I often ask; “what are your key performance indicators (KPI)?” The purpose of the question is to understand if business leaders have existing metrics. The answer often provides insights into how focused they are on results. About a year ago I asked this question to leader of a local innovation lab. At the time their response surprised me;
“We don’t have KPI because I want to enable creativity for the team and KPI would narrow our thinking.”
Wow … that was not the answer I was looking for. However, it got me to thinking … Do well-defined and easily measurable KPI pave a path to success or, are KPI a path to tunnel vision and group think! There are definitely two schools of thought on the use of KPI to drive results.
The Case for KPI and Metrics
Spoiler Alert … I am a big fan of metrics and key performance indicators. It was either Peter Drucker or Edward Deming who first said “What gets measured gets done!” Drucker and Deming are perhaps two of the greatest business minds of the 20th century and I am a big fan of both schools of thought. What gets measured tends to focus teams energies on producing measurable results.
The Case against KPI and Metrics
However, the case against metrics and key performance indicators is also quite compelling. In her post; If You Can’t Measure It, You Can’t Manage It: Not True Liz Ryan goes on to say and I quote; “Measurement is our favorite CYA activity. It’s an inherently fear-based process, because the reason we measure everything in business is to prove to someone who’s not in the room that we did what they told us to do.” Take that metric police!
According to Drucker and Deming, measurement is essential to getting things done and driving results. However, according to Liz Ryan metrics are code for CYA and “the vast majority of important things we manage at work aren’t measurable”. These two diametrically opposed points of view have inspired me to dig deeper into the case both for and against key performance indicators. There are a number of questions that spring to mind as a result of these opposing camps.
- What are some examples of key performance indicators that work?
- Do key performance indicators stifle creativity?
- How do you balance KPI to enable both; results AND creativity?
The next few posts will dive a little deeper into each of these questions.