The KPIs That Actually Drive Growth (Hint: It’s Not Just Revenue)

For years, rev­enue has been treat­ed as the ulti­mate growth met­ric. Watch it go up quar­ter over quar­ter, and it’s easy to assume every­thing is going well. But rev­enue is just one lay­er of the sto­ry — and not always the most reli­able one.

At Lawrence & Co., we’ve learned that focus­ing sole­ly on finan­cial out­puts like rev­enue, gross prof­it, or EBIT­DA can mask what’s real­ly dri­ving the busi­ness for­ward. If you want real growth — not just bet­ter num­bers on a spread­sheet, but a stronger com­pa­ny — you need to under­stand the true dri­vers under­neath those finan­cials. That means track­ing what we call Real Growth: increas­ing your num­ber of Xs, grow­ing your prof­it per X, and improv­ing the qual­i­ty of your team.

This frame­work for Real Growth is a foun­da­tion­al con­cept in my upcom­ing book, The Four Forces of Growth, com­ing this fall. It dis­tills the pat­terns we’ve seen in the most sus­tain­ably suc­cess­ful com­pa­nies over the past 30 years.

What Is Your ​“X”?

The ​“X” is the unit of val­ue your busi­ness deliv­ers to cus­tomers. It could be:

• Square feet leased for a real estate business
• Month­ly sub­scrip­tions for a SaaS company
• Bill­able hours for a pro­fes­sion­al ser­vices firm
• Vehi­cles sold for a dealership

The key is to iden­ti­fy the unit that best cor­re­lates to your company’s rev­enue engine. If you’re not grow­ing your num­ber of Xs, your rev­enue is prob­a­bly grow­ing through price increas­es or one-off deals — not sus­tain­able expansion.

Why Prof­it per X Mat­ters More Than Profit

Prof­it per X mea­sures how effi­cient­ly your busi­ness gen­er­ates val­ue. Unlike total prof­it, it tells you whether each unit sold is becom­ing more or less prof­itable over time.

For exam­ple:

• A con­sult­ing firm might track prof­it per bill­able hour
• A CPG com­pa­ny might track gross mar­gin per unit sold
• A tech com­pa­ny might look at con­tri­bu­tion mar­gin per user

Track­ing this KPI helps you iso­late whether your unit eco­nom­ics are becom­ing more or less effi­cient over time.

The Often-Over­looked Met­ric: % of A‑Players

Great com­pa­nies aren’t built by met­rics alone. They’re built by peo­ple. That’s why we rec­om­mend track­ing your Per­cent­age of A‑Players on the team — defined as peo­ple who con­sis­tent­ly deliv­er extra­or­di­nary results while liv­ing your core values.

When you increase your num­ber of Xs, improve your prof­it per X, and grow the per­cent­age of A Play­ers, you’re build­ing a busi­ness that is not only grow­ing, but get­ting bet­ter as it grows.

Chal­lenge: Are You Mea­sur­ing the Dri­vers — or Just the Outcomes?

Many exec­u­tive teams obsess over out­puts: rev­enue, net prof­it, EBIT­DA. But those are the result of some­thing else. The ques­tion is: are you mea­sur­ing the some­thing else?

Here are three ques­tions to pro­voke a deep­er dis­cus­sion at your next exec­u­tive meeting:

• What is the X that mea­sures real growth in our business?
• What is our cur­rent prof­it per X, and how is it trending?
• What’s our cur­rent per­cent­age of A Play­ers, and what’s our goal?

If your team can’t clear­ly answer these, it might be time to reset your KPI framework.

Ready for a KPI Reset?

If you want help iden­ti­fy­ing the most impor­tant mea­sur­ables for your company’s growth, reach out. The right KPIs are more than just met­rics — they’re a roadmap to build­ing a bet­ter business.

Learn More About Real Growth

If you’re curi­ous to go deep­er into the DNA of Real Growth, stay tuned for the release of my new book, The Four Forces of Growth, pub­lish­ing this fall. It lays out the proven frame­works behind these KPIs and how to lever­age them for trans­for­ma­tion­al busi­ness performance.