Key Performance Indicators

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Every day, we pay attention to things that keep our lives running smoothly, like making sure our phone battery is charged. 


Today's post is inspired by a presentation I did with my team around KPIs, short for Key Performance Indicators. 

I've created many dashboards in the past, but I hadn't fully understood the significance of KPIs.

After questioning the significance of these numbers and taking a LinkedIn Learning course, I gained a clearer perspective on the topic. 

Imagine pilots in a cockpit:

If they focus only on one sensor, they could miss other crucial information and risk a crash.

On the other hand, if they try to monitor every single indicator at once, they’d be overwhelmed and could make critical errors.

You see, the reason why it's called a key performance indicator is that you must be intentional with your selection process so that you get the desired result.

You get what you measure!

After completing the course, I realized how essential it is to select the right KPIs carefully.

Here are a few tips to help you focus on the indicators that will ensure your plane—your project or business—stays on course: 

Use a Balanced Scorecard

It typically measures performance from four perspectives: financial, customer, internal processes, and learning and growth. This multi-dimensional approach ensures that organizations are not just focusing on financial outcomes but also on areas critical to long-term success.
 
Microsoft uses a balanced scorecard to monitor not just profits but also customer satisfaction, innovation, and employee training.


Measure What Matters

The 80/20 rule, or Pareto Principle, suggests that 80% of the results come from 20% of the efforts. In business, this means that a small number of key metrics will have the most significant impact on performance.

Amazon tracks critical metrics such as customer retention rates, average order value, and delivery times. 

You Get What You Measure

When employees understand which specific metrics are being tracked and emphasized, they naturally align their behaviors to improve those numbers. This concept is tied to the psychological phenomenon known as the "Hawthorne effect," where individuals modify their behavior in response to being observed.

When Google set an internal goal to measure and improve site speed performance, their engineers focused on reducing page load times. 



Resources

KPIs for Dummies











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