It’s been a while since I’ve blogged a book but on the plane back from Germany I stumbled on an email that Nenshad sent me back in Feb with an excerpt from Chapter 9 of “Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise” by Robert A. Rudzki. In a section called measure only what you want to achieve, the author cites several measurement missteps, including:
One U.S. manufacturer that will go unnamed began focusing on the wrong kind of measurement. The company had been going through a protracted period of downsizing. Over time, management seemed to adopt the view that head count reduction was synonymous with improved bottom-line performance. In fact, one of their most talked-about, measured, and reported “objectives” was head count. Indeed, the managers were so experienced in achieving head count objectives in successive waves of downsizings that they received benchmarking requests from major companies that were starting their first rounds of staff cuts.
Almost too late, the company began to notice examples where its effectiveness to accomplish important business functions had been eroded. It had become an example of “corporate anorexia.” The objective and measurement of head count reduction (efficiency) had almost superseded the factors to which management should have given prominence in its performance measurement process (measures of effectiveness).
Like me, the author also counsels against having too many measures for fear of diluting focus. And to the individual manager who claims that their business is too complex and must measure a large number of factors, he replies:
The monitoring of other factors by individual managers is fine, as long as it does not conflict with the organization’s focus on the preselected “super metrics.” To say it another way, each manager has full flexibility to acquire and evaluate all sorts of data for diagnostic purposes, but he or she must not let those metrics dilute the organization’s focus on the few key objectives that have been determined to be strategically important. Monitoring of other factors serves the organization’s overall purposes when it is used to gain insight and trigger relevant questions about what is happening internally and externally – and to get at the root cause of issues.
Sounds like a book that I should read. Maybe on my next trip.