So there was this podcast episode I listened to back in the first half of 2019. I don't remember where from, but it told a story about KPIs (Key Performance Indicators) that I found interesting. The story goes something like this:
A steel manufacturing company had been on the decline for a long period of time. Output was lackluster, and production across plants country-wide often saw temporary, but regular, shutdowns. Investors were unsatisfied, so they tasked the board with finding a replacement CEO. The board soon found a potential replacement (let's just call him Steve), but Steve had to consider whether he could meet their expectations.
After much deliberation he took the role.
You see, Steve had an idea. A big announcement for his first day as CEO. The company's new top-level KPI would center around worker safety. Not revenue, not operating margins, but safety. Steve believed employee injuries was the single most important metric to optimize for. The top priority for the company.
Investors were shocked. In the bad way. Many even exited the company on the news. Absurdity, they thought. How could he do this to us? It's business after all, and profits should come first. Major investors walked straight out the door in search of a better investment. But those who chose to stand by Steve were in for a pleasant surprise.
In the coming months the company would see rapid revenue growth, resulting from higher productivity output across all plants. But how? The company had stopped prioritizing revenue. Turns out those regular shutdowns were caused by work-related injuries. These injuries not only delayed manufacturing but also hurt the people who did the work. The injuries were often expensive, and skilled employees would need to be compensated, then replaced.
Not only that, injuries reduced morale across the workforce. They caused tensions between workers on the floor who often risked injury and managers who only cared about output metrics. Makes sense. Who really wants to get their hand chopped off? No matter how much money you get in return, you're going to be a touch bitter at any manager who's willing to risk your life for their performance review.
The next few months saw a huge turnaround in output as the changes to safety standards aligned the company to solve a major problem within the organization. One that crippled the company's workforce and, ultimately, its bottom line.
There's a bit more to it, but I'll stop here. I believe Steve's story serves as an example of how powerful creative KPIs can be in aligning an organization for success. By comparison, MRR (Monthly Recurring Revenue) is often an uninspired metric that translates poorly to the day-to-day. Everyone's trying to make money; KPIs should communicate how we intend to make that money.
So this is a bit of a Hail Mary, and I hope you enjoyed the story either way. But if anyone out there knows which podcast is referenced here, I would be forever grateful if you could point me in the right direction. I'm willing to offer coffee or lunch to call it even.