Retrospective<>Prospective

We are inundated with retrospective data, i.e. KPIs, dashboards with KPIs, tracking, metrics and so on. They are retrospective because they only tell us what has happened. They don’t tell us how things are going to evolve. And they don’t tell use about trajectories, i.e. future paths our business will take.

Prospective measurement is about forming quantitative beliefs about the future based on what we can see today. These measurements by definition require models since we are projecting forwards in time.

So given the higher complexity of prospective model-based measurements, it is easy to see why we anchor on KPIs. They’re just so simple to compute and look at.

The difference between looking at a KPI and using a model-based expectation of the future is easy to understand with a simple analogy. While driving you have KPIs, literally the measurement on how the car is performing via the speedometer and the rev counter. Tracking those KPIs is important to engine health. However, they will not tell you which way you are going! For that you need your GPS.