Step 3: Keeping them Stupid and Simple

It goes without saying that (to-be) parents want to give birth to a healthy baby. From a KPI perspective that is a clear and unambiguous goal. And of course there is no real discussion on what the KEY performance indicator would be; Health. But how do you measure the health of a newly born baby? What indicates the well being of a little human that is breathing for the first time? For decades it was gut-feeling of the person delivering the baby. This led babies to suffer from brain injuries because important signs were not seen or ignored.

This was the case until 1953. In that year it was Virginia Apgar who published her proposal for a new method of evaluation of the newborn infant. Having considered several objective indicators pertaining to the condition of the infant at birth she selected five. These indicators were heart rate, respiratory effort, reflex irritability, muscle tone and color. Sixty seconds after the complete birth of the baby a rating of zero, one or two was given to each sign, depending on whether it was absent or present. The purpose of the Apgar test was (and still is) to determine quickly whether a newborn needs immediate medical care; it was not designed to make long-term predictions on a child's healthVirginia Apgar. A twelve-institution study involving 17,221 babies, established that the Apgar Score, especially the five-minute score, can predict neonatal survival and neurological development. Some ten years after the initial publication, a backronym for APGAR was coined: Appearance (skin color), Pulse (heart rate), Grimace (reflex irritability), Activity (muscle tone), and Respiration.

The APGAR score is still being used all over the world. As a rough-and-ready, simple, but broadly accurate measure, it has saved countless lives since its introduction.  What can we learn about the story of Virginia Apgar (apart from the fact that innovative thinking combined with science can lead to great things)?

Keep it simple
Those who have experienced the birth of a child up close, know that it is a hectic situation. A complex and complicated KPI won't work. The APGAR score was created with the end-user in mind. Thousands of medical personal should be able to understand and apply the methodology in a few seconds. Each of the five indicators are scored with zero, one or two. Simply adding the individual scores gives you the APGAR score. Even a distressed farther-to-be can understand that. Simple tests like this are effective because they tend to be accurate enough, and crucially are simple enough that busy people actually use them. Simple formulas are as reliable as complex formulas or even expert judgement in many cases.

You might think that a simple 0,1 or 2 is an oversimplification that can't possibly be used as an indicator. However research shows that statistically sophisticated or complex methods do not necessarily provide more accurate forecasts than simpler ones (Makridakis and Hibon, 1999). The problem is that we focus on the rare occasions when these indicators work and almost never on their far more numerous failures (Taleb, 2010). Once you have defined a clear goal and selected the KEY performance indicators, it is not necessary to develop complex and complicated models that can be used as indicators (In a later blog we will discuss the issue of complex predictive models in more detail). Simple and easy-to-understand indicators will also help when implementing the KPI. Keeping it Stutip and Simple (KISS) helps people to relate to the indicator and apply the outcome directly in their actions.

Integer or decimal

Probably not deliberately, but Virginia Apgar chose a decimal range of values for scoring health. A decimal range is a set of values with a fixed maximum and minimum value (in this case 0 and 10). You might recognize another example of a decimal range from questionnaires, were often an answer range is given between 1 and 5.

Integer ranges on the other hand (theoretically) have no minimum or maximum. Temperature measured in Celsius or Fahrenheit, Speed measured in miles per hour, or Age measured in years, are all examples of integer value ranges. If you would extract two integer values, the result is again an integer value and can be compared to other values in the range. For example, the difference between a 9-year-old and a 7-year-old results in exactly the same difference comparing someone who is 40 with another who is 42.

This however does not work for a decimal range. Let's say that you measure individual performance in a range between 1 and 5 (poor, sufficient, good, very good, excellent). The difference between 1 and 2 (poor and sufficient) is not quite the same as the difference between good and excellent. This is a much more subjective difference. Comparing integer with decimal, one could say that the first "contains" much more information than the latter. This is because information can be extracted from each value point (and even from between two value points). One could even calculate the average without "losing" information.This makes integer ranges more detailed and "rich"*.

That is not to say that a decimal range cannot be used as measurement range. As long as you understand its limitations. The information that can be retrieved from such a range is limited, but on the other hand it is easier to understand and interpret. An integer range on the other hand provides more detailed information, but its interpretation is more abstract because they tend to be more difficult to relate to the "real"  world. Which could be problematic as we have seen that KPIs best be stupid and simple.

Next time we'll discuss step 4: choosing the threshold.

*theoretically you could calculate an average for a decimal range, but this would be less representing a "real" value (e.g. what would an average of 2.7 say in the individual performance example above?)