Effective KPI development using environment-based design (EBD) methodology: A case study of airline KPI system

Background Key Performance Indicators (KPIs) are crucial for guiding employees towards organizational goals and providing stakeholders with insights into goal achievement. Developing effective KPIs is particularly challenging for startups due to dynamic environments and limited resources, often requiring extensive domain expertise. Methods This study proposes an effective KPI development process using the Environment-Based Design (EBD) methodology. The approach systematically converts an organization's mission statement into KPIs through three steps: generating questions and answers, identifying a performance network, and extracting KPIs. It employs tools like the Recursive Objective Model (ROM) and structured question-asking techniques to aid knowledge acquisition and performance network integration. Results The methodology was validated using Flybe's case, Europe's largest regional airline. Two graduate student designers with no aviation experience developed KPIs that were comparable to those in Flybe's 2018 Annual Report, while also addressing additional operational aspects like route attractiveness. Conclusion The EBD guided approach reduces reliance on prior domain knowledge, making KPI development accessible to non-experts and enhancing repeatability for experts. Although the study is limited to the airline industry and English-speaking countries, it demonstrates the potential for broader application. Future research should explore the approach in diverse organizational contexts and cultural settings to further validate its effectiveness and adaptability.