FINDINGS FROM THE 2018 STRATEGIC MEASUREMENT GLOBAL EXECUTIVE STUDY AND RESEARCH PROJECT #MITSMRreport REPRINT NUMBER 60180 Leading With Next-Generation Key Performance Indicators SUMMER 2018 RESEARCH REPORT By Michael Schrage and David Kiron Sponsored by:
R E S E A R C H R E P O R T L E A D I N G W I T H N E X T- G E N E R AT I O N K E Y P E R F O R M A N C E I N D I C AT O R S Copyright © MIT, 2018. All rights reserved. Get more on strategic measurement from MIT Sloan Management Review : Read the report online at Visit our site at Contact us to get permission to distribute or copy this report at [email protected] or 877-727-7170 AUTHORS CONTRIBUTORS MICHAEL SCHRAGE is a research fellow at the MIT Sloan School’s Initiative on the Digital Economy, where he does research and advisory work on how digital media transforms agency, human capital, and innovation. DAVID KIRON is the executive editor of MIT Sloan Management Review , which brings ideas from the world of thinkers to the executives and managers who use them. Carrie Crimins, Masha Fisch, Lauren Rosano, Allison Ryder, Deborah Soule, and Barbara Spindel The research and analysis for this report was conducted under the direction of the authors as part of an MIT Sloan Management Review research initiative, sponsored by Google, in collaboration with Think with Google. To cite this report, please use: M. Schrage and D. Kiron, “Leading With Next-Generation Key Performance Indicators,” MIT Sloan Management Review , June 2018.
LEADING WITH NEXT-GENERATION KEY PERFORMANCE INDICATORS • MIT SLOAN MANAGEMENT REVIEW 1 CONTENTS RESEARCH REPORT SUMMER 2018 3 / Executive Summary 4 / Introduction: Slack Finds Its North Star 5 / KPIs and Their Role in Today’s Enterprise 8 / The Fundamentals of Advanced KPI Uses 16 / The Future 18 / Conclusion 20 / Acknowledgments
LEADING WITH NEXT-GENERATION KEY PERFORMANCE INDICATORS • MIT SLOAN MANAGEMENT REVIEW 3 Leading With Next-Generation Key Performance Indicators Executive Summary A ccelerating technological innovation, intensifying competitive pressure, and increasing customer expectations are forcing business leaders to rethink how they use key performance indicators (KPIs) to lead and manage the enterprise. Based on a global survey of more than 3,200 senior executives and interviews with 18 executives and thought leaders, we find business leaders worldwide are struggling to strike a workable balance between tactical and strategic KPIs; operational and financial KPIs; and KPIs that effectively capture the moment while anticipating the future. This imbalance is a source of measurable dissatisfaction and concern as data for KPI improvements continues to increase. Executives also appear torn between adding more detailed KPIs or lasering in on a smaller, simplified set. While no consensus KPI best practice emerged from the survey, we did find a small slice of companies are exhibiting sophisticated data-driven and analytically innovative approaches to maximizing the impact of their KPIs.
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