I had an interesting thought last night…
These are fascinating things and are the focus of a lot if not all the attention of various people.
You see, I think they are misunderstood. Let’s go back to first principles.
Let’s start with a basic assumption that any organisation of 1 or more people working on something is usually working on something with a view to achieving some form of goal. As a person works on something, if they just focus on the work then they get to an exhausted point where they aren’t sure whether they achieved what they set out to achieve. It is therefore prudent to figure out how you will know that you are achieving what you want to achieve, measurements.
Let’s consider a sufficiently complex goal, is a single measurement good enough? Probably not, at least not if you want to somehow qualify how well you are achieving your goal. So, the chances are you will need multiple measurements all of which are taken together to build a picture of how well you are operating and achieving your goal.
So far, so good…
The danger is now right in front of us though like a disguised dragon waiting to gobble us up.
You see in the above situation;
a single measurement is useless, you need all the measurements to determine the health of achieving the goal.
As we get comfortable with the measurements we have come up with, we forget the above statement. We start to focus on single measurements rather than the collection of measurements. We start to optimise for single measurements despite impacts on other measurements.
We start to treat the measurement as the goal!
When we treat the measurement as the goal we forget that measuring how well we are achieving the goal is determined by the behaviour of the measurements as a collective. In short:
We no longer know whether we are achieving our goal or how well
So, this leaves us back at square one.
I wanted to articulate this because when we consider KPI’s, these are the exact symptom of the above thinking. A person can achieve their KPI’s and the business still go under.
Let’s take an example of a sales organisation. A person might have a KPI of 20 cold calls per day because way back when someone discovered that cold calling was an integral part of making sales and so used this as an indicator. This however missed the work and research that went in to identify a potentially successful cold call and there could be days when no cold calls were made because prospects may not have been suitable for some reason. Because research cannot be quantified however, this wasn’t included in the KPI, only an average number of cold calls which would probably indicate health of how well initial steps were being made. It could be argued that a truer, although still incomplete, KPI would be the success rate, i.e. the volume of cold calls that lead to a second conversation. This is still not great, but it’s a bit better because it now encourages people to only call people they are likely to have second conversations with.
But there is a grotesque fundamental problem sitting in that paragraph. The individual’s goals are now to meet their KPI which means cold call someone and then go for a business expensed lunch. The person has no focus on the business goals and therefore isn’t invested in the business success beyond their own success at achieving their KPI’s.
As people rise through the ranks then this new mentality becomes more prevalent until it becomes just the standard expectation of behaviour.