Key Performance Indicator

A key performance indicator is a measure selected to help assess an important objective. Effective sets may combine outcome and process measures, including leading and lagging indicators. The number and type should fit the decision, data quality, and cost; setting a target can create incentives that weaken a measure's usefulness.

A KPI should make a consequential question easier to answer. Start with the intended outcome, then choose a measure whose changes can be interpreted in relation to it. Define the denominator, population, and period so that a better-looking number cannot be produced merely by excluding difficult cases.

Use a small set of complementary measures to keep the proxy from becoming the purpose. An outcome measure can show whether something improved, while a process measure can help investigate why. Neither deserves automatic priority; check data quality, unwanted incentives, and the important parts of the objective that remain unmeasured.

When to use it

When building or iterating on products; when evaluating market opportunities; when deciding resource allocation; when scaling operations.

How it can help

Directly applicable to building, launching, and scaling products and businesses. Helps prioritize actions, identify market opportunities, and build sustainable competitive advantages.