‍When Numbers Stop Serving Strategy

Metrics matter. But research from Harvard Business Review shows that companies using more than 8–10 KPIs at the executive level actually see lower performance alignment than those who keep it focused. This isn’t a data problem. It’s a leadership problem.

The culprit is the law of diminishing returns. Just as pouring a tenth cup of water into a plant pot will drown the roots instead of nourishing them, every additional KPI after a certain threshold reduces clarity rather than increasing it. Leaders know this intuitively, yet quarterly board decks continue to swell with 30+ metrics.

The result? Teams lose focus, priorities blur, and measurement theatre replaces strategic action.

The KPI Return Curve

We frame this with what we call the KPI Return Curve. Think of it as three distinct zones on a graph plotting "number of KPIs" against "strategic value":

Zone 1 – The Sharp Edge

With 3–5 KPIs, organisations get real leverage. Each metric signals what truly matters, and progress feels visible. For example, a B2B SaaS company tracking only Customer Acquisition Cost, Net Retention, and Gross Margin can make trade-offs cleanly.
Reflection prompt: Which 3–5 measures would your organisation fight to keep if you had to discard all others?

Zone 2 – The Comfort Zone

Between 6–12 KPIs, most leadership teams feel safe. Everyone has their pet metric, every function feels represented, and nobody rocks the boat. The problem? This comfort zone breeds complacency. Metrics are monitored, but they rarely spark debate or decision shifts.
Micro-action: Run a 30-minute “KPI Audit” workshop and ask: Which of these are truly directional versus merely descriptive?

Zone 3 – The Noise Zone

Beyond 12 KPIs, value drops steeply. Reports balloon, meetings slow down, and frontline teams become disillusioned by measurement overhead. One global bank we advised had 47 board-level KPIs; executives admitted privately they only trusted four of them.
Micro-action: Eliminate one KPI this quarter. Notice whether decision quality improves or declines.

Putting the Curve Into Practice

So how do leaders operationalise this idea without slipping back into metric overload? Three steps help:

1. Define the Decision, Not the Data
   Begin with the strategic decision you want to sharpen. Then ask: which single metric best illuminates that choice?
   Pro Tip: If a metric doesn’t influence a resourcing or strategic trade-off, it doesn’t deserve KPI status.
   
   
2. Set Ceiling and Floor Effects
   Every KPI has a point of sufficiency. For example, Net Promoter Score above 60 may be “good enough”. Beyond that, chasing incremental improvement consumes disproportionate energy. Agree organisational thresholds in advance.
   
   
3. Institute a KPI Sunset Policy
   Just as products have life cycles, so should metrics. Create a review cadence where underperforming or redundant KPIs expire, making room for sharper measures.
   
   

Common Failure Modes We’ve Witnessed

• KPI Inflation – Every quarter, new metrics are added, but none are retired. Remedy: enforce a strict “one-in, one-out” rule.
  
  
• Vanity Metrics – Leaders cling to measures that look good but don’t change strategy. Remedy: stress-test every KPI against real trade-off scenarios.
  
  
• Over-Democratisation – Each function demands equal KPI airtime. Remedy: distinguish between operational metrics (managed locally) and strategic KPIs (escalated to the board).
  
  
• Short-Termism – Metrics become quarterly report fodder rather than long-term value guides. Remedy: balance leading and lagging indicators.
  
  

‍The Executive Reflection Bench

If your executive team were allowed only five KPIs for the next 12 months, which ones would survive the cut?
Which of your current KPIs actually trigger a resource reallocation when they move - and which are just reported?

Why This Discipline Pays Off

When leaders respect the law of diminishing returns, reporting shifts from theatre to traction. We’ve seen organisations move faster in strategic pivots, cut meeting times in half, and strengthen trust across layers of the business. More importantly, it restores the signal-to-noise ratio that allows executive attention - the scarcest resource of all - to focus on the right problems.

Your Next Strategic Move

This week, convene your leadership team and ask one blunt question: Which KPI would we drop if we had to? The act of debating this question surfaces priorities more effectively than adding the next “nice to have” measure.

‍

Team SHIFT