Day 03 Part 2 — KPI Design & Reporting¶
A great KPI changes behaviour. A bad one wastes attention or, worse, drives the wrong actions. This session covers how to design KPIs that matter, structure them into reporting that informs decisions, and communicate them to executives.
Learning Objectives¶
- Design KPIs that are specific, actionable, and tied to goals
- Build a KPI tree linking strategy to metrics
- Distinguish dashboards from reports
- Structure executive reporting
- Avoid vanity metrics and metric gaming
What Makes a Good KPI¶
A KPI must be: 1. Tied to a goal — it measures progress toward something that matters 2. Actionable — when it moves, you know what to do 3. Has a target — you know if the value is good or bad 4. Hard to game — optimising it produces real value, not just a better number
| Vanity Metric | Why it's weak | Better KPI |
|---|---|---|
| Total page views | More views ≠ more value | Conversion rate |
| Number of features shipped | Output, not outcome | Feature adoption rate |
| Total registered users | Includes inactive | Monthly active users (MAU) |
| Total revenue | No context | Revenue vs target, or NRR |
The KPI Tree — Linking Strategy to Metrics¶
A KPI tree decomposes a top-level goal into the drivers you can actually influence:
Revenue Growth
/ \
New Customer Revenue Existing Customer Revenue
/ \ / \
Traffic Conversion Retention Rate Expansion (upsell)
| | | |
Marketing Funnel UX Product quality Cross-sell offers
spend + support
The power: leadership sets the top (revenue growth), and each team owns a branch they can move. The tree shows how a frontline metric (support resolution time) ladders up to a strategic goal (revenue).
Dashboards vs Reports¶
| Dashboard | Report | |
|---|---|---|
| Purpose | Monitor — "is anything wrong right now?" | Explain — "what happened and why?" |
| Audience | Decision-makers, operators | Analysts, deep-divers |
| Format | Visual, interactive, concise | Narrative, detailed, with commentary |
| Cadence | Real-time / daily | Weekly / monthly / on-demand |
| Depth | 5-7 KPIs | Comprehensive |
(More in Interview-Preparation/dashboard-discussions.)
Structuring Executive Reporting¶
Executives have minutes, not hours. Structure for them:
- Headline — the one thing they need to know ("Revenue is 4% ahead of plan")
- Status of key metrics — RAG (red/amber/green) against targets
- What changed and why — the 2-3 drivers behind the numbers
- Risks and asks — what needs their decision or attention
- Detail in appendix — for those who want to dig
Lead with the answer
Don't build up to the conclusion. Executives read top-down and stop when they have what they need. State the headline first, support it second.
Reporting Cadence¶
| Cadence | Audience | Content |
|---|---|---|
| Real-time dashboard | Operations | Live operational metrics, alerts |
| Daily | Team leads | Yesterday's performance, anomalies |
| Weekly | Department heads | Week's trends, this week's focus |
| Monthly | Leadership | P&L, KPI scorecard, strategic progress |
| Quarterly | Board | Strategic OKRs, major trends, forecasts |
Avoiding Metric Gaming (Goodhart's Law)¶
Goodhart's Law
"When a measure becomes a target, it ceases to be a good measure."
If you reward call centre agents on call volume, they'll rush calls — volume goes up, customer satisfaction goes down. If you reward sales on revenue, they discount heavily — revenue holds, margin collapses.
Defences: - Pair metrics with guardrails (volume + satisfaction; revenue + margin) - Measure outcomes, not just outputs - Watch for unintended consequences when you introduce a target
Practice Exercises¶
Warm-up 1. Take a vanity metric (e.g., "total downloads") and rewrite it as an actionable KPI. 2. For a goal "improve customer satisfaction," define a KPI with a target and a guardrail. 3. Classify these as dashboard or report content: live order queue, monthly P&L narrative, real-time error rate, quarterly strategy review.
Main 4. Build a KPI tree for a goal of "reduce customer churn." 5. Draft a one-page executive summary structure for a monthly business review. 6. Identify a metric that could be gamed and design a guardrail metric to prevent it.
Interview Questions¶
[Beginner] What is the difference between a KPI and a vanity metric?
[Mid-level] What is a KPI tree and how does it connect frontline metrics to strategy?
[Mid-level] Explain Goodhart's Law with a business example.
[Senior] How would you design a KPI scorecard for a monthly executive review? What would you include and exclude?