The Art of Measurement (Part 2)

The first step in building the KPI Tree is to take one of your high-level goals and its associated headline measure and begin to deconstruct it. The technique is to brainstorm the key performance drivers – the activities or outcomes that directly influence the success of that headline measure.

To illustrate this and the following steps, we will use our example of a playout managed service provider, focusing on the goal of ‘Deliver first-class service availability’.

We can identify the main drivers by asking key questions:

Identifying these performance drivers gives us the core components for the next layer of our KPI Tree.

Now we translate these drivers into a clear hierarchy. This typically involves at least two tiers:

• Tier 1 KPIs (Target KPIs): These are the primary measures that directly represent a performance driver. We will set targets against these
• Tier 2 KPIs (Diagnostic KPIs): These are the underlying metrics that explain the performance of Tier 1 KPIs

Continuing our example:

This hierarchy is where measurement becomes a management tool. For example, if the Target KPI for ‘Incident Count’ is red, we don’t just see a problem; we can immediately look at the Diagnostic KPIs. A spike in ‘Incidents by type: software’ prompts a very different action (a development team review) than a spike in ‘Incidents by service/channel’ (a service management review). This is how we move from simply seeing data to making informed decisions.

For each Tier 1 KPI, a specific target must be set. These should be realistic but also a stretch, designed to challenge teams and drive tangible improvement.

At this stage, we must also consider the cadence – or frequency – of each metric. An Employee Engagement Score might be updated annually, whilst Service Performance metrics like Incident Count are often tracked weekly or even daily. Defining this cadence is key to creating a sustainable and relevant reporting system.

Finally, with our  KPIs and targets in place, we must actively manage them to turn insight into impact. Adhering to these key principles is essential for success:

• Maintain a Review Cadence: Make your KPIs a central part of regular performance discussions, from team stand-ups to management reviews
• Make them Easy to Understand: Every KPI should be simple and clearly defined so that everyone knows what is being measured and why it matters
• Ensure they are Easy to Assemble: Favour metrics that can be generated automatically. An over-reliance on manual data collection makes a measurement system unsustainable
• Highlight What Matters (Make it Ugly): Your reporting (e.g., dashboards) should be designed to make deviations from the target stand out clearly. A sea of green is unhelpful; you want the reds and ambers to draw immediate attention
• Enable Drill-Down: The measurement system should allow you to move seamlessly from a high-level headline measure down to the diagnostic KPIs to understand the story behind the numbers
• Make them Visible: When targets and performance are made visible to everyone, it drives accountability and focus. Human nature is to work towards achieving a target once it is clearly seen
• Establish Common Goals Creatively: Shared, highly visible targets can be incredibly powerful. For example, in the example we have laid out, implementing ‘Avoidable Outage’ clocks for each team – from implementation to support – can create a sense of collective ownership. This type of healthy competition often results in enhanced focus and vigilance, significantly improving service performance – while focusing minds on the goal of driving increased, effective,  automation

Recognise and Reward Success: Measurement should not just be about finding problems; it’s also about celebrating success. Formally recognising and rewarding teams that meet stretch goals or set new performance records is a powerful way to reinforce a positive culture, improve employee engagement, and connect people directly to performance outcomes

As we implement our KPI framework, it’s wise to be aware of common pitfalls that can undermine its effectiveness:

• Measuring Too Much: The goal is not to track every possible metric, but to identify the vital few that truly reflect performance. Avoid ‘vanity metrics’ that look good but don’t drive action
• Forgetting the ‘Why’: Don’t get so lost in the data that you forget its purpose. Every KPI review should lead to a conversation, a decision, or an action
• Having Orphaned KPIs: A metric without a clear owner is a metric that will be ignored. Every KPI must be assigned to a person or team who is accountable for its performance
• Siloed Perspectives: Over-emphasising one perspective (e.g. financials) at the expense of others (e.g., Customer Experience) can lead to short-term gains but long-term problems. A balanced view is essential

As we implement our KPI framework, it’s wise to be aware of common pitfalls that can undermine its effectiveness:

• Measuring Too Much: The goal is not to track every possible metric, but to identify the vital few that truly reflect performance. Avoid ‘vanity metrics’ that look good but don’t drive action
• Forgetting the ‘Why’: Don’t get so lost in the data that you forget its purpose. Every KPI review should lead to a conversation, a decision, or an action
• Having Orphaned KPIs: A metric without a clear owner is a metric that will be ignored. Every KPI must be assigned to a person or team who is accountable for its performance
• Siloed Perspectives: Over-emphasising one perspective (e.g. financials) at the expense of others (e.g., Customer Experience) can lead to short-term gains but long-term problems. A balanced view is essential

Following these steps creates a clear line of sight from your top-level strategic goals all the way down to the specific, actionable operational metrics that your teams can influence every day. By building a true hierarchy of KPIs, you transform data into insight, and insight into genuine, measurable impact.