The CEO Has No KPI
Why the concept of "metrics for the CEO" is misleading
There is a graphic making the rounds on LinkedIn called “Top 18 KPIs for CEOs.” It includes the metrics you might expect: revenue growth rate, gross margin, customer acquisition cost, churn, net promoter score, employee turnover, EBITDA, etc. It purports to show the full dashboard the chief executive should use to run the business.
It’s a solid list, but none of these are “KPIs for the CEO.” I know that sounds a little pedantic, but to position these items as “for the CEO” misunderstands what the CEO job actually is. And when a CEO thinks these are their metrics, they are usually headed for trouble.
Every One of Those Metrics Already Has an Owner
Let’s look at the list of KPIs for the CEO again. Notice that each of them already belongs to one of the six core functional areas of the business.
Revenue growth rate, sales cycle length ⮕ Sales
Customer acquisition cost ⮕ Marketing
Churn, net revenue retention, NPS ⮕ Customer
Employee turnover ⮕ People / HR
Gross margin, cash runway, burn multiple, EBITDA ⮕ Finance
Lifetime value, expansion revenue ⮕ Product
Not one of the 18 KPIs measures the business as a whole. They measure the performance of a function within the business.
Furthermore, each of those departments should have an executive in charge that owns these KPIs. This is exactly as it should be. A company at scale has executives precisely so that someone with deep functional expertise wakes up every morning accountable for each of these numbers.
If the CEO of a 300-person company is personally managing metrics like CAC, LTV, and churn, they are doing the work of their executive team. Not only are they mistaking a pile of disintegrated metrics for the underlying health of the business, but they are also abdicating the true responsibility of the CEO job.
The Dashboard Trap
When a CEO starts trying to manage functional KPIs, they often narrow in on their favorites. (Every CEO has them.) And when a CEO adopts any functional KPI as their own, they start distorting the entire company.
Suppose a CEO decides revenue growth is one of their KPIs. Every decision starts bending toward it. Sales gets resourced before product does. The CEO suggests discounts to close deals faster. The CEO steers the marketing team from brand-building to lead generation at any cost. Customer success gets asked to become an upsell engine. Each of these moves makes the CEO’s chosen metric (revenue) look better, but at the cost of other parts of the business: margin erodes, churn rises eighteen months later, and the best engineers leave because product investment dried up. By optimizing one variable, the CEO has destabilized the whole system.
Functional executives, on the other hand, are supposed to optimize their variable. That’s their job. The head of sales should push for more sales capacity; the CFO should push back on spending; the head of product should fight for roadmap investment. These tensions are the natural physics of a healthy business. But someone has to sit above those tensions and resolve them in favor of the enterprise, not any single function. That someone is the CEO.
The First Law of Business
This brings us to what I consider the first law of business: The only way to build a successful, thriving business is to consistently provide value to customers, employees, and shareholders. The CEO must tend to all three, at the same time, over a long period of time.
The law doesn’t say that the key is to maximize revenue or margin, to minimize churn, to hit any particular number. It says the CEO must balance. They must deliver enough value to customers that they keep buying, enough value to employees that the best ones stay and do their finest work, and enough value to shareholders that capital keeps backing you.
There is no single KPI for that. There can’t be. The first law describes a constraint-satisfaction problem, not an optimization problem. The moment you compress it into one number—as so often happens when the CEO starts managing KPIs—you have chosen a constituency and started shortchanging the other two.
What the CEO Actually Optimizes
If the eighteen KPIs belong to the executives, what belongs to the CEO?
The CEO’s job is to coordinate and integrate the six functional areas so that the whole system serves all three constituencies. The job is multivariable optimization under uncertainty, i.e., the hardest kind of work there is.
In practice, that means the CEO watches all eighteen metrics but owns none of them. What the CEO owns is the relationships between them. Is sales growing faster than product quality can sustain? Is the margin the CFO wants achievable without the turnover the head of talent is warning about? Is the customer value we’re promising in marketing the customer value we’re actually delivering? These are integration questions. No functional executive can answer them, because answering them requires trading off across functions—and trading off across functions is the one authority that belongs exclusively to the chief executive.
The best analogy I have come up with for this is that the six areas of the business are like six wheels on a vehicle. The CEO’s job is to make sure all six wheels are turning in a coordinated way, and to notice which wheel is turning slowest, because that’s the one constraining the whole machine. That diagnosis changes quarter to quarter, and no fixed KPI can capture it.
None of this means CEOs should be innumerate or hands-off. In fact, the CEO needs to understand every one of those eighteen metrics well enough to know when an executive’s story doesn’t match the numbers. But those aren’t KPIs for the CEO. KPIs are for non-CEO executives. As CEO, your jurisdiction is the balance between them.