Being nosey here I’d like to know how you all choose your KPIs.
Hi Brandon, welcome to the community and thanks for the question. It’s something I’m interested in hearing from other folks too.
Here’s an abridged version of how we do it at Geckoboard.
For us, KPI choice follows directly from company strategy which is reviewed periodically (~once per year) by the leadership team. Once we have a clear strategy, we search for a metric that best reflects how that strategy maps to the desired customer and business outcomes. In other words, if our strategy succeeds, we would expect this metric to move in a specific direction and if it fails, it would either not move or move in a different direction.
The strategy and metric is shared with the rest of the business and project teams are formed with specific intent to impact that metric. At this point it’s important to think about three more things:
- If this metric is laggy, what are some leading/feeder metrics that might help us know whether we’re on course to hit the main metric for each project/initiative?
- What are the things that might impact this metric but wouldn’t result in the outcomes we wanted?
- How might we “balance” this metric so that if we’re doing things that might impact the main metric but not give us the business outcomes we desire, that we’ll know about it early. This also helps all of us to focus on actions that will give us the outcomes we desire, not just goosing a number. It’s such a common trap that it has a name, Goodhart’s law, which states “When a measure becomes a target, it ceases to be a good measure.”
For anyone coming at this fresh who wants an overview on choosing good metrics and KPIs, you could do a lot worse than picking up a copy of the book Lean Analytics by Alistair Croll and Ben Yoskovitz. We worked with the authors a few years ago to create a free UDemy course that should be a good primer including examples from different industries, and the book is full of case studies and helpful processes.
Finally, we collated KPI examples from different industries - which might act as inspiration for you and your team.