What are key performance indicators?

Key performance indicators (KPIs) are measurable values that determine whether an organization is achieving key objectives. KPIs will depend upon a business-specific context, as each company and industry will have its own core metrics to track. Indeed, the choice of the right KPIs that can positively affect the business’s long-term perspective is critical.

KPITypeDescriptionWhen to UseExampleFormula
Financial KPIs
Revenue Growth RateFinancialMeasures the percentage change in revenue over a specified period, indicating business growth.Assess revenue growth performance.A revenue growth rate of 10% indicates a 10% increase in revenue.Revenue Growth Rate = [(Current Revenue – Prior Revenue) / Prior Revenue] * 100%
Gross Profit MarginFinancialRepresents the percentage of revenue retained as gross profit, indicating profitability at the gross level.Evaluate the efficiency of production and cost management.A gross profit margin of 40% means 40% of revenue is retained as gross profit.Gross Profit Margin = (Gross Profit / Revenue) * 100%
Operating Profit MarginFinancialMeasures the percentage of revenue retained as operating profit before interest and taxes.Assess the efficiency of operating expenses and profitability.An operating profit margin of 15% means 15% of revenue is operating profit.Operating Profit Margin = (Operating Profit / Revenue) * 100%
Net Profit MarginFinancialRepresents the percentage of revenue retained as net profit after all expenses and taxes.Assess overall profitability after all expenses.A net profit margin of 10% means 10% of revenue is net profit.Net Profit Margin = (Net Profit / Revenue) * 100%
Earnings Before Interest and Taxes (EBIT) MarginFinancialMeasures the percentage of revenue retained as EBIT before interest and taxes.Evaluate operational profitability excluding interest and taxes.An EBIT margin of 18% means 18% of revenue is EBIT.EBIT Margin = (EBIT / Revenue) * 100%
Return on Assets (ROA)FinancialIndicates the efficiency of using assets to generate profit, measuring profitability relative to total assets.Assess the return on investment in assets.An ROA of 12% means a 12% return on assets.ROA = (Net Profit / Total Assets) * 100%
Return on Equity (ROE)FinancialMeasures the efficiency of using shareholders’ equity to generate profit, indicating shareholder returns.Assess the return on shareholders’ equity.An ROE of 20% means a 20% return on equity.ROE = (Net Profit / Shareholders’ Equity) * 100%
Earnings per Share (EPS)FinancialRepresents the portion of net profit allocated to each outstanding share of common stock.Evaluate profitability per share for investors.An EPS of $2.50 means $2.50 of profit per share.EPS = (Net Profit – Preferred Dividends) / Number of Common Shares Outstanding
Price-to-Earnings (P/E) RatioFinancialCompares a company’s stock price to its earnings per share (EPS), indicating relative valuation.Assess the stock’s valuation relative to earnings.A P/E ratio of 15 suggests the stock is priced at 15 times earnings.P/E Ratio = Stock Price per Share / Earnings Per Share
Customer KPIs
Customer Acquisition Cost (CAC)CustomerMeasures the cost incurred to acquire a new customer, assessing marketing and sales efficiency.Evaluate the efficiency of customer acquisition efforts.A CAC of $2000 means it costs $2000 to acquire a new customer.CAC = Total Marketing and Sales Expenses / Number of New Customers Acquired
Customer Churn RateCustomerIndicates the percentage of customers who discontinue their relationship with a business.Assess customer retention and loyalty.A churn rate of 5% means 5% of customers were lost during a period.Churn Rate = (Number of Customers at Start – Number of Customers at End) / Number of Customers at Start
Customer Lifetime Value (CLV)CustomerRepresents the predicted net profit generated by a customer over their entire relationship with the business.Assess the long-term value of customers.A CLV of $5000 means a customer is expected to generate $5000 in profit over their lifetime.CLV = (Average Purchase Value * Average Purchase Frequency) / Churn Rate
Net Promoter Score (NPS)CustomerMeasures customer satisfaction and loyalty by asking customers how likely they are to recommend the business.Assess customer satisfaction and potential for referrals.An NPS of 40 indicates a positive customer sentiment, while -10 suggests negative sentiment.NPS = (% of Promoters – % of Detractors) * 100%
Cost per Lead (CPL)CustomerRepresents the cost incurred to acquire a lead (potential customer) through marketing efforts.Evaluate the efficiency of lead generation campaigns.A CPL of $10 means it costs $10 to acquire one potential customer lead.CPL = Total Marketing Expenses / Number of Leads Generated
Operational KPIs
Inventory Turnover RatioOperationalMeasures the number of times inventory is sold and replaced during a specific period, indicating efficiency.Evaluate the efficiency of managing inventory.An inventory turnover ratio of 5 means inventory is sold and replaced 5 times in a year.Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Value
Accounts Receivable Turnover RatioOperationalIndicates the number of times accounts receivable are collected and replaced in a given period.Assess the efficiency of collecting outstanding payments.An accounts receivable turnover ratio of 8 suggests receivables are collected and replaced 8 times a year.Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable
Return on Investment (ROI)OperationalMeasures the return on investment as a percentage of the initial investment amount.Assess the profitability of an investment.An ROI of 15% means a 15% return on investment.ROI = (Net Profit / Initial Investment) * 100%
Employee Turnover RateOperationalRepresents the percentage of employees who leave a company within a specific period.Assess employee retention and HR effectiveness.An employee turnover rate of 10% means 10% of employees left during the year.Employee Turnover Rate = (Number of Employees Who Left / Average Number of Employees) * 100%
Website Traffic Conversion RateOperationalMeasures the percentage of website visitors who take a desired action, such as making a purchase.Assess the effectiveness of website marketing and user experience.A conversion rate of 3% means 3% of website visitors make a purchase.Conversion Rate = (Number of Conversions / Number of Website Visitors) * 100%
Sales and Marketing KPIs
Sales Growth RateSales/MarketingMeasures the percentage change in sales over a specified period, indicating sales growth.Assess sales performance and growth trends.A sales growth rate of 8% indicates an 8% increase in sales.Sales Growth Rate = [(Current Sales – Prior Sales) / Prior Sales] * 100%
Customer Retention RateSales/MarketingIndicates the percentage of customers retained by a business over a specific period.Assess customer loyalty and the effectiveness of retention efforts.A retention rate of 85% means 85% of customers were retained during a period.Customer Retention Rate = ((Number of Customers at End – Number of New Customers) / Number of Customers at Start) * 100%
Lead-to-Customer Conversion RateSales/MarketingMeasures the percentage of leads that become paying customers, assessing sales effectiveness.Evaluate the efficiency of lead nurturing and conversion efforts.A conversion rate of 20% means 20% of leads convert into customers.Conversion Rate = (Number of Customers / Number of Leads) * 100%
Customer Lifetime Value to Customer Acquisition Cost (CLV/CAC) RatioSales/MarketingCompares the customer lifetime value to the customer acquisition cost, indicating the efficiency of customer acquisition.Assess the effectiveness and ROI of customer acquisition efforts.A CLV/CAC ratio of 3 suggests that the lifetime value of a customer is three times the cost of acquisition.CLV/CAC Ratio = (Customer Lifetime Value / Customer Acquisition Cost)
Email Click-Through Rate (CTR)Sales/MarketingMeasures the percentage of recipients who click on a link contained in an email marketing campaign.Assess the effectiveness of email marketing campaigns.An email CTR of 7% means 7% of recipients clicked on a link in the email.CTR = (Number of Clicks / Number of Emails Sent) * 100%
Quality and Customer Service KPIs
Customer Satisfaction Score (CSAT)Quality/CustomerMeasures customer satisfaction based on their responses to a satisfaction survey.Assess overall customer satisfaction levels.A CSAT score of 85% indicates an 85% satisfaction rate among customers.CSAT = (Sum of Satisfaction Scores / Total Number of Responses) * 100%
Net Promoter Score (NPS)Quality/CustomerMeasures customer satisfaction and loyalty by asking customers how likely they are to recommend the business.Assess customer satisfaction and potential for referrals.An NPS of 40 indicates a positive customer sentiment, while -10 suggests negative sentiment.NPS = (% of Promoters – % of Detractors) * 100%
First Response TimeQuality/CustomerRepresents the average time it takes for customer service to respond to a customer inquiry or request.Assess the efficiency of customer service responsiveness.A first response time of 2 hours means, on average, it takes 2 hours to respond to customer inquiries.First Response Time = (Total Time to First Response / Number of Inquiries)
Customer Complaint Resolution TimeQuality/CustomerMeasures the average time it takes to resolve customer complaints or issues.Assess the efficiency of customer complaint resolution.A resolution time of 24 hours means, on average, it takes 24 hours to resolve customer complaints.Complaint Resolution Time = (Total Time to Resolution / Number of Complaints)
Supply Chain and Inventory KPIs
On-Time Delivery RateSupply Chain/InventoryIndicates the percentage of orders or products delivered on time as scheduled.Assess supply chain efficiency and customer satisfaction.An on-time delivery rate of 95% means 95% of orders were delivered on time.On-Time Delivery Rate = (Number of On-Time Deliveries / Total Number of Deliveries) * 100%
Inventory Turnover RatioSupply Chain/InventoryMeasures the number of times inventory is sold and replaced during a specific period, indicating efficiency.Evaluate the efficiency of managing inventory.An inventory turnover ratio of 5 means inventory is sold and replaced 5 times in a year.Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Value
Days of Inventory on Hand (DOH)Supply Chain/InventoryRepresents the average number of days it takes for inventory to be sold or used.Assess inventory management efficiency and liquidity.A DOH of 25 days means, on average, inventory can cover sales for 25 days.DOH = (Average Inventory Value / Cost of Goods Sold) * 365
Employee and HR KPIs
Employee Turnover RateEmployee/HRRepresents the percentage of employees who leave a company within a specific period.Assess employee retention and HR effectiveness.An employee turnover rate of 10% means 10% of employees left during the year.Employee Turnover Rate = (Number of Employees Who Left / Average Number of Employees) * 100%
Employee Satisfaction ScoreEmployee/HRMeasures employee satisfaction based on responses to a satisfaction survey.Assess overall employee morale and job satisfaction.An employee satisfaction score of 75% indicates a 75% satisfaction rate among employees.Employee Satisfaction Score = (Sum of Satisfaction Scores / Total Number of Responses) * 100%
Employee ProductivityEmployee/HRIndicates the output or performance of employees relative to their input, such as hours worked.Evaluate employee efficiency and performance.An employee productivity of 90% means employees are 90% efficient in their tasks.Employee Productivity = (Output / Input) * 100%
Website and Digital Marketing KPIs
Website Traffic Conversion RateWebsite/Digital MarketingMeasures the percentage of website visitors who take a desired action, such as making a purchase.Assess the effectiveness of website marketing and user experience.A conversion rate of 3% means 3% of website visitors make a purchase.Conversion Rate = (Number of Conversions / Number of Website Visitors) * 100%
Bounce RateWebsite/Digital MarketingRepresents the percentage of website visitors who navigate away from the site without interacting further.Assess the effectiveness of website content and user engagement.A bounce rate of 40% means 40% of visitors left the website after viewing one page.Bounce Rate = (Number of Single-Page Visits / Total Number of Visits) * 100%
Click-Through Rate (CTR)Website/Digital MarketingMeasures the percentage of users who click on a specific link, often used in online advertising campaigns.Evaluate the effectiveness of digital marketing campaigns.A CTR of 2.5% means 2.5% of users clicked on an online ad.CTR = (Number of Clicks / Number of Impressions) * 100%
Cost per Click (CPC)Website/Digital MarketingRepresents the cost incurred for each click on an online ad, indicating advertising efficiency.Assess the efficiency and cost-effectiveness of online advertising.A CPC of $1.50 means it costs $1.50 for each click on an online ad.CPC = Total Advertising Cost / Number of Clicks
Quality and Manufacturing KPIs
Overall Equipment Effectiveness (OEE)Quality/ManufacturingMeasures the efficiency of manufacturing equipment and processes.Assess equipment and process effectiveness.An OEE of 80% suggests equipment is running at 80% of its potential efficiency.OEE = Availability x Performance x Quality
First Pass Yield (FPY)Quality/ManufacturingRepresents the percentage of products that pass quality control on the first attempt.Evaluate manufacturing quality and efficiency.An FPY of 95% means 95% of products pass quality control on the first attempt.FPY = (Number of Good Units Produced / Total Units Produced) * 100%
Defects Per Million Opportunities (DPMO)Quality/ManufacturingMeasures the number of defects per one million opportunities, indicating process quality.Assess process quality and defect rates.A DPMO of 5,000 means 5,000 defects occur per one million opportunities.DPMO = (Number of Defects / Number of Opportunities) * 1,000,000
Scrap RateQuality/ManufacturingRepresents the percentage of material or products that are discarded as scrap during manufacturing.Assess material and production efficiency.A scrap rate of 2% means 2% of material or products are discarded as scrap.Scrap Rate = (Weight or Quantity of Scrap / Total Weight or Quantity Produced) * 100%

Understanding key performance indicators

Key performance indicators are critical indicators of progress toward the desired result. 

They also provide a focus for strategic development and create an analytical foundation for decision-making. Perhaps most importantly, KPIs help a business focus its resources on actions that matter most.

Key performance indicators are quantifiable, outcome-based statements. They are used to simplify the often complex process of performance tracking by reducing a large number of measures into a few select “key” indicators. 

As a result, KPIs are used when the business needs to evaluate its performance. This usually includes the performance evaluation of projects, plans, people, or departments.

The anatomy of a key performance indicator

Each key performance indicator must contain the following elements:

A measure

What is being measured? Measures can be strategic or operational. They can also be associated with risk and project or employee performance.

A target

What is the business seeking to achieve? Targets are usually numerical values that are sensitive to time or other constraints.

A data source

The data that underpins the target must be robust. There must be no room for interpretation in how each KPI is tracked and measured.

Reporting frequency

To some extent, reporting frequency will depend on the particular needs of the organization. But it is good practice to report at least once a month.

Creating a key performance indicator

Creating a KPI takes some work.

Successful key performance indicators can only be created once a business has a clear and structured understanding of its aspirations.

After this has been determined, it is a matter of following these steps:

Establish a clear objective

For example, a business that wants to become a market leader must clearly define what it will take to get there.

It might involve a 5% increase in revenue each financial year or the expansion of a product range by 15 products.

Define the criteria for success

In other words, what will the target be? Is it attainable in the desired timeframe?

How will progress be monitored?

Early-stage KPI monitoring is most effective when decision-makers focus on long-term targets with midterm monitoring.

Collect data

Where is the data located? Are there previous KPIs that might hold relevant information?

Here, the business needs to collect and collate data into a central location.

Build the KPI formula

While some KPIs measure one metric, most will rely on a combination of metrics incorporated into a single calculation.

In any case, it is important to build and then test formulas to make sure the results are what the business expects.

Present KPIs

At some point, KPI data will need to be synthesized into a form that is easily understood by others.

A host of KPI software and applications can help the business create presentable graphs and charts from its results.

KPIs Per Vertical

Here are some common examples of KPIs grouped according to department:


Number of new contracts signed per period, average conversion time, number of qualified leads in a sales funnel.


Revenue growth, gross profit margin, operational cash flow, current accounts receivables.

Customer service

Net Promoter Score (NPS), average ticket resolution time, percentage of market share, average refund or return rate.

The Net Promoter Score (NPS) is a measure of the ability of a product or service to attract word-of-mouth advertising. NPS is a crucial part of any marketing strategy since attracting and then retaining customers means they are more likely to recommend a business to others.


Time to market, employee churn rate, order fulfillment time.


Monthly website traffic, blog particles published per month, landing page conversion rate.

Human Resources:

  1. Employee Satisfaction Index: A measure of employee happiness and engagement within the organization.
  2. Employee Turnover Rate: The percentage of employees who leave the company within a specified period.
  3. Time-to-Fill: The average time it takes to fill a vacant position.
  4. Training and Development ROI: The return on investment for employee training and development programs.
  5. Diversity and Inclusion Index: A measure of diversity and inclusion efforts within the workplace.
  6. HR Cost per Employee: The total HR expenses divided by the number of employees.


  1. Overall Equipment Effectiveness (OEE): A measure of manufacturing efficiency that considers availability, performance, and quality.
  2. Defect Rate: The percentage of defective products in a production run.
  3. Cycle Time: The time it takes to complete one cycle of a manufacturing process.
  4. Inventory Turnover: The number of times inventory is sold or used during a period.
  5. Supplier Performance Score: A rating of supplier performance in terms of quality, delivery, and cost.
  6. Scrap Rate: The percentage of materials that are discarded as waste during manufacturing.


  1. Sales per Square Foot: The average revenue generated for each square foot of retail space.
  2. Customer Lifetime Value (CLV): The predicted value of a customer over their entire relationship with the business.
  3. Inventory Shrinkage Rate: The percentage of inventory lost due to theft, damage, or other factors.
  4. Average Transaction Value: The average amount customers spend per transaction.
  5. Foot Traffic Conversion Rate: The percentage of in-store visitors who make a purchase.
  6. Online Customer Acquisition Cost: The cost of acquiring a new online customer.


  1. Patient Satisfaction Score: A measure of patient satisfaction with the healthcare experience.
  2. Readmission Rate: The percentage of patients who are readmitted to the hospital within a specified period.
  3. Average Length of Stay (ALOS): The average number of days a patient stays in the hospital.
  4. Physician Productivity: Measures of a physician’s patient load, billing, and patient outcomes.
  5. Medication Error Rate: The percentage of medication errors in healthcare settings.
  6. Emergency Room Wait Time: The average time patients spend waiting in the emergency room before receiving treatment.


  1. Software Development Velocity: The rate at which software development teams deliver features or user stories.
  2. Customer Churn Rate: The percentage of customers who stop using a product or service.
  3. Customer Acquisition Cost (CAC): The cost of acquiring a new customer.
  4. SaaS Monthly Recurring Revenue (MRR): The total monthly revenue generated from subscription-based services.
  5. Bug or Issue Resolution Time: The average time it takes to resolve reported software bugs or issues.
  6. User Engagement Metrics: Includes metrics like daily active users (DAU), monthly active users (MAU), and user retention rate.


  1. Occupancy Rate: The percentage of hotel rooms occupied during a specific period.
  2. RevPAR (Revenue per Available Room): A measure of hotel revenue that considers both occupancy and room rates.
  3. Average Daily Rate (ADR): The average price charged for a hotel room.
  4. Customer Review Scores: Ratings and reviews from guests on platforms like TripAdvisor or Yelp.
  5. Restaurant Table Turnover Rate: The number of times tables are occupied by diners in a restaurant during a meal service.
  6. Spa or Wellness Center Utilization Rate: The percentage of guests who use spa or wellness services during their stay.

KPIs vs. Metrics

KPIs are metrics an organization uses to track and measure progress toward business critical objectives.

The operative word here is “key” since the metrics chosen are the most important ones at hand and serve as measurable benchmarks.

Metrics measure organizational performance and health in the context of specific activities and processes. While metrics may be related to organizational objectives, they provide less clarity on whether the company is making suitable progress.

To understand the main difference between each measure, first consider that KPIs are a subset of metrics.

In other words, all KPIs are metrics, but not all metrics are KPIs.

Other differences relate to communication, intention, and focus.

KPIs vs. OKRs

While KPIs are metrics that any business can use to track its short, and long-term progress.

OKRs is a goal-setting method for organizations, which helps them set aggressive yet achievable goals shared across the company to make them visible, clear, and shared.

Andy Grove, helped Intel become among the most valuable companies by 1997. In his years at Intel, he conceived a management and goal-setting system, called OKR, standing for “objectives and key results.” Venture capitalist and early investor in Google, John Doerr, systematized in the book “Measure What Matters.”

Thus, while KPIs are more generic, OKRs, need to be very specific, addressable, and achievable while also aggressive.

KPIs, on the other hand, can be picked based on the company’s structure, and it often helps to have a North Star, which is a focused KPI that helps steer the business in a given direction in the short term.

A north star metric (NSM) is any metric a company focuses on to achieve growth. A north star metric is usually a key component of an effective growth hacking strategy, as it simplifies the whole strategy, making it simpler to execute at high speed. Usually, when picking up a North Start Metric, it’s critical to avoid vanity metrics (those who do not really impact the business) and instead find a metric that really matters for the business growth.

Both tools are extremely important for companies, and especially startups, to reach their goals and move fast.

Key takeaways:

  • Key performance indicators are measurable values that help an organization determine whether it is meeting stated objectives.
  • Key performance indicators are comprised of four elements: a measure, a target, a data source, and a defined reporting frequency.
  • Key performance indicators can be used to track performance across a range of departments, including sales, finance, customer service, operations, and marketing.

Key Highlights

  • Definition and Significance:
    • Key Performance Indicators (KPIs) are measurable values used to assess whether an organization is achieving its key objectives.
    • KPIs vary based on business-specific contexts and industry requirements, playing a critical role in long-term business success.
  • Understanding KPIs:
    • KPIs indicate progress towards desired outcomes and serve as a foundation for strategic development and decision-making.
    • They focus resources on actions that are most impactful and relevant.
    • KPIs simplify performance tracking by condensing numerous measures into a select few key indicators.
  • Anatomy of a KPI:
    • A KPI comprises four elements: a measure (what is being assessed), a target (desired achievement), a data source (robust data to support measurement), and a reporting frequency (regular reporting).
  • Creating a KPI:
    • Establish a clear objective aligned with business aspirations.
    • Define success criteria and target attainment in a feasible timeframe.
    • Collect relevant data from dependable sources.
    • Formulate a KPI formula that often involves multiple metrics in a single calculation.
    • Present KPIs effectively using visualization tools and software.
  • Common KPI Examples:
    • Sales: New contracts signed, average conversion time, qualified leads in the sales funnel.
    • Finance: Revenue growth, gross profit margin, operational cash flow, accounts receivables.
    • Customer Service: Net Promoter Score (NPS), ticket resolution time, market share percentage, refund/return rate.
    • Operations: Time to market, employee churn rate, order fulfillment time.
    • Marketing: Monthly website traffic, published blog articles, landing page conversion rate.
  • KPIs vs. Metrics:
    • KPIs are specific, vital metrics used to track progress toward business-critical objectives.
    • Metrics measure performance in various activities and processes, but not all metrics are KPIs.
  • KPIs vs. OKRs:
    • KPIs are generic metrics for tracking short- and long-term progress.
    • OKRs (Objectives and Key Results) are a goal-setting method that sets specific, challenging, and achievable goals shared across an organization.
    • KPIs can be selected based on a company’s structure, while OKRs demand specific and aggressive goal-setting.
  • North Star Metric (NSM):
    • A North Star Metric is a key focus metric that drives growth for a business.
    • It simplifies the growth strategy and helps steer the company in a desired direction.

Connected Analysis Frameworks

Failure Mode And Effects Analysis

A failure mode and effects analysis (FMEA) is a structured approach to identifying design failures in a product or process. Developed in the 1950s, the failure mode and effects analysis is one the earliest methodologies of its kind. It enables organizations to anticipate a range of potential failures during the design stage.

Agile Business Analysis

Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.

Business Valuation

Business valuations involve a formal analysis of the key operational aspects of a business. A business valuation is an analysis used to determine the economic value of a business or company unit. It’s important to note that valuations are one part science and one part art. Analysts use professional judgment to consider the financial performance of a business with respect to local, national, or global economic conditions. They will also consider the total value of assets and liabilities, in addition to patented or proprietary technology.

Paired Comparison Analysis

A paired comparison analysis is used to rate or rank options where evaluation criteria are subjective by nature. The analysis is particularly useful when there is a lack of clear priorities or objective data to base decisions on. A paired comparison analysis evaluates a range of options by comparing them against each other.

Monte Carlo Analysis

The Monte Carlo analysis is a quantitative risk management technique. The Monte Carlo analysis was developed by nuclear scientist Stanislaw Ulam in 1940 as work progressed on the atom bomb. The analysis first considers the impact of certain risks on project management such as time or budgetary constraints. Then, a computerized mathematical output gives businesses a range of possible outcomes and their probability of occurrence.

Cost-Benefit Analysis

A cost-benefit analysis is a process a business can use to analyze decisions according to the costs associated with making that decision. For a cost analysis to be effective it’s important to articulate the project in the simplest terms possible, identify the costs, determine the benefits of project implementation, assess the alternatives.

CATWOE Analysis

The CATWOE analysis is a problem-solving strategy that asks businesses to look at an issue from six different perspectives. The CATWOE analysis is an in-depth and holistic approach to problem-solving because it enables businesses to consider all perspectives. This often forces management out of habitual ways of thinking that would otherwise hinder growth and profitability. Most importantly, the CATWOE analysis allows businesses to combine multiple perspectives into a single, unifying solution.

VTDF Framework

It’s possible to identify the key players that overlap with a company’s business model with a competitor analysis. This overlapping can be analyzed in terms of key customers, technologies, distribution, and financial models. When all those elements are analyzed, it is possible to map all the facets of competition for a tech business model to understand better where a business stands in the marketplace and its possible future developments.

Pareto Analysis

The Pareto Analysis is a statistical analysis used in business decision making that identifies a certain number of input factors that have the greatest impact on income. It is based on the similarly named Pareto Principle, which states that 80% of the effect of something can be attributed to just 20% of the drivers.

Comparable Analysis

A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis it is possible to understand the competitive landscape of the target organization.

SWOT Analysis

A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

Business Analysis

Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

Financial Structure

In corporate finance, the financial structure is how corporations finance their assets (usually either through debt or equity). For the sake of reverse engineering businesses, we want to look at three critical elements to determine the model used to sustain its assets: cost structure, profitability, and cash flow generation.

Financial Modeling

Financial modeling involves the analysis of accounting, finance, and business data to predict future financial performance. Financial modeling is often used in valuation, which consists of estimating the value in dollar terms of a company based on several parameters. Some of the most common financial models comprise discounted cash flows, the M&A model, and the CCA model.

Value Investing

Value investing is an investment philosophy that looks at companies’ fundamentals, to discover those companies whose intrinsic value is higher than what the market is currently pricing, in short value investing tries to evaluate a business by starting by its fundamentals.

Buffet Indicator

The Buffet Indicator is a measure of the total value of all publicly-traded stocks in a country divided by that country’s GDP. It’s a measure and ratio to evaluate whether a market is undervalued or overvalued. It’s one of Warren Buffet’s favorite measures as a warning that financial markets might be overvalued and riskier.

Financial Analysis

Financial accounting is a subdiscipline within accounting that helps organizations provide reporting related to three critical areas of a business: its assets and liabilities (balance sheet), its revenues and expenses (income statement), and its cash flows (cash flow statement). Together those areas can be used for internal and external purposes.

Post-Mortem Analysis

Post-mortem analyses review projects from start to finish to determine process improvements and ensure that inefficiencies are not repeated in the future. In the Project Management Book of Knowledge (PMBOK), this process is referred to as “lessons learned”.

Retrospective Analysis

Retrospective analyses are held after a project to determine what worked well and what did not. They are also conducted at the end of an iteration in Agile project management. Agile practitioners call these meetings retrospectives or retros. They are an effective way to check the pulse of a project team, reflect on the work performed to date, and reach a consensus on how to tackle the next sprint cycle.

Root Cause Analysis

In essence, a root cause analysis involves the identification of problem root causes to devise the most effective solutions. Note that the root cause is an underlying factor that sets the problem in motion or causes a particular situation such as non-conformance.

Blindspot Analysis


Break-even Analysis

A break-even analysis is commonly used to determine the point at which a new product or service will become profitable. The analysis is a financial calculation that tells the business how many products it must sell to cover its production costs.  A break-even analysis is a small business accounting process that tells the business what it needs to do to break even or recoup its initial investment. 

Decision Analysis

Stanford University Professor Ronald A. Howard first defined decision analysis as a profession in 1964. Over the ensuing decades, Howard has supervised many doctoral theses on the subject across topics including nuclear waste disposal, investment planning, hurricane seeding, and research strategy. Decision analysis (DA) is a systematic, visual, and quantitative decision-making approach where all aspects of a decision are evaluated before making an optimal choice.

DESTEP Analysis

A DESTEP analysis is a framework used by businesses to understand their external environment and the issues which may impact them. The DESTEP analysis is an extension of the popular PEST analysis created by Harvard Business School professor Francis J. Aguilar. The DESTEP analysis groups external factors into six categories: demographic, economic, socio-cultural, technological, ecological, and political.

STEEP Analysis

The STEEP analysis is a tool used to map the external factors that impact an organization. STEEP stands for the five key areas on which the analysis focuses: socio-cultural, technological, economic, environmental/ecological, and political. Usually, the STEEP analysis is complementary or alternative to other methods such as SWOT or PESTEL analyses.

STEEPLE Analysis

The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

Activity-Based Management

Activity-based management (ABM) is a framework for determining the profitability of every aspect of a business. The end goal is to maximize organizational strengths while minimizing or eliminating weaknesses. Activity-based management can be described in the following steps: identification and analysis, evaluation and identification of areas of improvement.

PMESII-PT Analysis

PMESII-PT is a tool that helps users organize large amounts of operations information. PMESII-PT is an environmental scanning and monitoring technique, like the SWOT, PESTLE, and QUEST analysis. Developed by the United States Army, used as a way to execute a more complex strategy in foreign countries with a complex and uncertain context to map.

SPACE Analysis

The SPACE (Strategic Position and Action Evaluation) analysis was developed by strategy academics Alan Rowe, Richard Mason, Karl Dickel, Richard Mann, and Robert Mockler. The particular focus of this framework is strategy formation as it relates to the competitive position of an organization. The SPACE analysis is a technique used in strategic management and planning. 

Lotus Diagram

A lotus diagram is a creative tool for ideation and brainstorming. The diagram identifies the key concepts from a broad topic for simple analysis or prioritization.

Functional Decomposition

Functional decomposition is an analysis method where complex processes are examined by dividing them into their constituent parts. According to the Business Analysis Body of Knowledge (BABOK), functional decomposition “helps manage complexity and reduce uncertainty by breaking down processes, systems, functional areas, or deliverables into their simpler constituent parts and allowing each part to be analyzed independently.”

Multi-Criteria Analysis

The multi-criteria analysis provides a systematic approach for ranking adaptation options against multiple decision criteria. These criteria are weighted to reflect their importance relative to other criteria. A multi-criteria analysis (MCA) is a decision-making framework suited to solving problems with many alternative courses of action.

Stakeholder Analysis

A stakeholder analysis is a process where the participation, interest, and influence level of key project stakeholders is identified. A stakeholder analysis is used to leverage the support of key personnel and purposefully align project teams with wider organizational goals. The analysis can also be used to resolve potential sources of conflict before project commencement.

Strategic Analysis

Strategic analysis is a process to understand the organization’s environment and competitive landscape to formulate informed business decisions, to plan for the organizational structure and long-term direction. Strategic planning is also useful to experiment with business model design and assess the fit with the long-term vision of the business.

Related Strategy Concepts: Go-To-Market StrategyMarketing StrategyBusiness ModelsTech Business ModelsJobs-To-Be DoneDesign ThinkingLean Startup CanvasValue ChainValue Proposition CanvasBalanced ScorecardBusiness Model CanvasSWOT AnalysisGrowth HackingBundlingUnbundlingBootstrappingVenture CapitalPorter’s Five ForcesPorter’s Generic StrategiesPorter’s Five ForcesPESTEL AnalysisSWOTPorter’s Diamond ModelAnsoffTechnology Adoption CurveTOWSSOARBalanced ScorecardOKRAgile MethodologyValue PropositionVTDF FrameworkBCG MatrixGE McKinsey MatrixKotter’s 8-Step Change Model.

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