Chapter 26: KPIs and Measuring Success

Chapter 26: KPIs and Measuring Success - Knowing Whether the Strategy Worked

Learning Objectives

By the end of this chapter, you should be able to:

• distinguish objectives from KPIs
• identify leading and lagging indicators
• establish meaningful targets
• connect KPIs to strategic objectives
• use KPIs to create feedback loops
• avoid measuring activity instead of impact

Why This Matters

Your source material asks one of the most important questions in a case: How will the organisation know it actually happened? That question turns a recommendation into a management system.

Discover Your Mad Skills Principle

If you can’t measure progress, you can’t manage the strategy effectively.

Objective vs KPI

• An objective describes what you want to achieve.
• A KPI measures progress toward that objective.

For example:

• Objective: Increase customer adoption.
• KPI: Monthly active users.
• Target: 25,000 monthly active users within six months.

Leading vs Lagging Indicators

Leading Indicators: These show you whether the activities driving future performance are occurring. Examples:

• number of customers contacted;
• employee training completion;
• pilot participation;
• conversion funnel activity.

Lagging Indicators: These tell you what actually happened. Examples:

• revenue;
• profit;
• market share;
• retention;
• customer satisfaction.

Include both leading and lagging indicators, along with targets and ranges.

Don't Measure Activity

A team might report: "We trained 500 employees." That is an activity. The better question is: Did the training change employee behaviour or performance? Likewise: "We launched the campaign." doesn't mean: "The campaign worked." Measure outcomes.

Targets

A KPI without a target is difficult to interpret. Instead of: "Increase retention." Use: "Increase customer retention from 72% to 80% within 12 months." Where appropriate, establish ranges. For example:

• Green: ≥ 80%
• Yellow: 70–79%
• Red: < 70%

This makes the KPI actionable.

KPI Hierarchy

A useful structure is:

Strategic Objective à Outcome KPI à Leading Indicators à Actions

This creates a feedback loop. If the outcome is off track, the organisation can investigate the leading indicators and adjust implementation.

Coach's Lens

Don't give the judges 15 KPIs. Choose the few that matter. Ask: If the CEO could look at only three numbers every month, what should they be? Those are probably your most important KPIs.

Common Mistakes

• Too Many KPIs
• More isn't better.
• Vanity Metrics
• Large numbers that don't indicate meaningful progress.
• No Targets
• A KPI without a benchmark isn't very useful.
• Only Lagging Indicators
• By the time you see the problem, it may be too late.
• KPIs Unconnected to Strategy
• Every KPI should tell you something about whether the strategy is working.

Mad Skills Drill

Choose your recommendation. Identify:

• one strategic objective;
• two lagging KPIs;
• two leading indicators;
• a target for each.

Then answer: What would cause us to change the strategy? That question creates strategic discipline.

Chapter Summary

KPIs transform implementation from: "We hope it works." into: "We know what success looks like, and we know how we will monitor it."

Key Takeaways

✓ Start with objectives.

✓ Measure outcomes.

✓ Use leading and lagging indicators.

✓ Set targets.

✓ Keep the KPI set focused.

✓ Create feedback loops.

Looking Ahead

There is one final category of ideas that teams often struggle with: What about the other good ideas we discovered? That is where future considerations belong.