KPI (key performance indicator)

A KPI is a metric an organization has deliberately chosen to track because it reflects progress toward something that matters, such as revenue growth, on-time delivery or customer retention. Not every number a company reports is a KPI; the label implies the metric has an owner, a target and a review cadence.

A well-formed KPI has four parts: the metric itself, a target or threshold, a time frame, and an owner accountable for it. It is usually shown on a dashboard alongside its trend line and target, so a viewer can see at a glance whether performance is improving, flat or declining, rather than just the current value.

KPIs matter because they focus attention on a small set of numbers instead of every metric a system can produce, and they link day-to-day work to strategic goals such as OKRs. The common pitfalls are tracking too many KPIs so none get attention, choosing vanity metrics that look good but do not drive decisions, and setting targets that quietly get gamed once people realize how they are measured. Good KPI programs revisit the list periodically and retire metrics that no longer inform a decision.