A Consultant's View

Prairie Trail Software, Inc. ............................................................. Feb 2012

Measure, measure, measure?

There is a well known saying in management that you can't manage what you don't measure. American companies have deeply adopted this idea. Today, companies make strong use of measuring everything. But there are real problems with focusing on just what is measured. It is possible to be excellent in what is measured and lose one's way.

The flip side to measuring everything is that anything that can be managed by measurement can be outsourced to China or elsewhere. This is the hard truth that IT companies have had to face for the last 10 years. Simply doing a task that other people can measure is not a way to make wealth. W. Edward Deming stated that managing a company based on the visible figures alone was one of the "Seven Deadly Sins of Management".

In today's world, real value is being created in the things that can not be measured. Apple has risen from an "also ran" in the computer field to being one of the most highly valued companies in the world. It has done this by the ruthless application of design principles - things that can be seen, but not measured.

One clear example of a company that measured everything, but lost its way is Motorola. In 1988, Motorola won the Malcolm Baldrige National Quality Award and progressed from there to near "perfection" in 1992 and their Commercial, Government, and Industrial Solutions Sector won the award again in 2002. They operated with a "six sigma" approach to running their business (and the title of "Six Sigma" originated with Motorola). Yet, last year, the company split into several pieces and much was sold off. What happened?

Measurement based managing works when in a near steady state economy. It totally fails in a market undergoing disruptive innovation. When Apple brought out the iPhone, they disrupted the phone business. Motorola could not respond quickly to that disrupted market.

In a market undergoing disruptive innovation, designs create new winners and losers. In that market, your design team is a more important part of the company than the measurement team.

Relying on measurement is similar to relying on technology to solve a problem. Problems are always people problems, not technology problems, and not measurement problems. People respond to design.

A number of industries are undergoing disruption. In these industries, new designs will have great impacts. Another observation by Peter Drucker is in order here. He pointed out that the "Information Revolution" is following nearly the same path and same time line as the Industrial Revolution. We are likely to see as many disruptions to come as we have had already. In means that we need to be constantly looking out for the guys in a garage redesigning how things can be done. They might put us out of business. Or we might be challenged to design something better that does the same thing.