I often ask, “what are your key performance indicators (KPI)?” The purpose of the question is to understand if business leaders have existing metrics. The answer often provides insights into how focused they are on results. About a year ago, I asked the leader of a local innovation lab. At the time, their response surprised me;
“We don’t have KPI because I want to enable creativity for the team, and KPI would narrow our thinking.”
Wow … that was not the answer I was looking for. However, it got me thinking … Do well-defined and easily measurable KPI pave a path to success, or are KPI a path to tunnel vision and groupthink! There are two schools of thought on using KPI to drive results.
The Case for Key Performance Indicators
Spoiler Alert … I am a big fan of metrics and key performance indicators. However, either Peter Drucker or Edward Deming first said, “What gets measured gets done!” Drucker and Deming are perhaps two of the greatest business minds of the 20th century, and I am a big fan of both schools of thought. What gets measured tends to focus teams’ energies on producing measurable results.
The Case against Key Performance Indicators
However, the case against metrics and key performance indicators is also quite compelling. Liz Ryans writes, If You Can’t Measure It, You Can’t Manage It: Not True. Liz Ryan goes on to say, and I quote, “Measurement is our favorite CYA activity. It’s an inherently fear-based process because the reason we measure everything in business is to prove to someone who’s not in the room that we did what they told us to do.” So take that metric, police!
Who’s Right?
According to Drucker and Deming, measurement is essential to getting things done and driving results. However, according to Liz Ryan, metrics are code for CYA, and “the vast majority of important things we manage at work aren’t measurable.” These two diametrically opposed points of view have inspired me to dig deeper into the case for and against key performance indicators. Several questions spring to mind due to these diverging schools of thought.
Key Performance Indicators questions and considerations
- What are some examples of KPI that worked or don’t work?
- Do KPI stifle creativity or enable results?
- Can you balance KPI to enable both; results AND creativity?
The next few posts will dive a little deeper into each of these questions.
Ian Paul Graham
“I help startup founders find product-market fit and business owners build digital demand teams.”