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Why we like KPIs so much


09 / 03 / 2015

(Coen de Bruijn) Ever tried to imagine the number of KPIs currently in use? Impossible right? What make KPIs so popular? Why are we so keen on measuring performance using metrics? The dual process theory of decision making might answer this question.

In psychology, a dual process theory provides an account of how a phenomenon can occur in two different ways, or as a result of two different processes. Stanovich and West applied this theory to the process of reasoning where they propose two distinctively separate cognitive systems underlying thinking and reasoning and that these different systems were developed through evolution. Our brain operates on the one hand as an efficient automatic pilot that is constantly making decisions in split seconds. This is the processing system that we use most often.

There is also also a non-automatic brain mechanism that can take over, but it is slower and needs focus and concentration. This so called System 2 is evolutionarily recent and specific to humans. It is also known as the explicit system, the rule-based system, the rational system, or the analytic system.It performs the more slow and sequential thinking. Kahneman popularized this theory in his book Thinking Fast and Slow and here is how he summarizes the two systems forming thoughts (Kahneman, 2013)*

System 1: Fast, automatic, frequent, emotional, stereotypic, subconscious
System 2: Slow, effortful, infrequent, logical, calculating, conscious

The two systems are best illustrated with an example. Do you remember all the decisions you made reading this text so far? Of course not, but still you were able to understand what was meant. This was System 1 in optima forma. Now try to solve the following puzzle.

You have been given the task of transporting 3,000 apples 1,000 miles from Appleland to Bananaville. Your truck can carry 1,000 apples at a time. Every time you travel a mile towards Bananaville you must pay a tax of 1 apple but you pay nothing when going in the other direction (towards Appleland). What is highest number of apples you can get to Bananaville?**

Solved it? Really? You might have read it, but decided (probably somewhere around the word “tax”) to read on and (maybe) try to answer it later. Using your non-automatic brain function System 2 is time consuming and tiresome! It even takes an effort to start using it and therefor we are very reluctant to start using System 2.

In order to execute its extremely difficult task of constant decision making, our (automatic) brain organizes all stimuli in tidy, simple, predictable, and coherent patterns. These patterns are stored in our memory which provides the different brain functions with the necessary background information to make all sorts of decisions. The outcome of the decision is stored and used again later (and so forth, and so forth). So our brain needs information to make all these decisions. The more this information is already structured, the faster it can be processed. System 1 therefore loves stereotypes, recognizable patterns (even when they are not there), certainty, confirmations, easy to solve questions, etc.

Now let’s go back to question why we like KPI’s so much. When we use KPIs our System 1 is immediately satisfied in many ways. The information provided is structured and someone already used the non-automatic part of their brains to do the hard work (selection the indicator, threshold, visualization, etc). KPIs are most often visualized and easy to interpret (using dashboards, graphs and traffic lights). They give the illusion that we can reduce the complex world to simple, tidy and coherent patterns. But most of all it provides us with a ready-to-use risk and loss avoidance toolkit. KPIs suggest that we understood the past and therefore are able to predict and guide our decisions. Decisions made on KPIs give the impression that we can avoid uncertainty, foresee risky events and prevent loss. In other words, the KPIs fulfill our needs and serve the decisions on a silver platter. No wonder we can’t get enough of KPIs!

So be aware that it takes conscious effort to solve problems we face. Don’t take KPIs on face value and be fooled by your auto-pilot letting you think everything is under control if your KPI is flickering GREEN. So next time you encounter a KPI put your System 2 at work and ask yourself questions like who created this KPI?, what metrics were used? What is the data quality of the information behind the KPI? Do I really understand what this KPI was meant for and what its outcome means? etcetera, etcetera

*Want to read more on the different systems in our brain? Read Thinking, fast and slow by Daniel Kahneman. An easy to read book on the mechanisms behind our reasoning, decision making and thinking.

**Answer to the riddle: 833 apples.

Step one: First you want to make 3 trips of 1,000 apples 333 miles. You will be left with 2,001 apples and 667 miles to go.
Step two: Next you want to take 2 trips of 1,000 apples 500 miles. You will be left with 1,000 apples and 167 miles to go (you have to leave an apple behind).
Step three: Finally, you travel the last 167 miles with one load of 1,000 apples and are left with 833 apples in Bananaville.

1 reactie

  1. 16 / 03 / 2015

    lijkt heel veel op de Theorie uit Exponentiële Organisaties van Yuri Van Geest. klopt dit?


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