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Measure What Must Be Managed

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Measure What Must Be Managed

My inspiration for this article was the famous quote, “What gets measured, gets managed,” which by many sources has been attributed to management consultant and author Peter Drucker.

Until writing this article, I was under the impression that this was indeed one of Drucker’s many famous quotes. But upon further investigation, it seems that Drucker didn’t actually say it! Some observers are of the belief that Drucker’s supposed quote has been misapplied by people who have taken this approach to the extreme; taking it to mean that you should ignore what can’t be easily measured. While Drucker is a believer in the importance of knowing your numbers and measuring performance, he also recognises the importance in business of some things that can’t be easily measured.

I discovered quite a few variations on the theme of Drucker’s supposed quote, so in the end, I decided to add my own into the mix:

“Measure what must be managed but remember to also focus on the intangibles.”

Measure what must be managed.

I’m a numbers guy. I firmly believe in the importance of knowing the numbers in your business and the importance of tracking your performance. This doesn’t just relate to how much money is in your bank account but runs right through all your business processes. Managing your workflow efficiently and effectively right from the start through to the finish requires you to know and track your Key Performance Indicators (KPI’s) along the journey. There’s no point changing one of your primary processes if you can’t measure the effectiveness of that change because you won’t know if it worked!

It’s important to constantly be seeking to improve your business, to do things better, to create more value, to provide better service. But a key component of this ongoing effort is to know what works and what doesn’t.

The particular elements that you measure will depend on your business and what you’re trying to get done. It might be measuring the number of leads that come in and what percentage of them convert into a sale, or it might be the number of failures that occur on a production line, or it might be the total number of sick days your staff take off every year.

When you decide to focus on improving a particular area of your business, your first step should be to clearly understand the current situation and put a framework around how you will assess or measure the success or failure of your efforts at improvement.

Focus on the intangibles.

Working in teams and closely with other people is such a valuable experience in business. You get to see different perspectives on a problem, look at issues through fresh eyes, face challenges together and recognise different approaches. Analytical minds can benefit greatly from the input of creative minds, and vice versa.

Even though I am a numbers guy, I recognise the importance of the intangibles in business. Things like communication, creativity, innovation, teamwork, culture, engagement, mentoring, imagination and happiness. It can be difficult to get a handle on these things, tricky to measure the intangibles. But that certainly doesn’t mean they should be ignored! Focusing on these ‘immeasurables’ in your business is just as important, if not more so, than on the measurables.

Just because something is difficult to measure doesn’t mean it shouldn’t be tracked, or efforts be made to improve it. All the intangibles in your business are worthy of your attention. Talk to people. Focus on things that you decide are important in your business. Give these issues airtime. Communicate with your staff and your partners about those issues that mean something to you and that you recognise as one of your KPI’s.

If creativity, imagination and innovation are important to you, set aside a budget of time and money for these things and encourage your staff to embrace those activities. If having high performing teams is one of your benchmarks, focus on team activities and training to optimise how your staff work together. If company culture has a big impact on your output, then work hard on building and maintaining a strong, positive culture in your business.

Test and measure, review and renew, evolve and improve.

Think about the following approach:

  • Test and measure the things that can be measured, set some KPI’s and focus on achieving those numbers.
  • For the things that are difficult to measure, set some goals and review your performance against those goals on an ongoing basis, then renew your strategy.
  • Evolve your business and improve your outcomes.

Change is inevitable, and the evolution of your business in response to that change is vital. Just doing the same thing the same way as you have done it in the past simply won’t prepare you for the future.

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  • Sonia King
    Reply

    Nice article Mike and I totally agree with your sentiments. That is why with my clients I use Performance Plan and Review (PPR) not just performance review. We also measure the intangibles such as “providing the best customer solution” by asking for examples in the PPR as part of the measurement process. Of course this is subjective but it is also real and can be verified. It also helps to ascertain if the high performing sales person is meeting their KPI’s with the organisations core values in mind.

    • Mike Dowsett
      Reply

      Hi Sonia, thanks so much for your positive feedback and sharing your great tip on your PPR method, I really appreciate it!

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