Rethinking Key Performance Indicators (KPIs) — a Holistic Approach to Performance Metrics
Last Updated on 27 May 2026 at 07:50
Performance metrics are the holy talismans of the business world. They are the numerical incantations executives vocalize in boardrooms, hoping to convince investors how good they are at creating strong profits out of thin air.
However, these magical figures and measures need recalibration.
Why ?
Because consumer behaviour and markets are shifting faster than anticipated.
Geriatric Stagnation vs. The Digital Metrics
Whether you’re old-school or new-age, performance metrics aren’t set in stone; they are evolving blueprints to market relevance. Besides, not all KPIs are providing a holistic view of business vitality.
If you are an executive who’s been around since the fax machine was considered groundbreaking, you are probably keeping pet metrics. Revenue per square foot ? The good old days. Output per employee ? Net Promoter Score (NPS) or Customer Lifetime Value (CLV) ? Turnover employees ? Very useful and classic.
The younger cohort of business leaders are captivated by the flashy arsenal of digital tools. Think of social media analytics, website traffic, real-time dashboards, sentiment analysis score, customer effort score (CES), AI-driven forecasts — you name it.
In sectors like SaaS or subscription-based models where high customer volume is required, and per-customer margins are slim, metrics like CAC Payback Period, LTV:CAC and Net Revenue Retention (NRR) are key.
When I arrived in Switzerland in the early 2000s, I noticed that many small businesses hesitated to create even a basic website, let alone an e-commerce platform with online ordering or in-store pickup services.
I remember an exceptional flower shop network located just in front of my house that rejected my business proposal to have more customers with a website or an e-commerce online boutique. Numerous other retail and major local brands decided the same way.
Years later, their e-commerce shortcomings and lack of vision continue to make headlines — while those companies are either bankrupt for years or continue to extend the ending by selling their brands one at a time for daily cash flow.
Why such a lack of vision ? Mainly because the owners of the physical stores feared that a website or an e-commerce display would disrupt their brick-and-stone shop and their old metrics.
The result ? A missed opportunity to evolve with consumer demands — and competitors such as Fleurop or Galaxus took their bet with great websites and multichannel strategies.
The lesson here is clear: when classic metrics become a dogma, a business is set up for obsolescence.
Internal vs External Metrics vs New Approaches for KPIs
In the external arena, metrics like EBITDA, customer lifetime value (CLV), and market share reign supreme and dictate the value of stock prices — of course, those quantifiable indicators make shareholders salivate, and analysts pontificate their expert views about a company.
Internally, the metrics are less specific.
Employee engagement scores, time-to-promotion, innovation index, or staff turnover metric are often cited as organizational “health” barometers — but in practice, such intangible measures are nebulous.
At the same time, the most brilliant organizations understand that internal and external metrics are inseparably linked.
A disengaged workforce or economic layoff of experts will likely result in poor customer service — which will appear in external metrics like market share, Customer Churn Rate (CCR) or Net Promoter Score (NPS).
Of course, the divide between internal and external metrics is illusory because both sets of metrics are symbiotic facets of a unified business strategy. Neglect one side, and you risk zagging off course.
Let’s take Apple, who once glorified the number of devices sold as a key metric.
However, as the smartphone market matured, they shifted focus to service revenue, which included App Store sales, Apple Music subscriptions, and more.
This pivot wasn’t just savvy but proactive, allowing Apple to continue its growth trajectory and higher stock price even as device sales plateaued.
Contrast this with Kodak, which kept the market share as its key metric, even as digital technology rendered film obsolete. The result ? A failure to adapt and innovate led to bankruptcy. The takeaway here is that external metrics, while important, are not sacrosanct. They must evolve in tandem with market conditions and technological advancements.
How about Theranos ? Externally, the company was hitting all the right notes, with its valuation soaring to $10 billion at its peak. Yet, the metrics were a façade, masking unproven technology and ethical wrongdoing. The lesson ? External metrics can be manipulated, and an overreliance on such indicators can lead to corporate hubris and bankruptcies.
Consider also Amazon, a firm often criticized for its internal culture and work conditions but continues to be a powerhouse with massive market shares. Its external metrics — revenue and profitability — are robust, but its internal metrics around employee satisfaction and work-life balance have often been questioned. This mix raises a complex question: can a company sustain strong external performance in the long run without equally strong internal metrics ?
The answer is a big yes.
Indeed, the numbers a company choose to focus on as performance indicators are not just arbitrary data points — but a reflection of its organizational priorities and values.
Of course, such an approach is risky because the metrics that served yesterday may not serve well tomorrow. And the metrics a company choose to ignore today could very well decide its place in the market tomorrow.
In a world with massive data available, the challenge is not just to measure everything that can be measured but to discern what should and must be measured. The key is to align internal and external metrics — and here is where things get interesting.
The Roadmap to Navigate the Metrics
External Metrics:
- Identify Business Catalysts: What pushes your business forward ? Is it customer satisfaction, speed of service, or perhaps innovation ?
- Master the Data Tracking and Infrastructure: Ensure you have the tools and talent to capture relevant data accurately. Assemble a team capable of collecting, cleaning, and interpreting the data. These actions are not a job for an intern, let alone for a junior — but for business experts.
- Customer-Centricity: Use the data to unearth what your customers actually want, not what you think they want.
- Break the Silos: A business organization is not a feudal kingdom, and inter-departmental collaboration is not just a nice-to-have.
Internal Metrics:
- Dethrone and move out HR: Reassign the responsibility of human performance metrics to a more strategically positioned department and people.
- Management Makeover: Stop promoting people to management based on tenure, corruption, or nepotism. Use data-driven methods and project successes to identify leadership and delivery potential.
- People Analytics: Leverage data to understand your employees’ strengths, weaknesses, and motivations. This approach is not just about numbers; it’s about human capital and business, after all.
Finally, the metrics a company choose to focus on have far-reaching implications.
Choose wisely.
Elena Debbaut is a strategic execution expert to boards and executive teams. She leads and advises on complex transformations when governance barriers, internal politics, or structural fragmentation prevent organizations from executing critical decisions.
Specialities:
• governance-constrained transformation
• operational restructuring
• strategic recovery & execution