KPIs: Logical but Often Misunderstood

Having KPIs seems like an extremely logical and sought-after part of business. But oftentimes, we’re not really putting them to use. Just use GenAI or Google, and you’ll be bombarded with sales and operations KPIs stemming out of a microeconomics handbook.

It would seem that those KPIs are predefined terms that aren't meant to be messed around with, dealing strictly in specific areas. However, KPIs go way beyond that:

KPIs should be applicable to every facet of the work.

They should be custom, understandable, and tied into the goals.

Tracking the Right Metrics – Qianlong’s Marble Boat was designed to embody unshakable rule—just as meaningful KPIs should reinforce a team's core strengths.

Why a Data-Driven Culture?

As a leader, you want to have a data-driven culture. You aim to optimize your system and move away from micromanaging every activity, toward following general trends and hitting benchmarks of performance.

Challenges with KPI Tracking: A Real-World Example

Problems sometimes arise from setting up tracking for KPIs. Let’s take an example from a tech company I worked with:

• One goal was to improve developer planning and estimation proficiency.

• Since they were using a Kanban approach, there were no specific KPIs set up as in Scrum, where you have a clear image of planned vs. done work.

• Without proper tracking, someone would need to manually track each task's age and then approach developers individually.

A more efficient approach involves understanding how estimations come in and cross-referencing these with the actual time spent. By plotting such KPIs in Jira, for example, we can get an overview of what’s going on. Parsing this data through a central system allows you to clearly see, in percentages, where planning issues lie.

The KPI Trap – Without customization and clarity, KPIs can mislead teams rather than improve performance.

Using KPIs for Effective Follow-Up

Once you have information in your graphs, you can easily follow up in retrospectives or one-on-ones. These sessions help you understand the why behind the numbers. Whether the issue is the need for coaching or the complexity of the project, solutions can begin to be collected once we clearly deal with the information.

Unconventional KPIs: Learning from History

To drive this customization point home, I want to demonstrate a lesser-known example of data tracking for leadership:

• The Mongols would track their success by how their people survived after a battle to measure how a leader was performing.

• They monitored how many defections there were in the cities they conquered to see what strategies worked and which did not.

• After all, it's better to win a battle without spilling blood.

This historical example demonstrates the importance of customized KPIs in understanding how people work and which strategies succeed. Clear KPIs also explicitly communicate what's expected from your team, giving them a precise picture of your needs.

Data-Driven Conquerors – The Mongols used strategic KPIs to track leadership effectiveness, proving that data-driven decision-making isn’t new.

A Word of Caution on Simplicity

However, do be careful—by having a very basic KPI setup, you might not get an accurate picture of great performers and vice versa:

• Someone might be lucky or skilled in one specific area but awful in others, yet still appear great based on KPIs alone.

• Whenever possible, always follow up to understand how high performers succeed so they can help others replicate their success.