We are a numbers driven world. Look at the way we all watch the weather reports for tomorrow’s temperature. We watch the stock market to see where the market is today and what the change is from yesterday. We are constantly being told of unemployment rates, interest rates, price changes and approval ratings. Look also at the way we watch our own key performance indicators to help us keep track of the health of our businesses. Metrics are an important aspect of what we do. They shape our opinion of our world and of how things are going. We need to remember that good metrics do not cause good performance. Good metrics measure performance, good or bad. Metrics provide you guidance on how to look at the various aspects of the business. Metrics also take time and effort. They require business leaders to continually make judgments as to whether the effort required to generate different or more detailed tools and systems will result in better visibility and detail of the performance of the various aspects of the business, and if this better visibility can provide better guidance as to what potential changes need to be made to the organization. The other side of this business discussion is could the effort required to generate better the better tools and systems be invested in the elsewhere in the business and provide a better return (more sales, cost reductions, etc.). More detailed or complex metrics will not improve your business’ performance. Good planning, implementation, competitive capabilities and commitment to cost control will help improve your business’ performance. It is not the metric that improves your business. It is what you do with the metric that can improve your business. Metrics are a ways to a means. In many instances they seem to have become the means unto themselves. The objective is not to have good metrics. The objective is to have a good business, where the metrics will reflect this performance. Businesses in some instances have a tendency to believe that it is the metrics fault that poor business performance is being reflected. This phenomenon can be seen in the periodic revamping of report and review materials to provide more and greater detail. Real information has a tendency to be subjected to ever more complex statistical analysis in order to provide more detailed views of performance. I have found that metrics, like objectives are best when they are very simple, and focused. They need to focus only on those attributes that directly affect your ability to achieve your goals. If they require incremental or additional explanation, then they are not appropriate to the business. They should almost be intuitive in the nature of the information that they are conveying. Good metrics should guide you both on performance and what type of changes, if any need to be made to the business. Metrics should provide facts and real event based information, not statistical means or averages. Remember what Mark Twain said about statistics. “There are lies, damn lies, and then there are statistics.” Keep the metrics simple, focused and fact / event based. It’s not the metric; it’s what is done with the information the metric provides that is important.
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Excellent points Steve.
Here is something I found out when I was managing a semiconductor fabrication facility: If I assigned technicians to measure something such as photoresist thickness uniformity (something over which they had some control), it always got better! However, if I asked for too many different metrics or tried to automate the data taking, everything got worse.
What I learned was: pick a few, simple, key metrics and assign them to someone who has some measure of control – don’t divorce the data from the responsible parties through automation – and things will improve.