Thoughts about the things we measure

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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

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