KPIs Are Hard To Understand, says CEO of NVIDIA
Jensen Huang, the CEO of NVIDIA (market cap over $2,22 Trillion!!), says Key Performance Indicators (KPIs) are hard to understand.
In a recent interview at Stanford University, he expressed that while for example, “Gross Margins” are important, they are not KPIs but results.
Instead, he advised looking for something that serves as an “Early Indicator Of Future Success”:
KPIs are metrics used to evaluate the performance of a company or a project.
They are quantifiable measures that help in making decisions and tracking progress with a goal in mind.
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However, they can be complex and may not always provide a clear picture of the current situation or future potential.
Jensen Huang's suggestion to look for early indicators of future success is a more proactive approach—which I find super interesting for Customer Success!
This means focusing on metrics that can predict future outcomes rather than just measuring past performance.
For instance, if a company is investing in research and development, tracking the number of patents filed could potentially be an early indicator of potential future success.
In the context of NVIDIA, which is a leading company in the field of artificial intelligence (AI) and graphics processing units (GPUs), early indicators could include the number of AI startups engaging with the company, the adoption rate of their new technologies, or the performance of their AI chips in many different tests.
That way, businesses can make more informed decisions and take proactive steps to improve their performance when they focus on early indicators, not necessarily KPIs that are based on “past” performance.
So, it's not just about measuring what HAS happened, but also about predicting what MIGHT happen in the future.
Similarly, Jeff Bezos, co-founder and executive chairman of Amazon, says that if your customers’ anecdotes conflict with your metrics, then you should doubt your metrics.
Not because the data is wrong, but because you’re not measuring the right thing:
Right on spot, isn’t it?
And That’s It
KPIs are important, but they are just one part of the equation.
Looking for early indicators of future success can provide a more impacting view of a company's performance and potential.
What do you think?