MIT Sloan Management Review Article on The Quest for a Killer KPI

Performance metrics are among managers’ most powerful tools: Setting the right goals and tracking progress accurately can help you take your business where you want it to go. To be effective, though, goals and metrics need to be clear and simple, and the fewer the better.

In our growing company, we’ve learned that simplicity increases our odds of achieving what we want. When our goals were too numerous and too complex, employees’ decisions didn’t sync up within or across teams, which meant groups and individuals were tugging in various directions and failing to produce desired outcomes at scale. So we set out to identify a single key performance indicator that would unify behavior within one major customer-facing group — the unit that designs, creates, and manages our online storefront — and could also serve as a shared currency across teams, enabling us to make smarter investments in the business. But we realized that going all in on a KPI without putting some sort of check on it could have serious unintended consequences. We knew that any primary goal had to be bounded by a constraint, as in, “Maximize X without reducing Y.”

About the Author

Omri Morgenshtern is the chief operating officer of Agoda, a subsidiary of the Booking Holdings travel group.

Robert Rosenstein is a cofounder and the chairman of Agoda.

Peter L. Allen, formerly Agoda’s vice president of people, is a faculty member at Hult International Business School and chief people officer at APL Group.

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