Go On, Torture Your KPIs
Stress-testing is a thorough investigation aimed at determining the stability of a system, often to breaking point.
Key Performance Indicators can be counterproductive, producing the opposite effect to that originally intended. So… By stress-testing or ‘torturing’ KPIs, we can learn how to game the system to fix design flaws.
The whole idea of KPIs is to trigger positive outcomes. When this isn’t happening, our natural response is to add new KPIs to the system. But this makes it even more complicated. Result: reams of KPIs have become normal in the pursuit of vendor and performance management, often to the point where we can no longer see the wood for the trees. Our well-intentioned KPIs have become targets against which we judge and penalize people. Unintentionally, KPIs can be weapons of mass distraction. Or as economist Charles Goodhart memorably put it:
“When a measure becomes a target, it ceases to be a good measure.”
So here’s how to start stress-testing KPIs:
- Ask the boots on the ground to share metrics they find counterproductive.
- Find conflicting parameters: those that have an unintended negative impact on other essential metrics.
- Assess the impact of penalties on people’s behavior (especially in outsourcing).
- Make a list of the most toxic KPIs. Give them humorous awards (like the Golden Raspberry Award for movies) to make them debatable.
- Define the kill-zone and fix-zone to cure and simplify the KPI model.