A Blog by Jonathan Low


Mar 11, 2024

How Enterprises Use AI To Create More Effective Key Performance Indicators

The primary benefits of using AI to improve and transform KPIs is that they generate more accurate and dynamic insights about organizational performance in an economy which is increasingly driven by real-time data within rapidly shifting markets. 

The results, so far, reveal that AI may improve financial performance by as much as three times previous standards, while generating more effective information around intangibles like collaboration and organizational behavior. In this socio-economic environment, optimizing performance in this way provides significant strategic advantage. JL 

Michael Schrage and colleagues report in MIT Sloan Management Review:

Key performance indicators (KPIs) increasingly fail to deliver the insights leaders need. Companies that revise their KPIs with AI are three times more likely to see greater financial benefit. Organizations using AI to create new KPIs are also more likely to realize benefits around alignment, collaboration, efficacy and efficiency. AI-enriched KPIs better describe ongoing performance, more effectively anticipate future performance, and make more useful recommendations to promote outcomes. Transforming static metrics into smarter and more accurate KPIs helps executives shift their strategic insight, delivering previously unattainable levels of data-driven organization, reconsidering the purpose of performance measurement and the strategic value of metrics.Legacy key performance indicators (KPIs) increasingly fail to deliver the information and insights leaders need to succeed. They fall short in tracking progress, aligning people and processes, prioritizing resources, and advancing accountability. These failures both undermine operational efficiencies and compromise the pursuit of strategic objectives and outcomes. Sophisticated organizations worldwide recognize that their KPIs need to be measurably smarter and more capable. They consequently invest in algorithmic innovations to make their performance metrics more intelligent, adaptive, and predictive. Smart KPIs powered by artificial intelligence (AI) become sources — not merely measures — of strategic differentiation and value creation.























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