Most KPI Systems Are Broken—Here’s How to Fix Yours

Many businesses make the mistake of treating KPIs as isolated figures rather than an integrated decision-making system. Without a clear structure, KPIs often fall into these common traps:

❌ Too many KPIs → Data overload, no focus on what truly matters.
❌ Vanity metrics → Numbers that look good but don’t drive action.
❌ Lack of accountability → No one takes ownership of improving results.
❌ Disconnected dashboards → Data that doesn’t tell a clear story.

That’s why I developed the 9-Step KPI Methodology—a structured, proven approach to ensuring KPIs drive real accountability and business impact..

The 9-Step KPI Methodology: From Numbers to Action

This methodology ensures that every KPI you implement is:
✔ Relevant to your business goals.
✔ Linked to a clear process with ownership.
✔ Designed for real-world decision-making.
✔ Tested and optimized before automation.

Step 1: Involve the Right People 👥

One of the biggest mistakes in KPI implementation is defining metrics in isolation and expecting teams to follow them. If people aren’t involved from the start, they won’t commit to tracking or improving KPIs.

That’s why the first step is to engage the right stakeholders early on.

✔ Identify the key people responsible for each process.
✔ Ensure they understand that KPIs are a tool for insight and control—not micromanagement.
✔ Create buy-in by explaining how KPIs will help them make better decisions, not just report numbers.

By bringing in the people who will actually use the KPIs, you ensure that they own the process, trust the numbers, and are committed to making them work.

Step 2: Start with Strategy & Define the Process Map 🎯

Now that you have the right people involved, it’s time to select a strategic process to measure.

A strategic process is a core workflow that directly impacts business success. Examples include:
🔹 “From the world needs to find us → to order” (Marketing & Sales)
🔹 “From order → to delivery” (Operations & Logistics)

Once you select a strategic process, map it out using three levels:

1️⃣ Strategic Process – The high-level workflow that drives business success.
2️⃣ Main Process Steps – The 5-8 critical stages within the strategic process.
3️⃣ Sub-Processes – The detailed steps within each main process (max 8 per main process).

This structure ensures that every KPI is directly linked to a process step, making it actionable, measurable, and relevant to business success.

Step 3: Brainstorm Everything—No Limits 💡

Now that we’ve mapped out the process, it’s time to brainstorm all possible KPIs—without restrictions.

At this stage, the mindset should be:

✔ Everything is possible.
✔ Everything is free.
✔ Everything is available.
✔ Everything can be measured.

Encourage open thinking and generate as many ideas as possible. You’ll likely end up with 100+ potential KPIs per process step—that’s exactly what we want!

This brainstorming step ensures that no valuable metric is overlooked. Filtering comes later—right now, the goal is to capture every possible way to measure success.

Step 4: Use the Impact Matrix 🔄

Once you have a list of potential KPIs, it’s time to filter them down.
✔ Sort them in a matrix based on:

• How important they are for success.
• How easy or hard they are to measure.
  ✔ Focus on KPIs that have high impact and are practical to track.

🔹 Example:

• High-impact + easy to measure = must-have KPI.
• High-impact + hard to measure = worth testing.
• Low-impact + hard to measure = discard.

This step ensures you only keep KPIs that actually matter.

Step 5: Align KPIs with Process Ownership

Now that we’ve identified the most impactful and measurable KPIs, it’s time to bring them back into the process. This step ensures that each KPI is tied to a specific process step and owned by the right person.

Here’s how it works:

1️⃣ Reintegrate KPIs into the Process – Move the selected KPIs from the Impact Matrix back to the corresponding process step they measure.

2️⃣ Accountable Person Takes Ownership – The person responsible for that process step reviews the KPIs with their team and selects 3-4 key numbers that best tell the story of performance.

3️⃣ Team Alignment & Commitment – The team understands and agrees on these KPIs, ensuring that:

• The accountable person knows they are tracking the right numbers to stay in control.
• The team knows exactly what is being measured, eliminating confusion and aligning expectations.

4️⃣ Creating a Culture of Ownership – Since the accountable person has chosen the KPIs based on real process insights, they are fully committed to monitoring and improving them. The rest of the team, in turn, trusts that this process step is being managed correctly.

By structuring KPI ownership this way, we eliminate guesswork, ensure transparency, and create real accountability—turning KPIs into a trusted system for continuous improvement. 🚀

Step 6: Define KPIs with the KPI Canvas 📜

Now that we’ve identified the right KPIs for each process step, it’s time to fully define them using the KPI Canvas. This step ensures that each KPI is clear, actionable, and properly structured from the start—eliminating ambiguity and ensuring accountability.

🔹 Key Elements of the KPI Canvas

1️⃣ Who Owns the KPI? (Accountability & Reporting) 👤

• Define who is responsible for ensuring the KPI is measured and tracked.
• Assign a RASCI model separately for reporting and taking action (sometimes these roles differ).
• Example:
  • Responsible: The person/team measuring the KPI.
  • Accountable: The leader who ensures action is taken.
  • Support: Teams providing data.
  • Consulted: Subject matter experts.
  • Informed: Stakeholders who need updates.

2️⃣ Why Are We Measuring This? 🎯

• What is the purpose of this KPI?
• How does it support business goals?
• Who are the internal customers of this KPI (who will use it to make decisions)?

3️⃣ Where Does the Data Come From? 🔍

• Identify data sources (CRM, ERP, Google Analytics, manual tracking, etc.).
• Define the exact formula for calculating the KPI.

Example:

• KPI: Sales Conversion Rate
• Formula: (Number of Closed Deals ÷ Number of Leads) × 100
• Data Source: CRM system

4️⃣ Expected Errors & Data Risks ⚠️

• What are the possible data issues or misinterpretations?
• Is there a risk of incomplete, inconsistent, or delayed data?

Example:

• Sales Conversion KPI → Risk: Not all deals are recorded in the CRM.
• Customer Satisfaction KPI → Risk: Survey responses may be biased toward extreme opinions.

5️⃣ What Are the KPI Targets? (Green, Orange, Red) 🚦

• Define what success looks like (green zone).
• Set thresholds for warning signs (orange zone).
• Establish a trigger point for critical issues (red zone).

Example: Customer Retention Rate

• ✅ Green: 90%+ retention
• ⚠️ Orange: 85-89% (Needs attention)
• 🚨 Red: Below 85% (Immediate action required)

6️⃣ Cost to Implement the KPI 💰

• One-time cost to set up the KPI (e.g., dashboard development, system integration).
• Ongoing cost per reporting cycle (e.g., manual data entry, software costs, analysis time).

Example:

• Setting up an automated KPI dashboard → €5,000 one-time cost.
• Weekly data collection & reporting → 2 hours per week = €200 recurring cost.

Step 7: Testing—Prove Your KPIs Before Automating ✅

One of the biggest mistakes companies make is jumping straight into fancy dashboards before knowing if their KPIs actually work.

📢 Please do not create a fancy dashboard in PowerBI, Tableau, or any other tool right away!

Instead, start simple:
✔ Track the numbers manually in Excel for a few weeks.
✔ It only takes a few minutes per week but ensures you’re measuring the right things.
✔ Observe trends, validate data accuracy, and ensure the numbers truly tell the right story.

Step 8: Go Live—But Keep It Simple 🚀

🎉 Now it’s time to start using the KPIs in real business meetings.

✔ Only use each KPI in one meeting rhythm (daily, weekly, or monthly).
✔ Do not over-automate immediately. Start manually, then automate when stable.
✔ Ensure teams actually use the KPIs to make decisions.

🔹 Common mistake:
Many companies overcomplicate dashboards too soon, leading to clutter instead of clarity.

Go live, but stay flexible.

Step 9: Evaluate, Learn, and Optimize 🔄

KPIs are not set in stone—they should evolve.
✔ Every quarter or year, ask: Do these KPIs still tell the right story?
✔ If needed, adjust or replace outdated KPIs to stay relevant.
✔ Avoid changing KPIs too often, or you’ll lose tracking consistency.

🔹 Example:

• If your KPI no longer predicts success, replace it with a better metric.

This ensures KPIs remain useful long-term.

Why This 9-Step Method Works

✅ No more useless KPIs – Only numbers that drive decisions.
✅ Clear ownership & accountability – Every KPI has a purpose and a responsible person.
✅ Prevents bad data & reporting fatigue – Focus on high-impact, easy-to-track metrics.
✅ Encourages continuous improvement – KPIs evolve with your business.

Companies that follow this see massive improvements in execution, clarity, and team engagement with KPIs.

Final Thoughts: Stop Tracking KPIs, Start Using Them

KPIs should be your daily guide to better decisions—not just numbers on a dashboard.

By following this 9-step methodology, you’ll create a KPI system that works, scales, and drives real business results.

Follow Business Alchemist Academy for more insights from #KPIAlchemist and other #BusinessAlchemists.

I hope this article has inspired you to embrace KPIs the right way—turning numbers into clear insights that help you run your business (and your job) better every day.

Best,
The KPI Alchemist,
Jeroen Volk RA MSc – Business Alchemist 💡💡🚀🚀

Tags: #Control #Course #Dashboard #Insights #KPI #KPIAlchemist