Jeffrey Saltzman's Blog

Enhancing Organizational Performance

Managing what you are not measuring

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There have been a large number of statements made in various textbooks and articles that are along the lines of “if you can’t measure it, you can’t manage it” or “you can’t manage what you don’t measure”. It is a cute statement; one used to justify various management behaviors, and is quoted over and over ad nauseum. The only problem is that it is wrong. There are plenty of things that we don’t measure and yet manage quite well. The statement itself as it is commonly used is actually misquoted, with the original statement being “you can’t control what you can’t measure” taken from a text on software development.

Do you measure your degree of hunger before putting some food in your stomach? Do you measure the length of your hair prior to getting a haircut? Do you measure your pleasure at attending a baseball game, a Broadway show, a concert, or a movie prior to deciding if you should attend another? Do you measure your likes and dislikes of various food choices before deciding what to have for dinner?  Do you measure the buildup of plaque on your teeth or the bacterial content of your mouth before deciding if it is time to brush those pearly whites? Do you contrast various aspects of your car’s performance by the gasoline brand, its miles per gallon, its horsepower etc. before deciding which brand of gasoline to fill your tank with? We make choices everyday in our lives that are not rigorously measured and we seem to manage many of those decisions just fine and to exert the appropriate amount of control over them.

Medical doctors use a variety of techniques, among them clinical judgment, in deciding a course of action for our various ills. This is often done without rigorous measurement of the presenting condition, but rather by looking at the panoply of signs and symptoms being displayed. And remarkably people get better every day. Teachers when reviewing essays from their students are using similar judgments in deciding whether a paper deserves an A+ or a C. Artists of various kinds also use judgments when deciding how to proceed on an artistic creation. Those judgments are based on their experiences and training as professionals in their respective fields.  The list of non-measured judgments with more often than not positive results could go on and on.

How do these non-measured judgments get made? And how do they get made in such a way as to lead to fairly consistent positive performance? How do these types of decisions differ from the kind that would benefit from more formal or rigorous evaluations? These decisions are based on rules-of-thumb or heuristics. Experience, training, logic, folk-wisdom, categorization including bias and bigotry are all used to generate rules that allow people to make decisions with less than complete knowledge of the situation. You can decide if you need a haircut without actually measuring the length of your hair by operating with certain rules-of-thumb. Maybe your trigger point for a haircut is calendar based – every 4-5 weeks. Or maybe it is when the hair on the sides of the head touches your ears or for some when there is any sign of stubble on an otherwise gleaming sphere. Some simply look in the mirror and “know” that it is time. Whatever the rule-of thumb is, you can apply it to the decision point regarding the need for a haircut without actually measuring the length of your hair.

Managers in organizations apply rules-of-thumb or heuristics daily in their jobs. There are oftentimes rule books and procedure manuals that can be referred to, formal information flows that can be queried, but with the large number and variety of decisions to be made including many times regarding the unforeseen, rules-of-thumb are often utilized. Some managers have a good set of rules-of-thumb that tend to yield positive results and others with poor sets or those that apply good rules inconsistently are more or less flying blind.

Value statements developed by organizations (and often hung on a wall), if actually utilized, can help frame-up the paradigm that should be used to determine or help guide decision making. For instance Google lists 10 things that they “have found to be true” including “#6. You can make money without doing evil.” Merck lists 5 values on their website including “#2. We are committed to the highest standards of ethics and integrity.” Citigroup talks about 3 shared responsibilities with the overall goal of being “the most respected global financial services company.” Many corporations have these Value statements and they represent core priorities of the culture, the overarching rules by which people would be expected to make decisions within the organization.

The downside of these rules-of-thumb is when stereotypical concepts or bias are the basis for their development and then those bias laden heuristics are employed when making decisions. Without having actual information, or in an attempt to quickly sort through or condense a large amount of information available, people have a tendency to base decisions on preconceived or stereotypical notions and sometimes those notions could be called erroneous at best, despicable at worst. Rules-of-thumb or heuristics though are not inherently bad and do not inherently lead to poor decisions, but when erroneous, biased, bigoted or just plain stupid rules-of-thumb are adopted poor decisions will follow.

One application of these concepts comes about when voters are deciding whom to vote for in an election. An election can be thought of as a type of program evaluation. Each candidate develops a program (a campaign strategy) designed to get them elected. The candidate with the best program, the one that resonates most with the voters, receives a very clear evaluation, they get more votes and hence assume office (unless of course if you are in Zimbabwe). For the voter responsible for evaluating the candidate’s program two possible paths can be taken when deciding where to cast their ballot. One path, a rational approach, is to analyze the candidates on each of their positions and then to select the candidate that most closely matches your own views. The second possible path is to employ heuristics, general rules-of-thumb to allow you to select your candidate of choice without having to analyze each of their positions. It has been found that in mock elections, that voters who try to collect and analyze as much information about each and every candidate as they can make poorer decisions about whom to support. In other words they choose candidates who do not necessarily come closest to mirroring their own positions on issues. Those who use rules-of-thumb made better decisions. The rules-of-thumb employed included party affiliation, endorsements, position in political polls, even physical appearance. One conclusion of this work was that a typical voter uses party affiliation similarly to how consumers use brand loyalty as a short cut in the decision making process on which products and services to purchase.

You can manage what you are not measuring through various heuristics; the question is when does measurement add appreciably to your ability to make better judgments? And that will be a topic for later discussions.

© 2010 by OrgVitality, Jeffrey M. Saltzman. All rights reserved.

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Written by Jeffrey M. Saltzman

October 20, 2009 at 10:16 am

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