How do you choose the right KPIs?
Start from the customer, not the org chart. A KPI is worth keeping only if a better number means the customer got more value. Most traditional indicators fail that test — they measure the efficiency of one phase, one machine or one team, and reward improving it even when the improvement helps no one downstream. Choosing the right KPIs is mostly about resisting the easy, local metric in favour of the harder, whole-process one.
KPIs quantify how well a system is meeting its objectives. That only helps if the objective is the right one. Misread the indicator and you make confident, well-measured, wrong decisions.
Where traditional KPIs go wrong
The classic mistake is optimising a phase at the expense of the whole. Push a single machine to hit its production target and you may create inventory the market doesn't want — capital frozen in a warehouse, a beautifully efficient number, and a worse business. The KPI looked green the entire time.
- They measure individual or phase efficiency, not value delivered to the customer.
- They optimise a step in isolation, harming the overall process and service level.
- They get adopted out of habit, without asking what the customer actually needs.
- They can become a constraint on improvement rather than a guide toward it.
It's the football fallacy: a team can post excellent individual player stats and still lose every match. The per-player numbers don't explain the result because winning is a property of the whole, not the sum of the parts.
What good KPIs do instead
- Start from customer needs and work backward to the metric.
- Measure the process end to end, not a single phase in isolation.
- Guide you toward the right decision, not just support whatever you've already decided.
- Are tied to a real objective, so a better number is genuinely a better business.
This is a shift from phase-oriented to process-oriented thinking, and it has to come from the top — align the whole chain of indicators with customer value, from senior management down to the last step of the process. It's an organisational rethink, not a spreadsheet tweak.
“A KPI should not only support your decision — it should guide you toward the correct one, with customer value as the primary goal.”
DBrothers — on measurement
Why it's hard to change
Reworking your KPIs means questioning long-standing habits, and it's hardest exactly when the business is already profitable — success makes the current numbers feel validated. But the payoff is real: indicators aligned to customer value change what your teams optimise for, and that changes results. Reevaluate, realign, and measure the whole, not the phase.
