KPI Fundamentals

What are we going to calculate to assess the health of our business? Well, it turns out, whatever makes sense for the business scenario. There are many different business scenarios for many different types of analysts and all of them are going to calculate the key performance indicator that makes the most sense for that business context. Now, there’s lots of different ways we can add dressing to this. We can add colour coding, we can add shapes. In fact, there are different software tools to manage and track these things. But at the end of the day, they’re often very simple calculations, often as simple as an average or a difference.

What makes key performance indicators useful is that we have figured out exactly what summary statistic to calculate and exactly which business scenario to be most useful. From there, there’s all kinds of things we can do. We can add all kinds of context. We can put these things together in charts or tables. We can add trend lines, we can add graphs. We can tell the story of our data. But at the end of the day, we need to understand those fundamental key performance indicators that are going to help us assess the health of our business in the right scenario for what we’re wanting to do.