Killer KPIs – You Got That Right

A recent article by Jeanne Urich on has really got me fired up and not in a good way. The article entitled Killer KPIs to Drive Your Services Business is fraught with flawed and lazy thinking. It is more spoon fed pabulum from consultants as we at VeraSage call it.

Some lowlights:

  • “Seemingly overnight, Services have become quite respectable sources of revenue and margin.” Really, what insight! In 1992, when I first become an owner in a consulting company, we already made as much revenue and more margin on consulting. I am glad to know that 15 years later is has now at least become “respectable.”
  • “Running a Professional Services business is very complex – and it’s a game which must be won with “singles and doubles”, not homeruns; so it is imperative to know which KPI’s are “essential”, what the right targets are for each KPI and how improvement of specific KPIs can improve the bottom line.” Sheer genius! And wrong! The message here is clear, don’t innovate, just track some numbers and everything will be alright.
  • “The challenge is to continually capture new business, while ensuring projects are delivered with quality, to provide consultants the tools they need to deliver and grow their skills, while effectively running operations and ensuring revenue and cost are in alignment.” Oh now I get it, if only I had this advice sooner. You mean I have to ensure revenue and control costs. Ah ha! This is like saying to a basketball team, “In order to win, we need to play good defense and try to score more points than the other team.” Thanks, coach!

What is really troubling is that the article than goes on to describe in detail the KPIs that PSFs should track. All the traditional ones are there: revenue, margin, utilization, and resource planning. All of them are lagging and internally facing. Only one, customer satisfaction, is external and possibly predictive, however, the author does a great job of emasculating this by saying, “I recommend at least quarterly reviews of all projects with defined criteria for RED, AMBER and GREEN…”

Quarterly reviews of projects! Give me a break. How about measuring on time completion of tasks? Even better, publish them to the customer so they can see your performance. To borrow a line from Ron Baker, quarterly reviews of projects would be like timing your cookies with a smoke detector!

Killer KPIs is right, these KPIs will kill you!


  1. Ed,

    Great post. I find it amazing that people confuse leading and lagging KPIs.

    A lagging KPI (Key Performance Indicator) is just a measurement, like numbers you can pull from a financial statement (revenue, profit, etc).

    A leading KPI (Key Predictive Indicator) is a measurement guided by a particular theory, such as on-time arrival in the airline industry. By definition, a leading KPI will not appear on a financial statement.

    The KPIs listed in the article are all lagging. They can no more help you improve your business than weighing yourself more frequently (or accurately) will change your weight.

    We’ve all heard: “What you can measure you can manage.” This is nonsense on stilts.

    There’s a million things any business can measure, most of which shed no insight into changing customer behavior.

    We should only measure what matters to customers. That requires a testable hypothesis–a theory.

    Without theory, we are simply counting for the sake of counting, the MBA’s and CPA’s refrain–don’t think, count!

    Positing and testing theories requires us to measure the right things. Without doing this vital step, KPIs don’t mean anything.

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