that allow you to extract data from GPT to upload the data analysed to spreadsheets periodically.

Conclusion

This report provides useful insights into how companies are harnessing AI to drive performance. Developing better KPIs, and analysing this data more effectively is one such way companies are doing this. And the best part is, you don’t need teams of data scientists to do this anymore. Using free or very low-cost tools can produce outsized results.

If your curious about how innovative tools such as generative AI can be harnessed to improve your business, get in touch with Vitr Technologies. We offer a free digital audit of your business to help determine where the most impactful changes can be made.  We can help you establish the tools required to enhance visibility within your business and marketplace, with a goal of helping you realise the return on your investment rapidly.