Key Result Area, is perhaps the most important yet under recognised concept of Business Management. And I wish that KRA was as well recognised as SWOT (Strengths Weakness Opportunities Threats) assessment used for everything that does NOT even qualify for a SWOT! Hence, I will issue a blog in public interest.
As the abbreviation of the acronym speaks for itself, the term stands for the areas that deliver the maximum results. In business there are dozens of aspects that demand your time and resources, but all of them will rarely deliver equal results, gains in revenue or profits.
Think of this as a Pareto chart where all your result areas are arranged in decreasing order of impact, starting from the one with the greatest impact. For instance, if you are a retailer, you will realise that areas such as Sales and Stock Management will have greater impacts compared to Human Resource or Legal areas. The same assessment can be done at deeper level; for instance, there are multiple aspects, namely training, staff, dress code, display, etc.., that you can address to improve sales; however not all of them will deliver equal results.
And identifying your KRA becomes crucial because all businesses have finite resources. In real world, most businesses have limited resources, making trade-offs necessary. Thus, business managers and entrepreneurs always fall short of resources and need to make choices. The identification of KRAs plays a vital role in deciding whether this choice will align the resources and efforts towards organisational KRAs or starve them!
Now that we know about KRAs, it is time to distinguish them from low hanging fruits. Some of the identified options may be low hanging fruits but not necessarily KRAs. Think go these easy fruits as levers with extremely long handles that you can mobilise by the effort of single finger. In other words, the tasks or options that you can accomplish with minimal efforts. But their impact may not always be significant; hence, some KRAs may be low hanging fruits but most may not be so. But as a general practice, most executives take these fruits disregard to their status of KRAs, in absence of any cons.
In order to identify KRAs in business, one needs to be familiar with the nature of business and its area of core value creation. For instance, in retail the core value creation revolves around consumer perception that increases the perceived product value and subsequent sales as well as margins; hence, retailers invest their resources to elevate the look and feel of store, product showcase, SKU / stock management, sales training and staff. Whereas, for manufacturers the quality, pace and economic nature of business contributes to business success. While in case traders, the pace of transactions and minimal cost of each transaction decides business success. Hence, the areas that increase the outcome or increase the likelihood of outcome in the aforementioned aspects will be classified as KRAs.
Just as businesses, the concept of KRAs also applies to personal lives. And this is perhaps the single most important concept that can help anyone succeed in life. For instance, the KRA for athlete includes physical fitness and expertise in the game; and everyone knows how much time athletes and performers such as actors, artists, musicians and dancers invest to master their play. The applies to everyone else! Being involved in the intellectual trade of consulting and academics, I always invest time in widen and deepen my intellect, along with efforts to sharpen and master my skillset.
This also applies to our purchase decisions and is critical as this precedes the popularised need and want assessment. While making any purchase, you should assess whether it is going to make your life easier or help you reach the next level. In some cases this will serve as basis to your need and want classification. You can then do a want assessment to decide how much to spend. In my case, I upgrade my laptop frequently (this is my 7th laptop within a decade), and always have a decent budget; since laptop is critical for my work, disruption in my relationship with laptop will screw my productivity. At the same time I try to save on my mobile phone as I have a very limited use of mobile phone. To put it in perspective, I am still using an iPhone 7!
KRAs are critical, not only because of their magical ability to yield results but also because finance is a limited resource. Hence, I would recommend you to read our blog on Financial Literacy, and also think about KRAs from a financial perspective.
Follow your KRAs and they will lead you to success!
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Savvy Munshi 