We Stopped Using 'Key Performance Indicators'—We Focused on Quality Instead

By mid-2024, our management meetings had become an exercise in data-driven masochism. We had forty-five distinct "Key Performance Indicators" (KPIs) spread across seven different departments. We spent 60% of every executive sync debating why the "NPS" had dropped three points or why the "LTV to CAC ratio" was 2.8 instead of 3.0.

The result was an organization that knew how to move numbers but had no idea how to build features. Our product team was so terrified of "hurting the conversion rate" that they stopped making bold architectural changes. Our customer success team was so focused on "reducing churn" that they were offering desperate discounts to customers who should have been fired months ago.

We realized that we were managing the shadow, not the object. We were managing the metric, not the business. We decided to delete the dashboard, fire the "data-driven" consultants, and focus on one thing: Quality. Here is why KPIs are the most destructive force in modern business and how to escape the measurement trap.

Goodhart's Law in Action

Goodhart's Law states: "When a measure becomes a target, it ceases to be a good measure." This is the fundamental flaw of the KPI-driven organization. The moment you tell a Sales team that their primary KPI is "Number of Calls Made," they will make 10,000 useless calls to people who aren't in your target market just to hit their bonus.

In our case, we told the engineering team that their primary KPI was "Velocity" (story points per sprint). Within two months, our velocity had doubled! We were high-fiving each other in the boardroom. But when we looked at the actual product, we saw that it was riddled with bugs. The engineers were simply breaking down tasks into smaller and smaller pieces and ignoring tech debt to keep their "velocity" high. We were measuring "speed," but we were actually producing "garbage."

The Complexity of the "Average"

KPIs are almost always averages. Average Revenue Per User (ARPU), Average Response Time, Net Promoter Score (which is an average of averages). Averages are a great way to hide the truth.

Our "Average Response Time" for customer support was under two hours. We felt great! But when we dug into the data, we found that 80% of our customers got a response in 10 minutes, and 20% of our customers—the ones with the most complex, critical problems—were waiting three days. The "average" was healthy; the reality was that 20% of our most valuable customers were furious. The KPI didn't just fail to alert us; it actively obscured the crisis.

The Obsession with 'Short-Termism'

Most KPIs are backwards-looking, and almost all of them incentivize short-term thinking. A product manager who wants to hit their "Conversion Rate" target for the quarter will implement a dark pattern or a manipulative notification flow because it moves the number today. They don't care that those same users will churn in six months because that's not this quarter's KPI.

We found that we were trading long-term brand equity for short-term metric gains. We were burning our future to heat our present. We were so busy "optimizing the funnel" that we forgot to check if the product at the bottom of the funnel was actually worth the price we were charging for it.

The 'One Thing' Strategy: Quality

We replaced our 45 KPIs with a single, qualitative orientation: **Is this the highest quality version of what we are building?**

This sounds un-businesslike. It sounds un-measurable. It is. And that's exactly why it works. Quality is an internally-derived standard of excellence that cannot be gamed. You cannot "A/B test" your way to quality. You cannot "optimize" your way to quality. You have to decide to be great.

When we focused on quality over KPIs, everything changed:

• Sales: We stopped telling the sales team to "make calls." We told them to "only close customers who are a perfect fit for the product." Our sales volume dropped initially, but our churn rate eventually plummeted because we stopped selling to the wrong people.
• Engineering: We stopped tracking "velocity." We told them: "Don't ship anything that isn't fast and reliable." Features took longer, but they worked. Our support volume dropped by 70% because the software was actually good.
• Product: We stopped running 50 A/B tests. We started talking to ten customers a week and asking them: "What part of this product feels cheap / broken / annoying to you?" We fixed those things.

Conclusion

KPIs are for managers who don't understand the work. They are a proxy for reality, and unfortunately, the proxy is often a lie. When you manage by the numbers, you are managing a spreadsheet, not a company. You are managing the echoes of past decisions, not the potential of future ones.

Delete your dashboards. Stop searching for the "North Star Metric." Instead, go talk to your customers and look at your product. If it's not great, no amount of metric optimization will save you. Quality is the only KPI that matters in the long run.