Performance Isn’t in the KPIs – It’s in the Spaces Between Them

June 27, 2017 by Stacey Barr

The tick-and-flick approach to reviewing KPIs, one at a time down the scorecard, won’t ever reveal the insights about how to truly improve performance.

The more I learn about health, immunity, diet and longevity (a hobby, I guess), the more it’s reinforced to me that the answers to performance are in the spaces and gaps between things and not in the things themselves.

The same extremist and contradicting health messages keep coming up in the media:

  • Coconut oil is a superfood. Coconut oil causes heart disease.
  • Veganism will save the planet. Veganism makes your brain dumber.
  • Carbs kill. Ketogenesis prevents muscle growth.
  • Red meat causes cancer. Our ancestors ate red meat, so we should too.

You can’t find truth anywhere, it seems. But I think our lazy search for fast and easy truths has us looking for answers in the wrong places. The answers aren’t in the parts: the coconut oil, the veganism, the carbohydrates or the red meat.

Some research does point out that coconut oil can be a factor in heart disease, because it is a saturated fat like butter and lard. But other research has found that it’s not that simple. The health of coconut oil has more to do with the balance between HDL and LDL cholesterol, and factors (like refined carbohydrates) that can tip this balance.

The answers aren’t in the parts. The answers are in the interactions among the parts that make up the whole.

The same goes for measures of our goals. The answers to better performance, or how well we achieve our goals, are in the interactions among measures. Not in the measures themselves.

There’s little point looking at your Total Expenses KPI and freaking out because it’s not hitting target. There’s even less point challenging business unit to cut costs by another 10% this quarter. The KPI Total Expenses is not an island. It’s part of a complex landscape.

Would you really want to cut costs where they are generating much higher revenues? Would you want to cut spending on upgrading systems that are cause of rework that’s costing ten times as much as the system? How prepared are you to scale back on other priority goals that have some level of conflict with reducing costs, like reducing cycle time or improving on-time delivery or deepening customer relationships?

Decisions about improving performance of the whole (not sub-optimising the parts) are always decisions that rest on how well we can interpret the interaction among a related set of KPIs.

The answers to better performance are in the interactions among KPIs. Not in the KPIs themselves.
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DISCUSSION:

Do you have a story about how KPIs have been used to understand how the story of strategy is unfolding, how the insights have come from their interactions rather than their individual targets?

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  1. Tom G says:

    Nifty post! I love the idea of telling the strategy story – it would encourage people to stop chasing the numbers to improving the system. This is essentially another wonderfully practical warning to avoid one of Deming’s 7 Deadly Management Diseases: Running the business on visible numbers alone. Thank you for refreshing this one with a relevant and inspiring application.

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