Last night I was reminded of a workshop on Performance Indicators in LEAN and AGILE which I did several years ago for a consulting agency that was doing a pilot project for the British NHS. The major challenge which many companies struggle with is that most of the KPI’s are designed to look good. To look good towards the board and executives. To look good towards investors and shareholders. To look good towards customers. “Look how good we are” sells much better than “Do we have problems to solve”.
There is another reason behind the preference of reporting KPI’s which show good performance and designing KPI’s in such way that they will. Performance is a trigger for incentives, promotions, acceptance. Careers are decided over performance. And at the same time, “don’t give me problems, give me solutions” is still a common phrase during performance reviews and management meetings. So, we are basically conditioning ourselves to measure and report what we know will make us look good.
What do we learn from those KPI’s? Absolutely nothing! What we need are KPI’s which show us where the real need for improvement is. And where we need to focus our attention. KPI’s that show us the efficiency and effectiveness of our improvement efforts. But also, KPI’s that show us where we struggle, and KPI’s that show us where we need support. How else can we convince executives, boards, and investors that we need investments or resources? How else can we demonstrate customers that we take their concerns serious and solve problems?
I sum that up in the following instruction:
Only measure what educates you, anything else is akin to measuring the amount of days since the last dinosaur sighting.
Many leaders and managers resist letting go of the KPI’s which make them look good in the eyes of others. The moment they are willing to let go of the classical KPI’s and start focusing on the real issues and challenges, and reporting them accordingly, they notice a different conversation with their teams, their line managers and their peers. Pain points and solutions become the topic of meetings and actions. And that is what LEAN and AGILE are all about!