Analysis
KPI
Also called key performance indicator.
KPI is a metric a team commits to in advance as the way it will judge a period. It comes with a target and a date.
How it is measured
A KPI needs a definition, a data source, a target, and a review cadence. The definition says exactly what is counted and what is excluded. It is chosen before the period starts.
Check it by asking whether two people would compute the same number. If one counts trial signups and the other counts paid, the KPI is two numbers.
Worked example
A small online bookstore sets one KPI for the quarter: repeat purchase rate within 90 days, target 22 percent. In January the figure reads 17 percent from 4,100 first-time buyers.
The owner changes shipping speed, adds a reorder email, and checks again at the next review. March ends at 21 percent. Because the target was set before, nobody argues about whether it counts.
How it differs
A KPI is a committed measure with a target. An OKR is a planning format that includes key results, which may or may not be KPIs. A KPI keeps running; an OKR is reset by quarter.
Common errors
Having twelve KPIs. Setting the target after the result is known. Choosing a number the team cannot influence. Redefining it mid-period. Using revenue alone when margin tells the story.
In practice
Pick at most three. Write the definition, owner, and target on one page. Put the number on the dashboard. Review it on a fixed day, not whenever someone asks.