Sunday, March 05, 2006

“You get what you measure” or not?

Very strong topic today in all management doctrines is measurement. This is also emphasis in many quality management approaches. The old saying “you get what you measure” is used in many contexts all over the world, and it has had influence on reinforcing interests in measurements. E.g. Google finds as much as 17800 hits for this statement. Is this saying right? Do you get what you measure?

Measurements are important in all kinds of activities including managing organizations but their emphasis is very often wrong. You don’t necessarily get what you measure, and what you get through measurements is not necessarily good for organization or people being managed.

This topic is related to the knowledge theme that I considered in my previous blog. Measurements results represent explicit knowledge but business intentions and real business results are of tacit knowledge of business leaders and workers in the organization. No measurements can be objective but they are always affected by the intension and awareness of somebody – even in physics objectivity is impossible. What is being measured, by what kinds of means or methodology, what is obtained through measurements, and how the measurements results are understood – they all depend on somebody’s intention and awareness.

Dr. W. Edwards Deming said (e.g. in "The new economics") that information is not knowledge. Knowledge comes from theory. Without theory, there is no way to use the information that comes to us on the instant. He also emphasized that there is no true value of any characteristic, state, or observation. Therefore he called for creating profound knowledge for leadership. He also warned about people rewarding based on quantitative measurements. This was his well-known deadly disease #3 of leadership. According to his arguments “evaluation of performance, merit rating, or annual review nourish short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics. It leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.”

More important than to create scrupulous and even harmful business measurement systems, is to get tacit knowledge of business leaders and workers effectively interact with each other for creating extensive profound knowledge within an organization. After that also measurements based explicit knowledge gives new views for managing an organization to sustainable success development.

The most well-known and recognized general model for management is the P (Plan) - D (Do) - C (Check) - A (Act) model according to Deming and Shewhart. This model is also an appreciated tool of quality management. Traditionally PDCA model has been applied principally in the context of explicit business information. The challenge, however, to business management is to combine explicit and tacit knowledge in making business decisions in businesses. According to the figure, managerial actions based on facts from operations are combined with the tacit knowledge of managers. "Ba" is a Japanese concept expressing a collaboratively living environment promoting change of knowledge and creating managerial profound knowledge or even wisdom.

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