The KPI.org Blog

How to Cheat at Wordle Using Indirect Measurement

By: David Wilsey

Mar 9, 2022 568 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

You have likely heard of the word-guessing game Wordle. If you are on social media, you might even be tired of seeing the related green and yellow grids on your feed each day. You might not know, however, that a few folks have discovered a sneaky way to cheat.

Apparently, the Wordle word-of-the-day has been showing up on the list of top searches on certain online dictionary sites around 9:00 am US east coast time lately. So, if you are so inclined, you could scan that list for 5-letter words before playing and have a good idea what to guess.

This example demonstrates how an organization might use indirect measurement (or a “proxy” measure) as a KPI. An indirect measure can be used in cases where it is not practical to directly measure an intended result or goal and is based on a hypothesis around correlation or contribution. Metaphorically speaking, let’s say the word-of-the-day is something an organization wants to accomplish but is finding it difficult to measure directly. You could create a KPI around the number of searches for any particular 5-letter word on the dictionary sites and then use that data to inform your word-guessing decision. The hypothesis is based on an expected correlation between the dictionary searches and the game.

It also demonstrates the imprecise nature of indirect measures. The dictionary search measure informs my word-guessing decision, but I can’t assume that there isn’t some other reason why a 5-letter word might show up on the list. Direct measurement is almost always preferred. If we want more sales, the direct sales dollars tell us what we want to know precisely. Once I shift to something that is indirect, like web traffic on my shopping cart website, my measurement becomes less reliable and requires more work to connect to the intended result.

But in the management world, many times a direct measurement is not obvious. A non-profit that works in advocacy might not be able to identify tangible intended results of their work. Teams that succeed through collaboration and innovation sometimes end up with softer, more indirect, measures of success. Or in the example above, maybe I want to measure the web traffic to better understand what is contributing to sales results. The point is that sometimes indirect measurement is useful, as long as you understand where the weaknesses are.

If you would like to learn more about indirect measurement or our general approach to KPI development, please consider our KPI Professional certification program.

Source: https://www.washingtonpost.com/video-games/2022/02/19/wordle-cheat/

Image source: Wikipedia

KPI Development: When to Use Ratios

By: David Wilsey

Nov 30, 2020 1310 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

Let’s say you are managing a large organization and your HR director comes to you with bad news. The total number of employees leaving the company has skyrocketed. They show you the chart to the right to indicate that the raw number of employees leaving last year was below 20 and this year it is 50. Should you panic?

The answer is that it depends. What if I told you that this year the company acquired a competitor and that the total number of employees had expanded from just over 500 to over 2200 (see the chart below), and so the turnover percentage (# leaving / total # of employees) had actually decreased slightly (see Turnover ratio). Would that make you panic? Probably not.

The point is that raw counts can be misleading if you are not careful about the comparisons you are making relative to the underlying population. You might have seen debates in the news about how political leaders or writers have highlighted raw COVID 19 counts to support an argument when a per capita ratio suggests a different conclusion. It’s not that raw counts aren’t sometimes useful, but it is important to be aware of what you are comparing and how the overall population might impact interpretation. We recommend that any measures that could be misinterpreted be expressed as a ratio. Common examples of ratios include:

  • Percent completion
  • Coverage, fraction of the total possible
  • Error or defect rate
  • Per capita
  • Efficiency = Output / Input
  • Productivity = Output / Cost (or Output / work hour)

Beginners in the KPI space often make the mistake of developing raw count measures where ratios would be more meaningful.

One type of ratio you do NOT see on this list is percent increase. Many of our clients mistakenly think that if they create a ratio comparing the current period with the previous period that they have solved this problem. While a percent increase is technically a ratio, creating a ratio using the 2017 raw count and the 2016 raw count is still just as misleading, as more than 150% increase in turnover from year to year is still unnecessarily alarming. Of course, you could choose to track a percent increase of the ratio, but that would be addressing a different question, one that I will address in an upcoming blog.

To learn more about ratios and other KPI development issues, please see our KPI Professional Certification program.

Get our tips straight to your inbox, and 
become more strategy focused