What is a Key Performance Indicator (KPI)?
A KPI is a measurable value tracking progress toward an objective that matters — emphasis on key: a handful chosen deliberately, not a dashboard of forty numbers nobody acts on. Good KPIs are connected to decisions (a number that changes no behavior is a decoration) and balanced (pair speed with quality, cost with satisfaction, or you'll optimize one by quietly wrecking the other).
Leading indicators predict (risk exposure trend, backlog readiness); lagging ones confirm (CPI, defect escapes). Mature reporting mixes both.
Worked example
A data-center program tracks five KPIs: SPI, CPI, safety incidents per 100k hours, commissioning tests passed first time, and open risks above threshold. When first-time-pass drops two months running, the program invests in earlier vendor factory testing — the KPI paid for itself by changing a decision, which is the only way KPIs ever pay.