Thoughts about the things we measure

Photo by tiffa130

In the last few days almost all of my information and knowledge sources (books, podcasts, blogs and RSS feeds and newspapers) have touched to a degree the idea of measurement. More specifically, the question – whether we are measuring the right things? One area where this question is particularly strong these days is the measurement of GDP and how good of an indicator it is for the state and growth of country. Here is, for example, the description of a Freakonomics podcast dedicated to the subject:

For decades, Gross Domestic Product (GDP) has been a standard yardstick for measuring living standards around the world. (The U.S., at $14 trillion, remains far above any other single nation in GDP.) Martha Nussbaum would rather use something that actually works… she argues that we should listen less to economists who tout GDP as a valuable measure of human welfare and look at all the things that GDP fails to capture — like what sort of opportunities are available to people, or as she puts it, “What are people really able to do and to be?”

In many of these discussions, people point out to the famous quote by Robert F. Kennedy at the University of Kansas on March 18, 1968:

Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product – if we judge the United States of America by that – that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman’s rifle and Speck’s knife. And the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans.

This line of thinking, however, doesn’t only apply to GDP. It is not only true on the national level but also on the business and personal level. The yardsticks we use should represent our values and the other way around. This is what I wrote on this issue a while back:

When you start treating management as a race for productivity you get an unnatural phenomenon. When you start using carrots and sticks like people are jackasses you get an unnatural phenomenon. When you rely only on measurement of the things you can measure to fuel management you get an unnatural phenomenon.

Here is what Nilofer Merchant wrote on the HBR.org blog a few days ago:

Words like “productivity,” “efficiency,” and “innovation” are defined by goal posts of our own creation: number of units shipped, revenue and profit, EPS and shareholder return. But when you think of the world this way, you forget two things: first, people, and second, that the numbers themselves are not a product. Both are symptoms of a soulless approach to business: when who we are is dictated by strategy and metrics, what we make lacks humanity — in terms of both our products and services, and the cultures we cultivate.

Are we too focused on things we can measure and not on things we should measure? Are we letting the measurable dominate our actions and discussion? Are we working hard enough to find ways to measure things that we should measure but are difficult to measure?

What are you measuring? What is your team measuring? Why?

Elad

Input or output?

Photo by Andres Rueda

Business thinking is always focused on outputs. On results. On measurable things. And usually, it is a good thing (at least when you are measuring the right thing). But we should not let our focus on results prevent us from acknowledging that sometimes, results are not the most important factor. Effort is.

I was reminded of this while I was reading this paragraph from Eduard De Bono Six Thinking Hats:

With white hat thinking we do expect a definite input of neutral and objective information. With black hat thinking we do expect some specific criticisms… With green thinking, however, we cannot demand an input. We can demand an effort…

You cannot order yourself (or others) to have a new idea, but you can order yourself (or others) to spend time trying to have a new idea.

And I think this is the problem many managers have with some of the “soft skills”. They judge it according to the outputs. Like a computer program. “If I acknowledge or recognize my employees x  times a week, they should be engaged”. But it does not work like that. First, because there are many things in life that are a function of probability. You can improve the probabilities if you follow a good process, but you can never make sure. Creative thinking is one. Employee engagement is the other. Second, because human beings are so special and unique, we can’t expect one system to work. Thus we need to put in the effort and do the adaptations according to the specific person and circumstances.

The question, of course, is more general: when do you measure using outputs and when do you measure using inputs? While there will never be a definitive answer, I think stopping and asking the question once in a while is beneficial by itself.

Elad

Changing perspectives

Photo by carbonNYC

I was reading an interesting article on HBR.org about the attempts to find a replacement for GDP as the main measurement in macro economics. In it, I found this paragraph:

Advocates of a new way of thinking about the economy say focusing on Bhutan’s problems masks the deeper lessons to be learned from the underpinnings of GNH. “As a society, we have not taken the issue of time seriously at all,” said John de Graaf, founder of the Take Back Your Time movement to combat the societal “time famine” plaguing our 24/7 world: “Our focus has been on growing more, faster and faster. One of the sacrifices we’ve made on this hedonic treadmill is the sacrifice of time. Less time with each other, less time taking care of ourselves, our communities, our environmental health.”

It reminded me so much of my effectiveness vs. efficiency discussion and many discussions about long-term and short-term thinking I had here, that I had to quote it.

Our world, business, political and personal, needs to change its focus. No more myopic thinking concentrated on the more now. More thinking that looks at questions from a wider perspective and understands that most things in life are processes and not events. And this, like many other things, starts with how we measure things and what kind of measurements we put as the guides for our behavior.

Elad

Is listening to customers and employees enough?

Photo by Lepiaf.Geo

I love the movie “Big” with Tom Hanks. It is a classic. There are so many great scenes there, but this is one of the best  (this is the source):

JOSH: I don’t get it.
PAUL: What exactly don’t you get?
JOSH: It turns from a building into a robot, right?
PAUL: Precisely.
JOSH: Well, what’s fun about that?
PAUL: Well, if you had read your industry breakdown, you would see that our success in the action figure area has climbed from 27 percent to 45 percent in the last two years.  There, that might help.
JOSH: Oh.
PAUL: Yes?
JOSH: I still don’t get it.
PAUL: What?!
MR. M: What don’t you get Josh?
JOSH: Well, there’s a million robots that turn into something.  And this is a building that turns into a robot.  So what’s so fun about playing with a building?  That’s not any fun!
PAUL: This is a skyscraper.
JOSH: Well, couldn’t it be like a robot that turns into something like a bug or something?
PAUL: A bug?
JOSH: Yeah!  Like a big prehistoric insect with maybe like giant claws that could pick up a car and crush it like that!

I was reminded of the scene while reading Bruce Temkin’s post on the Customer Experience Matters blog titled Don’t Listen To Customers, Understand Them. He reminds all of us of a point I mentioned a number of times in this blog – listening to customers is not enough, because they cannot always tell you what they really want, because they cannot articulate it. Here is a little excerpt:

I really like this quote from Sir Denys Lasdun, the English architect, saying that the architect’s job is to give a client: “Not what he wants but what he never dreamed that he wanted; and when he gets it, he recognizes it as something he wanted all the time”…

Instead of looking at direct responses to questions, breakthrough innovations often require a different type of customer input: Observation.

And I was also reminded of this scene while reading a great post on the Harvard Business Review blog by Roger Martin titled Management by Imagination. In this post, Martin claims that true innovation doesn’t come from looking at the past and measuring it better, but by imagining a future that is completely different than anything that ever existed in the past. Again, a short excerpt:

We need to get away from all those old sayings about measurement and management, and in that spirit I’d like to propose a new wisdom: “If you can’t imagine it, you will never create it.” The future is about imagination, not measurement. To imagine a future, one has to look beyond the measurable variables, beyond what can be proven with past data.

I would like to take these ideas and apply the same approaches in managing our employees. It is important to ask them what they want and listen to them, but it is more important to give them things that they are not even able to think about asking, because they have been schooled to become cogs and bombarded with mistaken conventional wisdoms. It is more important to observe them in their places of work because that is the only way we can understand what they are going through. Above all, it is important to let go of the mechanisms of control and stop trying to limit them with rules that enable their measurement and instead equip them with tools that allow them (and the managers) to imagine a better future.

Do you really understand your employees?

Elad