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Most organizations are fanatic about measurable results -- so-called "metrics." So it's not surprising that these numbers are sometimes misinterpreted, or in some cases, the right things aren't even being measured. Nonetheless, the numbers take on a magic of their own, even if they are only marginally useful. The worst case is that bad data can lead to bad business decisions or the "paralysis of analysis" -- if we gather more data, then we'll have a clear idea of what we're supposed to do (which doesn't always happen).
Recently, two bloggers posted some observations on organizations' fascinations with metrics and assumptions made about them, and some broader principles regarding "nonsense" -- trust me, these two concepts are related:
In his Management by Baseball Weblog, Jim Gilliam has written an excellent essay on dystunctional metrics called "The Seductions (& Giant Sucking Sounds) of Metrics." (there are two parts to it; this link goes to part 2, and part 1 follows below it) Here's an excerpt from the introduction:
"In business endeavors with quantifiable results (manufacturing and sales, for example) there's a near-erotic fascination with 'metrics.' Sadly, too many of the folk who create them are not numerate. Those who have a 'tin ear' for numbers are likely to grab onto metrics with their eyes closed, clenched tight, ignoring the realities, in favor of the numeric artifact that is a shadow of a dream of a reflection of reality. The larger the organization... the more the metrics are institutionalized, embraced without serious examination."
Gilliam then goes on to use several examples from the sport and management of pro baseball to illustrate how numbers can be misused or misinterpreted, or how some executives may not even be gathering meaningful data. Great observations!
The other post, which comes from James Robertson's Column Two Weblog on knowledge management, is called "Three Laws of Nonsense." Without further ado, here they are:
- The source of nonsense is that for every piece of nonsense there exists an irrelevant frame of reference in which the item is sensible.
- The persistence of nonsense comes from rigorous arguments from inapplicable assumptions.
- The diffusion of nonsense results from the fact that people are more specialists than problems.
These pithy observations also accurately describe what sometimes happens in organizations. Numbers and measurements are funny things: they can be presented in ways that make them look impressive -- even if they are meaningless. Also, if you start out with a wrong assumption (i.e., this metric is easy to get, so therefore it must be meaningful), you can easily reach an invalid conclusion without even realizing it. A case in point from Gilliam's essay, where he talks about "CYA metrics:"
"In business we see this all the time.Take sales folk. Most usually, their commissions and/or respect are measured by the most easily-measured metric: gross sales. Most sales folk working within this structure will focus on selling the most gross dollars, ignoring net margins (the actual life's blood of a for-profit organization), consideration for the customer's needs (the long-term viability of repeat business) and the strategic importance of the particular products sold (the long-term health of the company)."
So what are you measuring? Is it meaningful, or is it simply perpetuating nonsense and misinformed business decisions? More importantly, is it helping you to uncover new customer needs, business process improvements and other forms of innovation? |
