My grandfather had a wonderful sense of humor. Sadly, he only knew a half dozen jokes, so we got to hear the same ones over and over. I may have inherited this trait, much to my kids’ chagrin.
One of Grandpa’s favorite jokes was about a fellow that comes upon a drunk stumbling around underneath a street light, apparently searching or something. This fellow asks the drunk what he’s looking for.
“My keys!” The drunk slurs.
“Well, are you sure you lost them over here?” inquires the helpful fellow.
“Well, no,” says the drunk. “I lost them in the alley next to the bar.”
“Well why in the world are you looking for them over here?”
“Because the light is so much better here.”
Ok. Maybe Grandpa wasn’t as funny as I thought he was when I was eight.
But this joke comes to mind far too often when I’m having conversations about corporate metrics.
I frequently get the sense that many of the things we measure have little to do with our core business. Rather too many metrics are the equivalent of our inebriated friend choosing a search location based on visibility, not on the likelihood that it will contribute to success.
In short, many of us measure what we can, not what we should.
I’m not sure why this has become so prevalent, but nearly every venue in which I’ve discussed this phenomenon I get resounding agreement from those who have suffered the tyranny of corporate metrics.
Why is that? Why is there such disconnect between what we measure and what most people think we should measure? Most of the people I’ve met who determine, track, and analyze a company’s metrics have been really bright people. Maybe we just don’t understand them.
Perhaps it’s because most of us don’t see the connection between a particular metric and our overall success. It appears to those of us who can’t connect the pieces that the corporate “counters of things” are simply channeling our key-searching friend and measuring what they can see because they lack the ability to find what really matters.
I think there are two possibilities here. First is that the metrics actually do contribute directly to our success in some way but the link between measurement and success is invisible to most of us. If that is the case, increasing communication about the why of these metrics would go a long way in motivating the workforce to help collect reliable data for that metric and for achieving positive results in that stat.
The second possibility is that we really are measuring what venture capitalist and author John Doerr calls “zombie metrics.” These are metrics that are disembodied and disconnected from meaningful life. They exist without a soul or purpose but refuse to die.
Sadly, I think the second possibility is more prevalent. I’ve sat through enough Key Performance Indicator (KPI) assessments to know that there are few cause-effect linkages between most KPIs and an organization’s overall success. I have observed hard-working employees spend countless (expensive) hours measuring things that only serve to change the color on a PowerPoint slide thousands of miles away from red to amber but have no other inherent value.
So where do zombie metrics come from and why do they persist? I think there are a couple of possibilities. Some of them, I believe, used to be useful, productive metrics whose utility have has disappeared. They are no longer relevant but refuse to Rest in Peace. I am not sure, for example, why some government agencies continue to pay to measure “leadership effectiveness” through an online test even though the results are not used to make hiring decisions. Old habit?
Zombie metrics can also arise from flawed assumptions about cause and effect. Managers rationalize that if a certain activity takes place (cause) than a specific outcome is assured (effect). If we incentivize the cause, we can predict a positive outcome. In mechanical systems this is a pretty reliable model. Unfortunately, in complex systems (like those involving humans) cause and effect relationships aren’t nearly as clean. People systems are just not as predictable as mechanical ones, and actual cause and effect linkages are really hard to nail down.
Another source of zombie metrics is akin to availability heuristic. Much like the drunk looking for his keys we measure what is available instead of doing the difficult work of determining how to measure what matters.
So, what to do?
First, determine if the metric actually provides value. Is there a real, provable link between what you’re measuring and what you are trying to accomplish? Can you communicate that link in a believable way to your workforce?
Second, figure out if it’s actually worth measuring. That is, figure out those things we are spending money measuring and compare the cost of measurement to the value of information gained by that measurement.
This means that managers need to be able to quantitatively articulate the economic value of information. I think it would surprise a lot of people to find that many of the metrics we chase have an information value somewhere around zero.
I am not suggesting that we get rid of metrics: far from it! I think leaders should always seek the best information possible to inform decisions. I just don’t want to spend any more money on measuring things that simply don’t contribute to creating value. If a metric can be reasonably tied to a value-producing decision, it stays. If we measure something only because it’s under a streetlight or if the metric resembles the Walking Dead, it has to go.