MIT Sloan Management Review Article on AI Can Change How You Measure - and How You Manage

With apologies to Peter Drucker, it is no longer simply what you measure that determines what you manage. It’s how you discover what to measure that determines how you manage. In industry after industry, we see innovative measurement systems leading to innovative metrics and new organizational behaviors that drive superior outcomes. More organizations are recognizing that benchmarking and executive expertise don’t always determine the best key performance indicators (KPIs). These data-driven companies employ predictive analytics such as machine learning, along with leadership acumen, to identify and refine key strategic measures. More finely tuned measures lead to better alignment of behaviors with strategic objectives.

Increasingly, business leaders are asking their teams: Do our metrics fully capture what drives value creation in our business? How can we use technology to improve our system of measurement — that is, how we create, assess, and use our metrics — to better discern these drivers and identify better KPIs? They are rethinking their approaches to measuring success, to developing metrics, and building organizational alignment.

About the Author

David Kiron is editorial director at MIT Sloan Management Review and leads the Big Ideas initiative.

Learn more about MIT SMR.