I was walking around the production area with one of my former bosses earlier in my career. I had recently been appointed to a position I had been performing for years and during this walk I was told that a list of approximately 7 metrics were what I needed to hit to succeed in the new role. And, as a newly anointed member of management, I would be measured against these KPI’s. I reviewed the 7 and I assured my boss that hitting the targets would be no problem, to which he looked astonished and then smirked. I felt a lesson coming on.

My boss, about 10 years my senior, assured me in a lightly condescending tone that I should try hard as he would very much appreciate that effort. It was apparent to me that he felt my over exuberance was simply showing naivety. I turned to him and said that I honestly have no doubt I can accomplish these objectives, the real question is do you really want me to?

He stopped, not knowing how to handle my defiantly subversive comment. He was genuinely interested at my statement and my apparent lack political correctness. From my point of view, to make money and succeed, we need to be brutally honest and do what actually needs to be done.

Anyone can make a KPI turn green on a report, but that doesn’t mean we have done what is truly needed for success!

Success? — Declaring KPIs can give us a managerial assuredness of progress and the successful meeting of business measures, but it does one insidious thing–

KPIs become the proof, unquestioned, that business is succeeding!

And often are used to justify the very actions which lead to business failure. KPIs are not the truth, nor should they be confused with the truth.

KPI stands for Key Performance Indicator and nothing else

We have divorced ourselves from the main point of a KPI –> Indicator. An indicator is nothing more than a touch point to begin to understand. The entry point for guided analysis. To put it another way, a KPI is not the analysis, it is simply the beginning. And no KPI should be ignored, regardless of the target attainment characterization.

Analysis must be of the underlying root causes, but to often is relegated to simplistic summary reporting of KPI values, often with the infamous change over time comparisons of the very KPI such as Year Ago or Like Periods –essentially an analysis of the change in KPI status.

Do the hard thing–ask your team:

• “What is wrong with the company?”
• “Why are we losing market share?”
• “Why are we meeting the SLA?”
• Etc.

Will the team give you the KPI’s restructured with trend over time?

How about a song and dance about a series of initiatives?

I suspect no true scientific testing, very little statistical analysis, etc. And driving this behavior is the fear of reprisal for saying “we do not know why” and who could blame them when the analysts’ jobs have been to refresh the standard reports and send them to the proper stakeholders for the last 5-20 years, with only the occasional investigation into if a negative color is the result of a data refresh issue, a master data change that broke a formula or just actual performance!

No one is at fault, it is the trap of using KPI’s incorrectly

Business success requires being on the forefront of analytical understanding of data and a divorce from the “all green” KPI dashboard as proof of success. If someone is hitting their targets, question it. If a department is green, show me the details. Run an analysis on the underlying data points, you will probably not like what you see. Prove why hitting this target did what we needed!

Accept a normal operating tolerance that allows for the “yellow to red” as an OK and normal part of doing business. Ignore nothing. We must accept that:

Not every project will be Green and nor should they be

Yellow marks deserve the same level explanation as a Green ones–imvestigaton beyond the indicator!