In his novel Gravity’s Rainbow, Thomas Pynchon didn’t write about KPIs, however, he wrote, “If they can get you asking the wrong questions, they don’t have to worry about answers.”
Asking the right questions will lead to better performance. Having the right numbers — numbers that are aligned from the CEO level to the lowest-level employee — will help management ask the right questions, help employees know what the company goals are, and synchronize the team agenda.
How many numbers should you use? I believe less is more. When you’re building your dashboard, choose up to three must-have key performance indicators (KPIs), and then up to seven more that can help answer the questions that will arise from the main question.
The decision on which KPIs and how many should come from management; they know best what the goal of the company is and how the investors evaluate the quality of the product. The resulting data report should go to the development and marketing teams, who in turn should push to improve the company’s performance.
Each team can use more numbers, of course; it’s not recommended, but for researching and getting answers, they can build their own dashboards. They should know, though, that at the end of the day, they’ll be judged by the number decided by management.
Takeaway: For every data report, choose no more than three KPIs to explain the direction of the company.