Key Performance Indicator (KPI)

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What is a “Key Performance Indicator (KPI)”?

“It is better to have an approximate answer to the right question than an exact answer to the wrong question.” — John Tukey, statistician

Key Points:

• Not all Measurements are equally important. Measurements of the critical parts of a system are called Key Performance Indicators (KPIs).
• These are a few questions, related to the Five Core Business Processes you can use to identify the KPIs:
  
  
  
  • How quickly is the system creating value? What is the level of inflows?
  • How many people are paying attention to your offer? How many prospects do you have?
  • How many prospects are becoming paying customers?
  • How quickly can you serve each customer? What is your complaints rate?
  • What is your profit margin? How much purchasing power do you have?
• Try to limit yourself to three to five KPIs. If you overload yourself with data, you won’t be able to make significant changes.
• Focus on your KPIs to improve your system with the critical data.

Questions for Consideration:

• What are the key components of the system you’re analyzing? How can you measure them?
• Of those measurements, what is the set of 3-5 KPIs that will give you the most important information you need to know about how the system is operating?

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