In theory, Key Performance Indicators (KPIs) help leaders make better decisions by quantifying and tracking the vital signs of the organization that help connect individual behaviors with the organizational mission. In reality, many decision-makers use KPIs in at least three counter-productive ways.
Enamored with the broad potential of KPI-aided decision-making, these executive warriors use KPI tools with the eagerness of a drowning man who finally manages to draw a life-sustaining breath. But, without an accompanying analytical rigor, raw enthusiasm lapses into the “Shiny Object Syndrome”.
The clearest symptom of this ailment is difficulty in distinguishing between representations and realities. Social media measurement tools, for example, have made it easy to track “likes”, “followers”, “friends”, “shares” and “retweets”, enticing marketers to conflate these metrics with the quality of the brand’s engagement with the audience. Without adequate focus on the quality of the data behind KPI dashboards, the enthusiasts risk making decisions that seem sensible but prove counter-productive.
The excitement about new measurement tools is understandable, but not when it leads to a drastically diminished interest in doing the hard work — i.e., testing data-driven hypotheses and applying insights collaboratively to achieve desired outcomes.
Like the character in the film American Psycho, these consumers of KPI tools don’t care at all about the relevance or reliability of the data behind colorful KPI dashboards. To them, KPIs are just another tool in the game of smoke and mirrors, the game they really enjoy. So, they use KPIs (and data in general) not to reveal underlying realities, but to distort them in order to support their own political objectives. Skillful manipulators use KPIs to inflate financial projections, cook the books, reward their allies, weaken their opponents and, most importantly, construct arguments in favor of increases in their own remuneration.
Data can never dictate decisions. KPIs are simply a decision-support tool, not a substitute for intuition, wisdom, experience, judgment or epiphanies, and one of the characteristics of effective leaders is their ability to make decisions in the context of inadequate data.
These misguided applications of data science draw a steady stream of searing criticism from “true believers” who understand that KPIs (just as surgeries and NASA missions) only serve their purpose when carefully managed by professionals who honor the complexity of the task. Otherwise, KPIs are dangerous, just like a surgeon who amputates the wrong leg because he looked at the wrong X-Ray.
We welcome inquiries from prospective clients considering KPI deployments and improvements.