12.5 Invest in a Great Measurement System

Great companies emphasize measurement. Why, you ask? They know that measurement drives performance. You’ve heard the catchphrase, “Information is power.” The measures you have in place are a critical source of decision-making information. For instance, how you measure a process helps you understand how—and how well—that process is working. To more fully grasp how measurement helps you make better decisions, and become a more indispensable manager, let’s take a closer look at three measurement mantras:

1. If you can’t measure it, you can’t manage it.

2. What gets measured gets done.

3. Measure twice; cut once.

Measurement Creates Understanding

The time-honored adage, “If you can’t measure it, you can’t manage it” is a trite saying that has the virtue of being true. To understand why, simply add a few words as follows: “If you can’t measure it, you don’t understand it, and therefore you can’t manage it!” Lord Kelvin said it this way: “When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind.” Measurement creates understanding in the following ways:

• Progress Toward Goals. Measurement tells you how much progress you are making toward your goals.

• Partner Expectations. Measurement tracks customer expectations and satisfaction levels as well as supplier capabilities.

• Sources of Problems. Measurement enables problem solving, helping you identify why things aren’t working so you can root out the causes of failures.

Simply put, measurement provides the feedback you need to develop and execute value-added strategies and processes.

Measurement Motivates Behavior

Ask yourself, “Does strategic intent translate into results?” Managers ask this question in boardrooms, on factory floors, and at the loading dock. What do you think: Does strategic intent translate into results? You may be surprised by the answer. Despite the hours spent devising and sharing strategy, research shows that the answer is often “no.” The strategy-to-performance connection breaks down when measures are misaligned (see Figure 12.1). Tom Peters, McKinsey consultant and author of In Search of Excellence, expressed this simply, saying, “What gets measured gets done.”

Your takeaway: How and what you measure is more influential than almost anything else you do. Set the right strategy, hire the right people, provide the right training, and you still won’t perform if your measures promote the wrong behaviors. Think about this from your own vantage point. You want to perform well and be viewed favorably—perhaps to earn that merit raise. These outcomes hinge on your ability to hit targets based on what is being measured. When ego and pay are tied to the same thing—i.e., measurement—you pay attention. People mold their expectations and behavior to measures; therefore, you need to measure the right things.

Measurement Drives Execution

The first two measurement mantras help you determine what to measure. The third motto—“Measure twice, cut once”—guides how you measure. If you’ve done a DIY project around the house, you’ve experienced the frustration this motto seeks to prevent. You measured and marked a board incorrectly, cut it to your measurement, and then put it in place. What did you discover? It didn’t fit. You learned a key fact: You have to measure the right things correctly. An imprecise measure leads to a false cut, costing you materials, time, and heartache.

If you measure the right things with the right measures, you get the right results. Robert Kaplan, the architect behind balanced scorecards, has spent years trying to persuade managers that how we measure matters. Kaplan defines “correct” measurement as accurate, relevant, and timely. If you have accurate, relevant, and timely information for every value-added activity, you will be able to make good decisions and deliver outstanding value. Sloppy measures, by contrast, guarantee poor performance and ticked-off customers.

To summarize, rigorous, thoughtful measurement enables you to do the right things in the right way. The outcome: Outstanding performance. This reality is expressed as follows:

One final thought: without great measurement, invention is “doomed to be rare and erratic.” Measurement promotes learning, making innovation “commonplace.” Good measurement is critical to a continuous improvement culture and will help you outpace your rivals in today’s fiercely competitive race.