Don’t Measure, Judge!
The mantra of modern management is (still) ‘If you can’t measure it, you can’t manage it’ and much analytical creativity goes into trying to invent new metrics (eg ‘the balanced scorecard’) in order to justify and monitor new strategies. Corporate officers are always asking for (impossible) ROI calculations on such things as knowledge management, customer satisfaction, innovation and the like.
What this measurement mentality misses is the fact that, as human beings, we are remarkably well-equipped to judge things, and we can form an accurate picture of what is going on by looking, talking and interacting, even for only a short period of time.
Take, for example, the issue of whether or not the employees in a business are excited, enthused, energetic and engaged.
In spite of corporate efforts to design questionnaires to monitor performance (including the infamously ineffective and bureaucratic 360-degree feedback programs), anyone walking into a business unit would be able to detect in a minute the difference between a ‘turned-on’ group of employees and one where everyone was operating like a good, compliant soldier. It would have to be a very sophisticated ‘measurement’ system to capture what any one of us could detect in an instance.
Embedded in the ‘management by measurement’ mentality is a false hypothesis. That effective management can be achieved through detachment – that measurements will be reviewed by a top-level (corporate-style) manager who is not involved in a hands-on way in the business, but monitors what is going on through the scorecards.
There is much in business (perhaps most of the crucial decisions) that cannot be measured in such a way that an accurate meaning can be conveyed to the person examining ONLY the measurements. Measurements can be invaluable in giving guidance to someone who must decide and judge, but are a profoundly pathetic substitute for effective judgments.
The challenge of modern business is not to improve our measurement metrics, but to redesign managerial activities so that the organization is better able to make good judgments.
How would you think about designing an organization that outperformed others by making effective judgments? I don’t think we yet have any science on this, but it would probably include:
a) Delegation of decision making to local managers who are more likely to understand what is going on and are able to make better, informed judgments;
b) A clear set of enforced guiding principles and objectives, so that trade-offs are made consistently across the firm
c) Careful selection and apprenticeship of those who are going to be placed in judgment (managerial) roles
d) Finding ways to ensure that the judges are credible and held accountable for their effectiveness
A good starting point for reading on this topic is an article entitled ‘The New Organization’ in January 21st issue of The Economist quoting Yves Morieux of the Boston Consulting Group.
M. Morieux says that, in the organization of the future, the main tasks will be to help improve the judgment-based decision-making processes that knowledge workers use, not find better ways to measure their performance.
Anyone else have some views on how you improve an organization’s ability to judge, rather than measure?