"If we view organizations as adaptive, problem-solving structures, then inferences about effectiveness have to be made, not from static measures of output, but on the basis of the processes through which the organization approaches problems. In other words, no single measurement of organizational efficiency or satisfaction - no single time-slice of organizational performance can provide valid indicators of organizational health." (Warren G Bennis, "General Systems Yearbook", 1962)
"Indicators tend to direct your attention toward what they are monitoring. It is like riding a bicycle: you will probably steer it where you are looking. If, for example, you start measuring your inventory levels carefully, you are likely to take action to drive your inventory levels down, which is good up to a point. But your inventories could become so lean that you can’t react to changes in demand without creating shortages. So because indicators direct one’s activities, you should guard against overreacting. This you can do by pairing indicators, so that together both effect and counter-effect are measured. Thus, in the inventory example, you need to monitor both inventory levels and the incidence of shortages. A rise in the latter will obviously lead you to do things to keep inventories from becoming too low." (Andrew S Grove, "High Output Management", 1983)
"So because indicators direct one’s activities, you should guard against overreacting. This you can do by pairing indicators, so that together both effect and counter-effect are measured. […] In sum, joint monitoring is likely to keep things in the optimum middle ground."
"The first rule is that a measurement - any measurement - is better than none. But a genuinely effective indicator will cover the output of the work unit and not simply the activity involved. […] If you do not systematically collect and maintain an archive of indicators, you will have to do an awful lot of quick research to get the information you need, and by the time you have it, the problem is likely to have gotten worse." (Andrew S Grove, "High Output Management", 1983)
"The number of possible indicators you can choose is virtually limitless, but for any set of them to be useful, you have to focus each indicator on a specific operational goal. […] Put another way, which five pieces of information would you want to look at each day, immediately upon arriving at your office?" (Andrew S Grove, "High Output Management", 1983)
"All good KPIs that I have come across, that have made a difference, had the CEO’s constant attention, with daily calls to the relevant staff. [...] A KPI should tell you about what action needs to take place. [...] A KPI is deep enough in the organization that it can be tied down to an individual. [...] A good KPI will affect most of the core CSFs and more than one BSC perspective. [...] A good KPI has a flow on effect." (David Parmenter, "Pareto’s 80/20 Rule for Corporate Accountants", 2007)
"If the KPIs you currently have are not creating change, throw them out because there is a good chance that they may be wrong. They are probably measures that were thrown together without the in-depth research and investigation KPIs truly deserve." (David Parmenter, "Pareto’s 80/20 Rule for Corporate Accountants", 2007)
"Key performance indicators (KPIs) are the vital navigation instruments used by managers to understand whether their business is on a successful voyage or whether it is veering off the prosperous path. The right set of indicators will shine light on performance and highlight areas that need attention. ‘What gets measured gets done’ and ‘if you can’t measure it, you can’t manage it’ are just two of the popular sayings used to highlight the critical importance of metrics. Without the right KPIs managers are sailing blind." (Bernard Marr, "Key Performance Indicators (KPI): The 75 measures every manager needs to know", 2011)
"KRAs and KPIs KRA and KPI are two confusing acronyms for an
approach commonly recommended for identifying a person’s major job
responsibilities. KRA stands for key result areas; KPI stands for key
performance indicators. As academics and consultants explain this jargon, key
result areas are the primary components or parts of the job in which a person
is expected to deliver results. Key performance indicators represent the
measures that will be used to determine how well the individual has performed.
In other words, KRAs tell where the individual is supposed to concentrate her
attention; KPIs tell how her performance in the specified areas should be
measured. Probably few parts of the performance appraisal process create more
misunderstanding and bewilderment than do the notion of KRAs and KPIs. The
reason is that so much of the material written about KPIs and KRAs is both." (Dick
Grote, "How to Be Good at Performance Appraisals: Simple, Effective, Done Right",
2011)
"A statistical index has all the potential pitfalls of any descriptive statistic - plus the distortions introduced by combining multiple indicators into a single number. By definition, any index is going to be sensitive to how it is constructed; it will be affected both by what measures go into the index and by how each of those measures is weighted." (Charles Wheelan, "Naked Statistics: Stripping the Dread from the Data", 2012)
"Even if you have a solid indicator of what you are trying to measure and manage, the challenges are not over. The good news is that 'managing by statistics' can change the underlying behavior of the person or institution being managed for the better. If you can measure the proportion of defective products coming off an assembly line, and if those defects are a function of things happening at the plant, then some kind of bonus for workers that is tied to a reduction in defective products would presumably change behavior in the right kinds of ways. Each of us responds to incentives (even if it is just praise or a better parking spot). Statistics measure the outcomes that matter; incentives give us a reason to improve those outcomes." (Charles Wheelan, "Naked Statistics: Stripping the Dread from the Data", 2012)
"Once these different measures of performance are consolidated into a single number, that statistic can be used to make comparisons […] The advantage of any index is that it consolidates lots of complex information into a single number. We can then rank things that otherwise defy simple comparison […] Any index is highly sensitive to the descriptive statistics that are cobbled together to build it, and to the weight given to each of those components. As a result, indices range from useful but imperfect tools to complete charades." (Charles Wheelan, "Naked Statistics: Stripping the Dread from the Data", 2012)
"Defining an indicator as lagging, coincident, or leading is connected to another vital notion: the business cycle. Indicators are lagging or leading based on where economists believe we are in the business cycle: whether we are heading into a recession or emerging from one." (Zachary Karabell, "The Leading Indicators: A short history of the numbers that rule our world", 2014)
"[…] economics is a profession grounded in the belief that 'the economy' is a machine and a closed system. The more clearly that machine is understood, the more its variables are precisely measured, the more we will be able to manage and steer it as we choose, avoiding the frenetic expansions and sharp contractions. With better indicators would come better policy, and with better policy, states would be less likely to fall into depression and risk collapse." (Zachary Karabell, "The Leading Indicators: A short history of the numbers that rule our world", 2014)
"Our needs going forward will be best served by how we make use of not just this data but all data. We live in an era of Big Data. The world has seen an explosion of information in the past decades, so much so that people and institutions now struggle to keep pace. In fact, one of the reasons for the attachment to the simplicity of our indicators may be an inverse reaction to the sheer and bewildering volume of information most of us are bombarded by on a daily basis. […] The lesson for a world of Big Data is that in an environment with excessive information, people may gravitate toward answers that simplify reality rather than embrace the sheer complexity of it." (Zachary Karabell, "The Leading Indicators: A short history of the numbers that rule our world", 2014)
"Statistics are meaningless unless they exist in some context. One reason why the indicators have become more central and potent over time is that the longer they have been kept, the easier it is to find useful patterns and points of reference." (Zachary Karabell, "The Leading Indicators: A short history of the numbers that rule our world", 2014)
"The indicators - through no particular fault of anyone in particular - have not kept up with the changing world. As these numbers have become more deeply embedded in our culture as guides to how we are doing, we rely on a few big averages that can never be accurate pictures of complicated systems for the very reason that they are too simple and that they are averages. And we have neither the will nor the resources to invent or refine our current indicators enough to integrate all of these changes." (Zachary Karabell, "The Leading Indicators: A short history of the numbers that rule our world", 2014)
"We don’t need new indicators that replace old simple numbers with new simple numbers. We need instead bespoke indicators, tailored to the specific needs and specific questions of governments, businesses, communities, and individuals."
"Yet our understanding of the world is still framed by our leading indicators. Those indicators define the economy, and what they say becomes the answer to the simple question 'Are we doing well?'" (Zachary Karabell, "The Leading Indicators: A short history of the numbers that rule our world", 2014)
"[…] an overall green status indicator doesn’t mean anything most of the time. All it says is that the things under measurement seem okay. But there always will be many more things not under measurement. To celebrate green indicators is to ignore the unknowns. […] The tendency to roll up metrics into dashboards promotes ignorance of the real situation on the ground. We forget that we only see what is under measurement. We only act when something is not green." (Sriram Narayan, "Agile IT Organization Design: For Digital Transformation and Continuous Delivery", 2015)
"Financial measures are a quantification of an activity that has taken place; we have simply placed a value on the activity. Thus, behind every financial measure is an activity. I call financial measures result indicators, a summary measure. It is the activity that you will want more or less of. It is the activity that drives the dollars, pounds, or yen. Thus financial measures cannot possibly be KPIs." (David Parmenter, "Key Performance Indicators: Developing, implementing, and using winning KPIs" 3rd Ed., 2015)
"Key performance indicators (KPIs) are those indicators that focus on the aspects of organizational performance that are the most critical for the current and future success of the organization." (David Parmenter, "Key Performance Indicators: Developing, implementing, and using winning KPIs" 3rd Ed., 2015)
"Key Performance Indicators (KPIs) in many organizations are a broken tool. The KPIs are often a random collection prepared with little expertise, signifying nothing. [...] KPIs should be measures that link daily activities to the organization’s critical success factors (CSFs), thus supporting an alignment of effort within the organization in the intended direction." (David Parmenter, "Key Performance Indicators: Developing, implementing, and using winning KPIs" 3rd Ed., 2015)
"Most organizational measures are very much past indicators measuring events of the last month or quarter. These indicators cannot be and never were KPIs." (David Parmenter, "Key Performance Indicators: Developing, implementing, and using winning KPIs" 3rd Ed., 2015)
"We need indicators of overall performance that need only be reviewed on a monthly or bimonthly basis. These measures need to tell the story about whether the organization is being steered in the right direction at the right speed, whether the customers and staff are happy, and whether we are acting in a responsible way by being environmentally friendly. These measures are called key result indicators (KRIs)." (David Parmenter, "Key Performance Indicators: Developing, implementing, and using winning KPIs" 3rd Ed., 2015)
"Indicators represent a way of 'distilling' the larger volume of data collected by organizations. As data become bigger and bigger, due to the greater span of control or growing complexity of operations, data management becomes increasingly difficult. Actions and decisions are greatly influenced by the nature, use and time horizon (e.g., short or long-term) of indicators." (Fiorenzo Franceschini et al, "Designing Performance Measurement Systems: Theory and Practice of Key Performance Indicators", 2019)
"Indicators take on the role of real 'conceptual technologies', capable of driving organizational management in intangible terms, conditioning the 'what' to focus and the 'how'; in other words, they become the beating heart of the management, operational and technological processes." (Fiorenzo Franceschini et al, "Designing Performance Measurement Systems: Theory and Practice of Key Performance Indicators", 2019)
"Monitoring a process requires identifying specific activities, responsibilities and indicators for testing effectiveness and efficiency. Effectiveness means setting the right goals and objectives, making sure that they are properly accomplished (doing the right things); effectiveness is measured comparing the achieved results with target objectives. On the other hand, efficiency means getting the most (output) from the available (input) resources (doing things right): efficiency defines a link between process performance and available resources." (Fiorenzo Franceschini et al, "Designing Performance Measurement Systems: Theory and Practice of Key Performance Indicators", 2019)
"People do care about how they are measured. What can we do about this? If you are in the position to measure something, think about whether measuring it will change people’s behaviors in ways that undermine the value of your results. If you are looking at quantitative indicators that others have compiled, ask yourself: Are these numbers measuring what they are intended to measure? Or are people gaming the system and rendering this measure useless?" (Carl T Bergstrom & Jevin D West, "Calling Bullshit: The Art of Skepticism in a Data-Driven World", 2020)
"A KPI is a performance measure that demonstrates how effectively an organisation is achieving its critical objectives. They are used to track performance over a period of time to ensure the organisation is heading in the desired direction, and are quantifiable to guide whether activities need to be dialled up or down, resources adjusted or management resource focused on understanding what is in play that may be holding back the organisation." (Ian Wallis, "Data Strategy: From definition to execution", 2021)
"The KPI juggernaut has been misused and abused in too many organisations to the extent it has devalued the concept of KPIs. KPIs used well - the ten things that really matter to an organisation - can, in my experience, be a real galvanising force to get focus and attention put in those areas which really can make a difference. The rest is a distraction, there through some misplaced view that more adds value when actually it detracts through losing the focus from where it needs to be." (Ian Wallis, "Data Strategy: From definition to execution", 2021)
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