Archive for the 'key performance indicator' Category

What measuring Olympic athletic performance can teach business

How should one measure the performance of countries at producing Olympic medal winners, and of the Olympic athletes themselves?  Some members of the press are having some fun answering that question—and there are some lessons for business too. The National Post played around with various ways of adding up the medal count to compare countries. [...]

How do you measure the performance of a business book?

Today* stores start selling our book—misLeading Indicators: How to Reliably Measure your Business. It has been a while coming. It’s natural for us as authors to wonder how it will “perform”. Many of our acquaintances wonder too, and ask us how we expect it to perform. Their indicators are usually sales or royalties.  Those are [...]

Why your customers may not see things the way you do

Are your customers experiencing something completely different from what your indicators tell you they are experiencing? Probably. Suppose a retail company with branches of different sizes measured some aspect of customer service in each of its branches, say wait times.  Will the average wait time be a good representation of the average customer’s experience? Take [...]

Moneyball shows that you should challenge thinking about KPIs

Business writers often speak of “measures that drive future performance.” The trick is figuring out what measures those are. Doctors have been measuring their patients since the Italian doctor Santorio Santorio invented a scale for the Galileo thermometer in 1612.  But patients can (and do) die soon after they get a clean bill of health, [...]

The importance of structural information

Business writers and consultants today typically advise managers to calculate indices and percentages to measure the state of their enterprises. For example, Kaplan and Norton, in the “Balanced Scorecard”, suggest measuring “strategic information availability” with the “percentage of processes with real-time quality, cycle time, and cost feedback available” and “percentage of customer-facing employees having on-line [...]

Why measurements don’t always bring opposing views together

Can measurements resolve opposing views about the truth or falsehood of controversial claims?   That indeed is one of the most important purposes of measurement.  But it does not always work out that way. Take a chemical company at which plant managers and laboratory staff around the world were at loggerheads over measurements of product brightness. [...]

Why you cannot measure risk

In 2008, Collateralized Debt Obligations (CDO) that had been given very high ratings by the credit rating agencies collapsed. The rating agencies got blamed for faulty ratings. Once a mining association gave a coal mine the “Safest Mine Award.” One month later the mine blew up and killed 32 miners. The award is based on [...]