A KPI traffic light is three colours against one number: red when it's below target, amber when it's close, green when it's on or over. It works when the target was set before the month started, and it fails the moment someone sets the target after the number comes in.
I've sat in a lot of leadership meetings over 26 years in the CEO chair. The ones that go badly all go badly the same way. Someone reads out a number, someone else explains it, and twenty minutes later nobody has decided anything.
The traffic light fixes that, if you set it up properly.
What do the three colours mean?
Red. The number is below target. Not "a bit soft". Below the line you drew in advance.
Amber. It's close to target and drifting. Amber is a warning, not a pass, and a KPI that sits on amber for three months is a red that nobody wanted to call.
Green. On target or over it. Say it and move on. Nothing on the agenda should be spent on a green.
Some teams add a fourth, super green, for well over target. I wouldn't. A number that far over target usually means the target was wrong, and that's a different conversation.
Why does the target have to come first?
Because a colour is only honest when the threshold was agreed before the month started.
Here's the test. If the number comes in and someone asks "so is that red or amber?", you don't have a traffic light. You have an opinion, and the meeting becomes a negotiation about the colour instead of a decision about the number.
Set the thresholds in the planning session. Write them next to the KPI. Then the colour is automatic, and the meeting starts with the reds.
How many KPIs should carry a colour?
Fewer than you think. One page, a handful of numbers, looked at every Monday.
The founders who break through $2M and scale past $10M+ aren't watching more numbers. They're watching fewer, and the right ones. Revenue is a result. It moves last and tells you least. The number you want to colour sits upstream of it: real conversations with your ideal client, sales-qualified leads, conversion, average value, delivery capacity.
Colour those, and you can see next month before it arrives.
What does the traffic light not do?
It doesn't tell you why. Red says "look here". It doesn't say what to do, and a dashboard that's all colour and no owner is decoration.
So every KPI gets one name against it. When it goes red, that person brings two options and a recommendation to the next meeting. That's the whole system, and it's the difference between running the business and reading about it afterwards. It's also how a CEO of a $10M business runs the week: the leadership team brings the reds, and the CEO stays two quarters ahead.
The one thing to do this week
Take your current scoreboard. For each number, write the red, amber and green thresholds next to it, in advance, and put a name beside each one. If you can't set a threshold for a number, it probably isn't a KPI.
If you want help building the page, book a Strategy Session and we'll do it on the call.
