128 lines
2.8 KiB
Markdown
128 lines
2.8 KiB
Markdown
**MD file:** `KPI.md`
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**Estimated reading time:** 11–13 minutes
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# KPI
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## Definition
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A **KPI**, or **Key Performance Indicator**, is a metric selected because it indicates progress toward an important business objective.
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Every KPI is a metric. Not every metric is a KPI.
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## Simple Mental Model
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> **Metric = something we can measure. KPI = a measurement important enough to tell us whether we are succeeding.**
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## How It Works
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A strong KPI connects:
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```text
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Business Objective
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↓
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Desired Outcome
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↓
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KPI
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↓
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Target
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↓
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Actions / Decisions
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```
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## Example
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If the strategic objective is streaming growth, executive KPIs might include:
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- Monthly Active Viewers
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- Total Watch Hours
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- Viewer Retention
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- Streaming Revenue
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Other metrics can still matter operationally without being KPIs.
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## Leading vs Lagging Indicators
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**Lagging indicators** measure outcomes after they happen, such as revenue or churn.
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**Leading indicators** may provide earlier signals, such as weekly engagement or trial activation.
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## How It Fits Into the Bigger Picture
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```text
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[[Fact Table]]
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Raw measures
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↓
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[[Semantic Layer]]
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Governed metrics
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↓
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[[Business Glossary]]
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Agreed meaning
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↓
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KPI
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↓
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Power BI
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↓
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Management decision
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```
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## My Company / Real-World Context
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Potential KPIs could include:
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- Monthly Active Viewers
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- Total Watch Hours
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- Viewer Retention
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- Video Start Success Rate
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- Advertising Revenue
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- WCAG Compliance Rate
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- SLA Compliance
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If everything is "key," nothing is key.
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## CTO Perspective
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Bad executive dashboards display whatever is easy to measure.
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Good dashboards display what is important to manage.
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A CTO should challenge output metrics that do not demonstrate business value.
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### Questions to Ask
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- What business objective does this KPI represent?
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- Why is it "key"?
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- Who owns it?
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- What is the target?
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- What decision changes when this KPI changes?
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- Is it leading or lagging?
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- Can we trust the underlying [[Data Quality]]?
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- Are we measuring output or outcome?
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## Meeting Scenario
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**Situation:** A department proposes 18 more metrics for the executive dashboard.
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**Possible response:**
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> "These may all be useful metrics, but which of them directly indicate whether we're achieving our strategic objectives, and what decisions would leadership make differently based on them?"
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## Key Takeaways
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- Every KPI is a metric, but not every metric is a KPI.
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- KPIs should connect directly to business objectives.
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- Leading indicators provide earlier signals; lagging indicators measure outcomes.
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- Executive dashboards should focus attention.
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- CTOs should distinguish output from outcome.
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## Related Concepts
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- [[Metric]]
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- [[Measure]]
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- [[Semantic Layer]]
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- [[Business Glossary]]
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- [[Data Governance]]
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- [[Data Quality]]
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- [[Data Lineage]]
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- [[Leading Indicator]]
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- [[Lagging Indicator]]
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