The METRICS Conundrum…
There was this quote from Edward Deming – “In God we trust, all others must bring data”. As firms have evolved, the focus on data/metrics and data driven decision making has increased tremendously. Firms have invested heavily in reporting systems and the overall infrastructure needed to capture and store a myriad of metrics. Departments have been created for analysing these metrics and helping firms take informed decisions. With all the action around predictive analytics and every improving techniques whereby data will be instrumental is providing what are called as “actionable insights”, the focus of firms on data and metrics is only going to increase.
A few questions come to mind – Are the effort and costs associated with producing, storing analysing and consuming metrics yielding the results that firms are looking for? Is decision making becoming so “de-humanized” that we are developing a Vulcan mindset and suppressing the emotional angles, the gut feel factor that many great leaders still swear by when it comes to decision making? Is the tail wagging the dog?
It might be a good time for firms to take a hard look at all their internal activity around their metrics because believe it or not, this activity could be a severe drain on the firm’s resources.
Let’s take an example. We all know that things have a funny way of continuing to be around even though they may have lost their relevance. In the context of firms, this theory mainly applies to almost everything in the firm including the metrics it measures. My favourite story in this context is of the manned lookout post built by the English to warn them against an attack by Napoleon. It continued to be operational till very recently. Unbelievable right? Now take a look at all the metrics that are being tracked by your firm. How many would fall in to such a category?
Here are a few things that firms could possibly do to bring focus around their metrics:-
- Put all your metrics in a simple 2×2 as follows
Impact – Is the metric in question aiding decisions related to growth of the firm?
Usage – The extensiveness of usage of the metric in terms of departments, people
A – Opportunity. If the firm improves the usage of these metrics, it could be beneficial.
B – Woodwork. These metrics might have originated at some point in time but are now part of the woodwork and continue to be there for reasons unknown. For example, a firm is moving its projects to an agile model but still continues to use metrics related to scope creep!!
C – CYA. These metrics have zero positive impact on the firm. These could potentially be used for deflecting attention from the real issue, basically a Cover Your A** mechanism. These metrics will remind you of the famous Mark Twain quote, “ There are lies, damned lies and statistics”.
D – Value. These metrics are providing the maximum leverage to the firm and helping gain actionable insights.
- Make a list of all metrics that qualify as “restrictions” and are being used to deliver consequences. For example, # of minimum hours spent in office, # of weeks unbilled, # of months spent on a single project, # of trainings missed etc. Try “switching off” these metrics for a period and see what happens. This might give valuable insights on the firm’s culture and what needs to be affirmed or changed.
- Focus on metrics that are lead rather than lag. In this fast paced business, time spent on looking ahead might be more worthwhile than time spent on looking at the past. As they say, History anyways repeats itself!! For example, annual Customer Satisfaction or Employee satisfaction survey scores are quite irrelevant for a variety of reasons. In the same vein, a bigger focus on employee potential rather than past performance might yield better results to the firm.
- Focus on metrics that are contributing to taking “positive” decisions. For example, decisions related to investments in a customer, rewards for high performers, building a new offering, investing in people development, enhancing the firm’s infrastructure etc. The business language should be more around develop, grow, innovate rather than control, review, optimize.
To summarize, data, metrics and the insights gained from these are a vital cog in any firm’s business. It is best to leverage these judiciously. An informed decision making process should look at data but only as a means and not as an end. Human elements of decision making like experience or gut feel are important and should not be ignored. Firms also need to be careful about the time and money being spent on their internal data and what is done using this data. As the famous economist Ronald Coase said “If you torture data long enough, it will confess to anything”!!
I am sure there will be a lot more views and ideas on this topic and as usual please keep the comments coming, they are extremely interesting and valuable.
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