Welcome back to our series on managing self-managing teams! π We’ve reached the final instalment, where we’ll dive into the crucial skill of crafting Key Performance Indicators (KPIs) that truly work for your team. Let’s turn those dull metrics into powerful tools for success!
When Good Metrics Go Bad
Ever presented what you thought was a perfect set of KPIs, only to be met with blank stares or confused looks? You’re not alone. Many of us have faced the dreaded “Why are we measuring this again?” moment. So, how do we create KPIs that inspire “Aha!” moments instead of “Uh… what?”
The Essential Elements of Effective KPIs
Before we start, let’s review the key properties our KPIs should have:
- Easily Measurable: No complex calculations or long running batch jobs required.
- Team-Focused: Avoid singling out individuals.
- Business-Aligned: Clearly linked to company goals.
- Actionable: Provides clear direction for improvement.
- Motivating: Inspires the team to perform better.
KPIs to Avoid
Just as important as knowing what to measure is knowing what not to measure. Here are some KPIs to steer clear of:
- Lines of Code: Quantity doesn’t equal quality.
- Number of Bugs Fixed: Could encourage writing buggy code just to fix it.
- Hours Worked: We’re after results, not time spent.
- Story Points: Often arbitrary and not indicative of real progress.
Real-World KPI Success: The Booking Completion Saga
Let me share a story from a company I once worked at. We implemented a KPI around booking completion that became a game-changer. Here’s what made it so effective:
- Direct Business Impact: We measured “Incremental Bookings per Day.” This directly showed teams how much they were contributing to the company’s bottom line.
- Instant Feedback: The real magic was in the immediacy. As soon as an A/B test was turned on, the numbers started ticking. Our experimentation system was linked to a real-time Kafka feed from the booking website.
- Visible Results: We had TVs on office walls displaying dashboards of running experiments. This visibility created a buzz of excitement.
- Celebration of Wins: When an experiment showed significant improvement, the Product Owner would take the team out for drinks the day it was taken, when the experiment run finished. It wasn’t uncommon to see teams celebrating their wins at the local bar area in the evenings with a bottle of something and shots on the table.
The excitement was so palpable that one developer even created a Slack bot in his spare time to check experiment results during dinner! He wasn’t going to wait to the next day in the office to see what the users thought about his new feature.
This KPI worked because it connected directly to business impact and provided instant, visible feedback. It almost gamified the process for the engineers, making it thrilling to see in real-time how users responded to new features. The high volume of bookings meant meaningful results appeared quickly, sometimes within minutes.
The result? A highly motivated team, numerous significant wins, and a culture of continuous improvement and celebration.
Aligning Team Metrics with Business Goals
Your KPIs should create a clear line from daily team activities to high-level business objectives. For example:
- Business Goal: Increase market share
- Team KPI: “Feature Adoption Rate” (How quickly users embrace new features)
- Daily Activity: Developing intuitive UI and smooth user on-boarding
Regular KPI Reviews
KPIs aren’t set-and-forget metrics. Schedule regular review sessions with your team to ensure your KPIs remain relevant and effective. Make these sessions collaborative and open to change.
The Ethics of KPIs
Remember these important principles:
- Never use KPIs as weapons against your team. Using KPIs punitively creates a culture of fear and discourages risk-taking and innovation.
Example: If a team’s “Time to Value” KPI is lagging, don’t use it to criticise or penalise the team. Instead, use it as a starting point for a constructive discussion about process improvements or resource needs. - Prioritise learning and improvement over hitting arbitrary numbers. Focusing solely on numbers can lead to short-term thinking and missed opportunities for meaningful growth.
Example: If your “Feature Adoption Rate” isn’t meeting targets, don’t push features that aren’t ready. Instead, dig into why adoption is low. Are you building the right features? Is user education lacking? This approach leads to better products and sustained improvement. - Celebrate the intent and progress behind the metrics, not just the numbers themselves. This approach encourages a growth mindset and values effort and learning, which are crucial for long-term success.
Example: Even if a new feature doesn’t immediately boost your “Enthusiastic User Ratio”, celebrate the team’s efforts in user research, innovative design, or technical challenges overcome. This keeps the team motivated and focused on continuous improvement. - Regularly review and adjust KPIs to ensure they remain relevant. As your product and market evolve, yesterday’s crucial metric might become irrelevant or even counterproductive.
Example: If your product has matured, you might shift focus from a “New User Acquisition Rate” KPI to a “User Retention Rate” KPI, reflecting the changing priorities of your business.
By adhering to these principles, you create an environment where KPIs drive positive behaviour, foster learning, and contribute to both team satisfaction and business success. Remember, the goal of KPIs is to improve performance and guide decision-making, not to create pressure or assign blame.
Wrapping Up: The True Value of KPIs
The real power of KPIs lies not in the numbers, but in the conversations they spark, the behaviours they encourage, and the focus they provide. When done right, KPIs serve as a compass, guiding your team through the complex landscape of product development.
Craft KPIs that inspire, illuminate, and drive your team towards excellence. And remember, in high-performing teams, the best KPIs often become obsolete because the team internalises the principles behind them.
What’s the most effective KPI you’ve used? Or the least useful? Share your experiences in the comments below!
P.S. If this post helped you rethink your approach to KPIs, don’t hesitate to share it with your network. Let’s spread the word about better performance indicators!