Managing What You Can’t Measure


I'm tired of hearing "You can't manage what you can't measure." If you're older than 6, you know Santa is a fiction. If you're older than 11, you don't need me to break it to you that of course you can manage what you can't measure. There's big money in that.

Let me give you some examples of managing without measuring.

Managing Without Measuring

+ Tiger Woods manages his swing quite well when it's windy. He might know the wind speed and direction, but he's not managing the way the wind blows. He's managing his body mechanics.

+ Baseball hitters manage to hit the ball without measuring anything. Yes, their eyes and brains are processing information; if you want to call that "measuring", then fine, but realize that just makes the original claim trivial -- "you can't manage without your brain processing information". OK, I won't argue against that -- even someone in a coma fulfills that condition.

+ Writers manage to finish screenplays without measuring anything.

+ Bridge players manage to win hands without measuring anything. (I'm cheating a bit, but read on.)

So there's plenty you can manage without measuring.

What About Managing Well?

Rankled yet? "This is not what managers do!", you say. "Managers manage people, they set targets, they measure progress towards those targets, and they alter course and speed depending on the results of their measurements." Yes, I agree. Strictly speaking, you don't need to measure anything to manage people, but the good ones seem to be measuring things. And by the way, bridge players are measuring something -- the odds that their opponents have particular cards. (I'll come to that in one moment.)

So maybe we should say, "To manage well, you need to measure." Or, "You can't improve what you can't measure." Or, "You can't control what you can't measure."

Now we're getting somewhere. Managing well means improving performance and gaining some degree of control over the outcomes you're interested in.

To improve or control outcomes you have to at least have a measure of the outcomes. Often you need more. If you manage a sales team you might measure completed sales per quarter. If you manage a research team you measure the number of publications per quarter and their quality. Measuring outcomes can range from easy (number of sales in a given period) to hard (the quality of a research paper). But that's a separate issue.

To improve or control something you often have to measure more than just outcome metrics. You have to measure process metrics. If you're looking for completed sales, then you need to research companies, send emails, call companies, and meet with prospects. If you're not hitting your sales numbers then you can ask why not -- am I making enough calls, sending enough emails, meeting with enough prospects?

Process metrics help you figure out where things might be going wrong. If you measure the right things, you might even be able to catch things early, before it becomes a full-blown problem. And process metrics themselves can be broken down into objectives and process metrics, and so on, iteratively. You'd be a fool to run production in a manufacturing plant without a lot of these layers of metrics.

You can be measuring all these things quite nicely and still not be managing well. The reason: you don't know what really influences outcomes and how much.

To have a feel for that is to have a fairly complex causal model -- a set of drivers that interact with each other and the outcome variables to produce the outcomes you're looking to improve or control.

So, "You can't manage what you can't model." But modeling is hard.

* It's hard to know what to measure (there are lots of things you could measure -- how do you pick the right ones?)

* It's hard to know how to measure it (quality of an idea? an author's degree of influence? complexity of an ERP system?)

* It's hard to know if the causal model is valid (do the metrics you've strung together really influence the outcome, and if so, by how much?)

Once you've gotten past these issues, you're ready to manage! Congratulations!

How do the best managers do it? Sure they have models. But the best managers are really good at two things:

* Having a great feel for what influences what and by how much,

and most importantly,

* Having a great feel for what to look for to know that you're not on the right track to the goal (either you're off in direction or speed)

This second attribute -- knowing whether you're off course and what to do to get back -- is what good CEOs get a lot of money to do.

Why? Because their decisions are often made in conditions where:

* There is very little information

* The situation is not very similar to ones they've faced before

* The stakes are high

* There's very little time to make the decision

If you find yourself in this situation time and again, there's only one way to manage. You've got to know quickly that you're off track and know what will get you back on. People who can do this for a living (justifiably) earn gobs of money.

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