Moneyball News - Spring 2022

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KPI “Moneyball” Theories

Quoting from Peter Drucker: “If you can’t measure it, you can’t improve it.” Here are 5 KPI theories to drive operational excellence.

1. Relatability: Set an Outcome KPI in terms the team can relate and gain buy-in such as sell 100 units or target 300 loyal members.

2. Linearity: Beware of optimal measures like Gross Margin as a higher number may lead to lost customers. Product Yield is a stronger primary KPI as it takes inventory turn (or occupancy rate) into account and directly correlates to profits.

3. Opportunity: Raw numbers, the numerator, may mislead. To fairly evaluate performance, it’s important to add in the denominator to take into account opportunity for “real” productivity.

4. Serenity: Revenue requires the customer to nod yes. Focus on the input drivers that you can control: products (or services), marketing, people, and market opportunity. There are two ways to grow each pillar - volume and/or productivity.

5. Segmentation: Investment Volume and ROI are what matters for each pillar. From there, segment into categories such as audience, channel, product and so forth to identify actionable insights.