Operations
KPI (Key Performance Indicator)
A measurable value that demonstrates how effectively a company or team is achieving a key business objective. KPIs are the metrics you watch every week to know whether the business is healthy.
In plain English
The 5-10 numbers that, when they change, change how the business is doing. Not every metric is a KPI — only the ones that change behaviour.
Example
B2B SaaS company's KPIs: MRR growth %, net revenue retention, CAC payback period, monthly active accounts, support ticket response time. Each is reviewed weekly; trends drive Monday's priorities.
Why it matters
KPIs are the bridge between strategy (where we're going) and execution (what we're doing this week). Without them, every team chases their own metric; with them, the company stays aligned on what 'good' looks like.
Common mistakes
- Tracking 30+ metrics and calling all of them KPIs — dilutes attention. 5-10 is the max
- Confusing leading indicators (predict future outcome) with lagging indicators (report past outcome) — both useful, but for different decisions
- Vanity KPIs (signups, pageviews) instead of actionable ones (activation, retention, revenue) — flatters the team without driving improvement
- Reviewing KPIs only at the end of the month — by then it's too late to change the outcome
- Setting KPIs without owners — no accountability, no movement