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Tag: organisational design

  • Why Most KPIs Create the Wrong Behavior

    Why Most KPIs Create the Wrong Behavior

    Reading Time: 3 minutes

    KPIs are all, in theory, about focus.

    Really, most of them just produce distortion.

    Companies use KPIs to align their teams around important performance indicators and to hold their employees accountable. Dashboards are reviewed weekly. Targets are cascaded quarterly. Performance is discussed endlessly. But even with all of this measurement, results frequently disappoint.

    The KPIs are the problem too.

    It’s that many of them inadvertently reinforce the kind of behavior that organizations are trying to weed out.

    Measurement Alters Behavior — Just Not Always for the Better

    Any time a number becomes a target, behavior attempts to adapt toward it.

    It’s not a shortcoming in individuals; it’s what you’d expect the system to do. When people are judged by a number, they will do whatever it takes to make that number go up, even if it results in bad behavior.

    Sales teams discount heavily to meet revenue goals. Support groups close tickets fast, because they process TICKETS not the Problem. Engineering teams deliver features that artificially increase output metrics but don’t actually create customer value.

    The KPI improves.

    The system weakens.

    KPIs Measure Activity, Not Value

    Many KPIs centre on what is easy to count, rather than what actually counts.

    Measures such as task completion, utilization rates, response times and system usage measure movement — not progress. They incentivize activity over the power to make a difference.

    When success is measured in terms of being busy rather than providing value, teams learn to keep themselves busy.

    Local Optimization Kills the Whole System

    KPIs are typically rolled up at the team or functional level. Each group’s targets are monitored as detached numbers in a vacuum from how they impact all the others.

    One produces to its numbers by pushing work downstream. Another decelerates execution to preserve quality scores. Both teams look good one-on-one but end-to-end results are not great.

    This is how workplaces get good at moving work — and garbage at delivering outcomes.

    KPIs Minimize Judgment in Situations When Judgment is Most Needed

    Execution requires judgment: when to optimize for learning over speed, long-term value over short-term gain or collaboration over optimization.

    Rigid KPIs suppress judgment. If there is a penalty for missing the number, people follow the metric even when it results in poor outcomes. Eventually resistance gives way to compliance.

    The organization ceases to adapt, and begins to game the system.

    Lagging Indicators Drive Short-Term Thinking

    Most KPIs are lagging indicators. They tell you what happened, but not why it did or what should happen next.

    As these measures come to prevail performance discussions, teams are incentivized to tune themselves towards current numbers at the cost of future capability. Long-term factors like resilience, trust and adaptability can hardly be charted on a dashboard — so they are deprioritized with little fanfare.

    What High-Performing Organizations Do Differently

    They don’t remove KPIs. They redefine the purpose of metrics.

    High-performing organizations:

    • Measure outcomes, not just outputs

    • Balance leading and lagging indicators

    • Use metrics as learning signals, not as targets

    • Frequently check if KPIs are positively influencing the right actions

    • Recognize that no metric can substitute for human judgement

    They create systems in which metrics inform decisions — not veto them.

    From Dominating Behavior to Facilitating Results

    The function of KPIs is not control.

    It is feedback.

    Teams are more empowered and accountable when they have visibility into how the system is behaving using metrics. The use of metrics to enforce compliance leads to fear, shortcuts and distortion.

    Better systems lead to better numbers — and not the other way around.

    Final Thought

    It’s rare for most KPIs to go wrong because they are poorly structured.

    They fail because they are being asked to replace system design and leadership judgment.

    The real question is not:

    “Are we hitting our KPIs?”

    It is:

    Are our KPIs driving the behaviors that result in sustainable outcomes?”

    At Sifars, we support companies to rewire how metrics, systems and decision-making interact — so performance improves without exhaustion, gaming or unwarranted complexity.

    If your KPIs are good, but execution’s a bitch, maybe it’s time to re-design the system behind the numbers.

    👉 Get in touch with Sifars to know how a better systems make for better outcomes.

    🌐 www.sifars.com

  • The New Skill No One Is Hiring For: System Thinking

    The New Skill No One Is Hiring For: System Thinking

    Reading Time: 3 minutes

    Companies are now hiring at a pace not seen in 20 years. New roles, new titles, new skills pour into job descriptions every quarter. We recruit for cloud skills, AI literacy, DevOps competency, data fluency and domain knowledge.

    But one of the most important assets for companies today is also one of the least likely to be found on a new hire plan.

    That skill is systems thinking.

    And its lack of existence is why even many very well-resourced, well-staffed organizations still watch execution, scale and sustainability recede into the distance.

    Shrewd Teams Still Can Have Dumb Outcomes

    The talent is there; lack of it is no longer the barrier to company growth. They arise from the interplay of humans, processes, tools, incentives and decisions.

    Projects become delayed not because some people suck, but:

    • Work bounces across teams
    • Dependencies are unclear
    • Decisions arrive late
    • Metrics optimize the wrong behavior
    • Work is seamless, but tools are not.

    Increasing the number of specialists does little to change that. It often adds complexity, in fact.

    The missing piece is being able to understand how the whole system is behaving, not just the performance of each individual part.

    What Systems Thinking Really Means

    Systems thinking, after all, isn’t about diagrams or theory. It’s a useful approach to thinking about how outcomes derive from structure.”

    A systems thinker asks:

    • Where does work get stuck?
    • What incentives shape behavior here?
    • Which decisions repeat unnecessarily?
    • What occurs downstream when this goes awry?
    • Are we fixing the causes or the symptoms?

    They don’t seek a single root cause. They seek out patterns, feedback loops and unintended consequences.

    “The larger the organization, it’s less important you’re very deep in any particular area,” he said.

    Why Companies Don’t Hire for It

    Think in systems is easier said than measured.

    It’s not something that pops out on the old résumé. It doesn’t map neatly to certifications.” And it doesn’t have ownership by any single function.”

    Recruitment systems are optimized for:

    • Technical depth
    • Functional specialization
    • Past role experience
    • Tool familiarity

    Yet systems thinking knows no silos. It challenges the status quo instead of upholding it. And that can feel uncomfortable.

    So organizations hire for what’s visible — and then cross their fingers that integration somehow comes later.

    It rarely does.

    The Price of No Systems Thinkers

    Whereas it lacks systems thinking, organizations try to make up for this in effort.

    People work longer hours.

    Meetings multiply.

    Documentation increases.

    Controls tighten.

    More tools are added.

    From the outside, it appears to be productivity. Inside, it feels exhausting.

    Invisible work grows. High performers burn out. Teams are locally optimising while the organisation is globally slowing down.

    Most “execution problems” are in fact system design problems — and without systems thinkers, they go unseen.

    Why Scaling Means Systems Thinking Matters More

    Small teams can get by without system thinking. Communication is informal. Context is shared. Decisions happen quickly.

    Scale changes everything.

    As organizations grow:

    • Dependencies increase
    • Decisions fragment
    • Feedback loops slow down
    • Errors propagate faster

    At this point, injecting talent without reimagining the system only intensifies dysfunction.

    It is imperative that systems thinking becomes the norm with leaders, as it enables:

    • Design for flow, not control
    • Reduce coordination overhead
    • Align incentives with outcomes
    • Enable autonomy without chaos

    It changes growth from a weakness to an advantage.”

    Systems Thinking vs. Hero Leadership

    Heroics are the way many organizations keep systems running.

    Some experienced individuals “just know how things work.” They connect chasms, mediate conflicts and cover over broken systems.

    This does the trick — until it doesn’t.

    Instead of relying on heroes, it shifts towards a way of thinking that assumes everyone can be heroic by design. It doesn’t ask people to compensate for failings, it repairs the structure that produces them.

    That’s how organizations become robust and  not fragile.

    What Systems Thinking Looks Like in Practice

    You can tell who the systems thinkers are.

    They:

    • Ask fewer “who failed?” questions and more “why did this happen?
    • Semi-automation instead of further control requirements
    • Reduce handoffs before adding automation
    • Design decision rights explicitly
    • Focus on flow, not utilization

    They make institutions more tranquil, not more crowded.

    And counterintuitively, they enable teams to go faster by doing less.

    Why This Skill Will Define the Next Decade

    At a time when more companies are thinking about how AI, automation and digital platforms are transforming work, technical skills will be increasingly within arm’s reach.

    What will distinguish companies is not what they make or sell — but how adept their systems are at change.

    Systems thinking enables:

    • Scalable AI adoption
    • Sustainable digital operations
    • Faster decision-making
    • Lower operational friction
    • Trust in automation

    It is the platform upon which all successful change is established.

    And yet, it’s largely invisible in hiring policies.

    Final Thought

    The next advantage won’t be achieved by hiring more specialized staff.

    It will be for those who understand how each piece fits together and can imagine a new way to design so that work flows naturally.

    Organizations don’t need more effort.

    They need better systems.

    And systems don’t just get better by themselves.

    They get better when someone knows how to look at them.

  • When “Best Practices” Become the Problem

    When “Best Practices” Become the Problem

    Reading Time: 3 minutes

    “Follow best practices.”

    It is one of the most familiar bromides in modern institutions. Whether it’s introducing new technology, redesigning processes or scaling operations, best practices are perceived to be safe shortcuts to success.

    But in lots of businesses, best practices are no longer doing the trick.

    They’re quietly running interference for progress.

    The awkward reality is, that what worked for someone else somewhere else at some other time can be a danger when dumbed down and xeroxed mindlessly.

    Why We Love Best Practices So Much

    Good practice provides certainty in a complex setting. They mitigate risk, provide structure and make it easier to justify decisions.

    They are by leaders: 

    • Appear validated by industry success

    • Reduce the need for experimentation

    • Offer defensible decisions to stakeholders

    • Establish calm and control

    In fast-moving organizations, best practices seem like a stabilizing influence. But stability is not synonymous with effectiveness.

    How Best Practices Become Anti-Patterns

    Optimal procedures are inevitably backward-looking. They have been codified from past successes, often in settings that no longer prevail.

    Markets evolve. Technology shifts. Customer expectations change. But best practices are a frozen moment in time.

    When organizations mechanically apply them, they are optimizing for yesterday’s problems at today’s requirements. What was an economy of scale has turned into a source of friction.

    The Price of Uniformity

    One of the perils of best practices is that they shortchange judgment.

    When you tell teams to “just follow the playbook,” they stop asking themselves why the playbook applies or if it should. Decision-making turns mechanical instead of deliberate.

    Over time:

    • Context is ignored

    • Edge cases multiply

    • Work gets inflexible not fluid

    The structure seems disciplined, but it loses its acumen in reacting intelligently to change.

    Best practices can obscure structural problems.

    Best practices in many corporations are a leitmotif for not doing any real thinking about problems.

    And instead of focusing on murky ownership, broken workflows or a lack of process, they apply templates, checklists and methods borrowed from other places.

    These treatments can resolve the symptoms, but not the underlying irradiance. On paper, the organization is mature, but in execution they find that everyone struggles.

    Best practices are often about treating symptoms, not systems.

    When Best Is Compliance Theater

    Sometimes best practices become rituals.

    Teams don’t implement processes because they make for better results, but because people want them. A review is performed, documentation produced and frameworks deployed — even when the fit isn’t right.

    This creates compliance without clarity.

    They turn work into doing things “the right way,” rather than achieving the right results. Resources are wasted keeping systems running rather than focusing on adding value.

    Why the Best Companies Break the Rules

    Companies that routinely outperform their peers don’t dismiss best practices — they situate them.

    They ask:

    • Why does this practice exist?

    • What problem does it solve?

    • Is it within our parameters and objectives?

    • What if we don’t heed it?

    They treat best practices as input, not prescription.

    This is a high-confidence, mature approach that enables organizations to architect systems in accordance with their reality rather than trying to cram their round hole into the square-peg architecture of some template.

    Best Practices to Best Decisions

    The change that we need is a shift from best practices to best decisions.

    Best decisions are:

    • Grounded in current context

    • Owned by accountable teams

    • Data driven, but not paralyzed by it

    • Meant to change and adapt as conditions warrant

    This way of thinking puts judgement above compliance and learning over perfection.

    Designing for Principles, Not Prescriptions

    Unlike brittle practices, resilient organizations design for principles.

    Principles state intent without specifying action. They guide and allow for adjustments.

    For example:

    • “Decisions are made closest to the work” is stronger than any fixed approval hierarchy.

    • ‘Systems should raise the cognitive load’ is more valuable than requiring a particular tool.

    Principles are more scalable, because they guide thinking, not just behavior.

    Letting Go of Safety Blankets

    It can feel risky to forsake best practices. They provide psychological safety and outside confirmation.

    But holding on to them for comfort’s sake can often prove more costly in the long run — and not just about speed, relevance, or innovation.

    True resilience results from designing systems that can sense, adapt and learn — not by blindly copying and pasting what worked somewhere else in the past.

    Final Thought

    Best practices aren’t evil by default.

    They’re dangerous when they substitute for thinking.

    Organizations are not in peril because they disregard best practices. They fail if they no longer question them.

    But it’s precisely those companies that recognize not only that there is a difference between what people say best practices are and how things actually play out, but also when to deviate from them — intentionally, mindfully and strategically.

    Connect with Sifars today to schedule a consultation 

    www.sifars.com