Understanding Metrics, KPIs, and Key Results

Introduction

Definition: A system or standard of measurement.
- Businesses: Set of figures/statistics that measure results.
Origin: Derived from Greek word metron meaning measure.
Purpose: Tool to measure success in various aspects.
- Example Metrics:
  - Customer renewal rate
  - Customer churn rate
  - Monthly active users
  - Net promoter score
  - Financial metrics like EBIT, cash flow, burn rate
Current Value: Present value of a metric.
- Calculation can vary among organizations.
- Importance of understanding calculation methods.

Definition: Key areas of business performance measurement.
Components:
- Metric
- Current value
- Target value
- Title
Target Value: Desired minimum or maximum value.
Title: Should include the metric and target value.
Purpose:
- Defines critical business areas to monitor.
- Becomes part of "business as usual."
Difference from Metrics:
- KPIs include a target value and title in addition to a metric.

Purpose:
- Clarify and quantify success for an objective.
- Measure progress towards an objective.
Components:
- Metric
- Current value
- Start value
- Target value
- Title
Start Value: Value at the beginning of a timeframe.
Key Result Title: Example "Increase NPS from 20 to 40."
Difference from KPIs:
- Key results have a start and target value different from KPIs.
- Used for impacting metrics positively.

Overlap and Differences:
- Metrics are measurement tools.
- KPIs track key business performance areas.
- Key results aim to improve performance metrics.
- KPIs and Key Results use metrics, but serve broader purposes.
Final Note: Importance of distinguishing between KPIs and Key Results to avoid confusion.