KPI

Also called Key performance indicator, Metrics, Dashboard

A small number of measures that tell you whether the business is working. The word 'key' is doing the work.

What it means

A key performance indicator is a measure chosen because it tells you something you would act on. The point is selection: a business can measure hundreds of things and can only pay attention to a few.

Leading indicators predict; lagging indicators report. Most dashboards are all lagging.

Why it matters

What gets measured gets managed, and what gets measured badly gets managed badly. Choosing the wrong indicator reliably produces the wrong behaviour, quickly and enthusiastically.

A support team measured on tickets closed will close tickets. A sales team measured on calls made will make calls. Neither is the outcome anybody wanted.

What it looks like in practice

Pick five or fewer. For most small businesses: sales, gross margin, cash, pipeline, and one operational measure specific to how you deliver.

For each one, write down who owns it, how often it is reviewed and what would make you act. An indicator nobody would act on is a statistic.

Mix leading and lagging. Enquiries this week predicts revenue next month; revenue last month predicts nothing.

What to watch out for

Vanity metrics — followers, page views, downloads — which move without anything changing.

Dashboards with forty tiles. Nobody reads them, which is functionally the same as having none.

Targets set as an incentive without thought about how they could be met dishonestly.

Where to get proper advice

This is an internal decision. An accountant can produce the financial ones reliably; nobody outside can tell you which operational measure matters in your business.