You introduce KPIs to manage, track growth, and set direction. However, over time, KPIs begin to dictate behavior rather than reflecting outcomes. Metrics climb, while revenue, margin, and retention stagnate. When a KPI becomes a jail rather than a tool - that’s when your business is trapped.
The KPI Paradox: when a metric becomes the target
A KPI starts as a guide: “what matters to do.” But without a strong connection to real business outcomes, it can devolve into a target in itself. Teams begin to “optimize for the KPI,” rather than thinking strategically. You end up optimizing the metric, not creating genuine value.
Examples of “killer KPIs”
– Sales over quality. Pushing volume at the cost of standards and customer loyalty.
– Growth over sustainability. Scaling aggressively without process maturity can lead to collapse.
– Activity-based KPIs: calls, emails, meetings - easy to measure, but not necessarily valuable.
The principle of a “good KPI”
– Must link directly to business value, not just activity.
– Must be fairly achievable - no loopholes or tricks.
– Must not overload the system — if execution drains resources, it’s a red flag.
– Should encourage the desired behavior, not incentivize shortcuts.
– Must be transparent - the team should see how their actions impact the metric.
Diagnosing: how to tell when a KPI is slowing you down
– When KPI compliance becomes more important than results.
– When metrics go up, but profits, retention, or quality do not.
– When metrics incite conflict between departments.
– When initiatives that “don’t align with KPI” get blocked or ignored.
What to do: reorient KPIs to result flows
– Shift focus from a standalone metric to the value stream that drives outcomes.
– Introduce guardrails - boundaries so the KPI does not warp the system.
– Prototype a KPI in one team or domain first.
– Phase in the transition, with feedback and adjustments.
– Treat KPIs as part of the system, not independent objectives.
Cases: when recalibrating KPIs saved companies
In the Harvard Business Review article “Don’t Let Metrics Undermine Your Business,” a company’s obsession with KPI precision ultimately undermined its values and strategy.
https://hbr.org/2019/09/dont-let-metrics-undermine-your-business?utm_source=chatgpt.com Spider Strategies discusses how KPIs can go wrong — when metrics are too narrow, data is noisy, or incentives are perverse.
www.spiderstrategies.com Nielsen Norman Group’s “Campbell’s Law: The Dark Side of Metric Fixation” examines how focusing on metrics as goals can lead to manipulation and distortion of the truth.
https://www.nngroup.com/articles/ campbells-law/utm_source=chatgpt.com BrightGauge’s blog highlights “worst KPIs” — those that are easily gamed, irrelevant, or impossible to measure reliably.
www.brightgauge.com Forbes, in “Why KPIs Don’t Work; And How To Fix Them,” describes common mistakes in KPI design and how to correct them.
www.forbes.com Practical Steps: how to revise KPIs without destabilizing
1. Audit all current KPIs; flag those that are harmful.
2. Select one or two metrics most aligned with core business goals and adjust them first.
3. Pilot the new KPI in a single team to observe system behavior.
4. Implement real-time feedback - adjust the metric immediately if it works against the system.
5. Communicate changes clearly - explain the “why,” what’s changing, and what stays.
Diagnosis Checklist: Are You Ready to Rethink KPIs?
1. Do you have a KPI tied directly to your primary business outcome (not just activity)?
☐ Yes ☐ No ☐ Unsure
2. Do your KPIs avoid internal conflicts (e.g., sales vs returns)?
☐ Yes ☐ No ☐ Suspect
3. Can you drop a KPI if it proves unhelpful?
☐ Yes ☐ No ☐ It’s hard
4. Do you review and revise KPIs regularly, rather than once and forget?
☐ Yes ☐ No ☐ Only formally
5. Does the team understand the purpose of each KPI?
☐ Yes ☐ No ☐ Not everyone
If you checked “No” or “Unsure” in three or more, it’s time to reexamine your metrics system.
Why KPIs become traps
1. “KPI as politics”
Metrics become political tools. Reports are massaged, reality is obfuscated.
2. “KPI as illusion of control”
Numbers feel like control. But without a deeper system view, metrics are just a facade.
3. “KPI as brake on change”
Metrics anchor the existing model. Anything outside the metric scope is ignored, stifling innovation.
What to aim for: metrics as flow
Transition from KPI-centric to flow-centric thinking. Metrics become signals, not goals. The system must stay alive and adaptive.
Instead of chasing metrics, build a system where metrics reflect reality, rather than distort it.
“TRIZ tip”
If a KPI morphs into a contradiction (e.g., growth vs margin) - leverage TRIZ:
– Temporal separation (delay growth)
– System shift (launch a new channel)
– Inversion (work with failures, not just leads)
This is how you turn “either-or” into “both-and.”
If your business’s KPIs are hurting rather than helping, contact us. Let’s dissect your system, find the weak links, and build metrics that actually drive growth.