Key Performance Indicators (KPIs) are the critical (key) indicators of progress toward an intended result. KPIs provide a focus for strategic and operational improvement, create an analytical basis for decision making, and help focus attention on what matters most.
The Challenge
“What gets measured gets managed.” But also, “When a measure becomes a target, it ceases to be a good measure” (Goodhart’s Law).
The Trap
The Measurement Trap occurs when KPIs are:
- Vanity Metrics: Look good but mean nothing (e.g., “likes”).
- Perverse Incentives: Encourage bad behavior (e.g., “calls per day” leading to spamming).
- Siloed: Pit teams against each other.
The Value-First Approach
Choose KPIs that measure Value Flow and Relationship Health.
- Instead of “Leads Generated,” measure “Hand Raisers.”
- Instead of “Calls Made,” measure “Conversations Started.”
- Instead of just “Revenue,” measure “Net Retention.”