Golf and KPIs—And what true success drivers look like
Key Performance Indicators (or KPIs); every company has them. Executives love them, employees may hate them, but we all need meaningful measures of how well we’re doing. The trick is to find KPIs that are true success drivers. One place you’ll find them is…golf!
A 1987 study by Dr. Lucius Riccio of Columbia University looked at golf stats and how they correlated with scores. Riccio found that the best predictor of a golfer’s score is the number of greens she reaches in regulation (two strokes less than par; when you reach a par-4 in two shots, that’s a green in regulation). Greens in Regulation (GIR) is a KPI—as quantified by “Riccio’s Rule”:
Score = 95 – 2*GIR
This means that if you hit two greens, you’ll probably shoot around 91; three greens gets you an 89, ten greens means you’ll shoot 75, and so on. Riccio found that this formula reliably predicts golf scores to within one stroke when you average the scores and stats over least four rounds.
So how do you increase your GIR? You have to find out whether you hit more greens teeing off with a driver for maximum distance or with a shorter club to keep the ball in play. On the PGA Tour, it’s a bomber’s game, but for average golfers, it’s less obvious; you have to try different ways and crunch the numbers to see which one works for you.
The important takeaway is that GIR is a stat that can’t be “gamed.” Either you hit the green or you don’t, so there isn’t a way to make your numbers look better than they really are, which can happen with KPIs that aren’t chosen carefully, especially if they’re really just measures of activity.
Another classic sports KPI is the walk, or base on balls. One of the earliest findings of the Moneyball-era of baseball analytics was that a batter with a high walk percentage is a big plus, all other skills being equal. At the same time, however, walk percentage is a tough stat to improve. Players, especially in the minor leagues, try to walk more often, but either you’re a patient hitter or you’re not. That makes walk percentage one of the top stats that scouts look for when rating prospects.
I used to write for a technology magazine that covered midrange systems and software. We had the best testing lab in the business, with performance benchmarks for CPUs, disk and tape controllers and subsystems, network interfaces, multiplexers, and even more prosaic things like printers and terminal servers. The most ambitious suite of benchmarks was for database management systems, a product area that covered everything from desktop DBMS products costing a few hundred dollars, to products that ran on clusters of minicomputers and cost millions. When you’re looking at spending that kind of money (or saving it by buying a cheaper product that does the job well enough), you need an objective set of benchmarks. We had a standard database, designed to exercise the most common tasks a DBMS was likely to do in a business environment—asking each DBMS we reviewed to query the same database gave our readers a KPI for each product.
Rocket uses our own Net Promoter Score (NPS) as a companywide KPI to compare how we’re doing year-to-year. Because NPS is derived from survey data provided by customers, it’s another one that can’t be gamed—there’s nowhere to hide from “promoter percentage minus detractor percentage.”
Whether it’s Greens in Regulation, walks, database performance, or Net Promoter Score, a good KPI is one that’s a reflection of how you’re doing—the “performance” is an underlying skill or talent, not the actual thing being measured. One more caveat—be careful about offering direct incentives for hitting KPI numbers. Legendary Boston Celtics General Manager Arnold “Red” Auerbach wrote that he always refused to give players incentive contracts—so much money if they led the league in scoring, rebounds, assists, and so on. Auerbach felt that such incentives distracted players from winning championships—that’s the KPI that matters most.