August 19, 2002

Measurement Matters

Just as September 11th was a wake-up call (at least a temporary one) for individuals to contemplate what matters most, I’m wondering if the Enron/WorldCom/et al fiascos will be a similar wakeup call for what matters most in corporations and organizations.

It has been said that we measure the things we most care about and that “what gets measured gets done.” When it comes to corporations the primary measurements that seem to matter are all financial metrics tied to Wall Street and the stock market. Though nothing can excuse the type of fraud apparently perpetrated by some companies and their leaders, the manic-obssessive emphasis (of analysts, of the media, and of some shareholders) on short-term financial metrics certainly does not encourage taking the long view of things.

This month’s Inc. magazine features an in-depth look at Amazon.com and its CEO Jeff Bezos, one of the few CEOs who has been focused on profitability in the long-term since the founding of the company. Business research guru Jim Collins captured this challenge in a Fast Company article more than a year ago that focused on whether companies were built to last or built to flip. In his most recent book, Good to Great, he demonstrates that many companies are in existence for a very long time before they experience a meteoric rise in results that moves them from good to great.

Let's be clear that while useful, an overemphasis on short-term metrics can also be dangerous. They can be harbingers of a need to correct course or they can be deceptive indicators that cause an about-face to be implemented too soon. Some times we just need to stay the course a bit longer.

That, however, flies in the face of our 24/7 real-time culture with its need for speed bravado. Leadership is soon going to become more about holding the space for thoughtful and patient deliberation in tandem with rapid response processes that allow decisions to be made quickly and products and services to get to market fast than before. To use Collins’ language, I’d suggest it is about being built to last with the capacity to flip when the moment requires doing so. It is difficult to create short-term opportunistic innovation if you haven’t mastered the fundamentals that will keep you around for the long haul.

And what might guide us? Well for starters a clear understanding of what matters most and a corresponding set of measurements. Does your organization have consensus about what matters most when it comes to determining if you are successful? Are the metrics in place ones that hold you accountable for those things that truly matter, or are they indicators that can actually distract you from focusing on the truly desired results?

Before we hit the snooze button on the current Scandalpalooza awareness and return to old patterns and habits answering these questions would be a good investment of one’s time.

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